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CHAPTER 1

INTRODUCTION
● History and background
● Business philosophy
● Vision and mission statement
● Market standing

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1. INTRODUCTION
MEEZAN Bank is the first and largest Islamic commercial Bank of Pakistan. The
Bank is headquartered in MEEZAN House - Karachi, Pakistan. It has a network of
over 528 branches in more than 130 cities of Pakistan. It commenced operations in
2002 when State Bank of Pakistan issued first-ever license for Islamic commercial
banking. The Bank has a market share of 35% in Islamic banking industry of the
country.

The Bank offers wide range of Shariah-compliant banking products and services to its
customers, both retail and business. Besides traditional banking channels, the Bank
offers various Alternate Distribution Channels including Internet Banking, ATM
Banking, Visa & MasterCard debit card, SMS Banking, SMS Alerts, Mobile Banking
Application and Utility Bills Payment through ATM and Internet Banking.

Banking plays a very significant role in the economic development of a country. After
Partition of India and Pakistan British Government’s commission distributed the
reserves between Pakistanand India.

In August 1947, various Banks transferred their headquarters and funds to India.
Before partition of Pak-o-Hind, some Banks were operated which were Chartered
Bank, Grind-lays Bank, Imperial Bank of India, Australasia Bank and Habib Bank.
After the independence of Pakistan, Muslim Commercial Bank Limited, Bank of
Bahawalpur Limited, Punjab National Bank and National Bank of Pakistan were
providing banking facilities to general public.
The State Bank of Pakistanwas inaugurated by our great leader Muhammad Ali
Jinnah. On 1​st​July, 1948. Australasia Bank and Habib Bank were providing facilities

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to the Pakistan’s nation. After some period, Australasia Bank Limited was converted
into Allied Bank of Pakistan.

State Bank of Pakistan is a Central Bank of Pakistan. Other Banks are Commercial
Banks, Specialized Bank and Investment Banks.
Now a days in Pakistan, fifty four banks are operated with thousands of branches.
Banks are providing Banking facilities to their customers and clients by offering
different services and packages.

Pakistan’s banking sector consisting of Islamic Banks, Private Banks, Public Sector
Banks, and Micro Finance Banks. These Banks are doing Corporate Banking, Trade
Financing, Lease Financing and some Banks are providing online banking facilities,
ATM facility and money transfer facilities also.

Banking sector is a back bone of our economy. If this sector is making progress than
whole economy is also growing a lot. Our Agricultural sector, Industrial sector,
Mining sector, Export sector all depend on the banking industry because Banks
provide long term funds as well as short term funds to all these sectors to meet out
their short term as well as long term requirement. Hence, banking progress is
necessary indeed.

1.1.2. HISTORY AND BACKGROUND


The founder of Pakistan, Quaid-e-Azam Mohammed Ali Jinnah while delivering
speech at the opening ceremony of State Bank of Pakistan on July 1, 1948, stated:
"​We must work our destiny in our own way and present to the world an
economic system based on true Islamic concept of equality of manhood and
social justice."
The statement serves as the concept of Islamic banking by the founding father of the
nation that was created in the name of Islam in 1947.

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1991: Procedure adopted by banks in 1985 was declared un-Islamic by the Federal
Shariah Court (FSC). The Government and some banks/DFIs made appeals to the
Shariah Appellate Bench (SAB) of the Supreme Court of Pakistan.

1997: Al-MEEZAN Investment Bank is established with a mandate to pursue Islamic


Banking. Mr. Irfan Siddiqui appointed as first and founding Chief Executive Officer.

1999​: The Sharia Appellate Bench of the Supreme Court of Pakistan rejects the
appeals and directs all laws on interest banking to cease. The government sets up a
high level commission, task forces and committees to institute and promote Islamic
banking on parallel basis with conventional system.

2001: The Shariah Supervisory Board is established at Al-MEEZAN Investment Bank


led by Justice. 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.

2002: MEEZAN Bank acquires the Pakistan operations of Society General and
concurrently Al MEEZAN Investment Bank converts itself into a full-fledged Islamic
commercial bank. The first Islamic banking license is issued to the Bank and it is
renamed MEEZAN Bank.

2003: MEEZAN Bank establishes itself as the pioneer of Islamic Banking in Pakistan
and quickly establishes branches in all major cities of the country. A wide range of
products are developed and launched consolidating the Bank’s position as the premier
Islamic Bank of the country Al MEEZAN Investment Management Limited (AMIM),
the asset management arm of MEEZAN Bank, introduces MEEZAN Islamic Fund
(MIF), the country’s first open-end Islamic Mutual Fund.

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2004: The State Bank establishes a dedicated Islamic Banking Department (IBD) by
merging the Islamic Economics Division of the Research Department with the Islamic
Banking Division of the Banking Policy Department. A Shariah Board has been
appointed to regulate and approve guidelines for the emerging Islamic Banking
industry. The Government of Pakistan awards the mandate for debut of international
Sukuk (Bond) offering for USD 500 million. The offering is a success and establishes
a benchmark for Pakistan. MEEZAN Bank acts as the Shariah Structuring Advisor for
this historic transaction.
2006:​ 62 branches in 21 cities

2007​: Bank’s branch network reached the milestone number of 100 branches. The
Bank introduced Istisna' (Istisna' is a sale transaction where a commodity is transacted
before it comes into existence. It is an order to a manufacturer to manufacture a
specific commodity for the purchaser. The manufacturer uses his own material to
manufacture the required goods) financing to cater to the working capital needs of
customers.

2008: MEEZAN Bank introduced Tijarah financing to allow customers to raise funds
for financing of stocks of finished goods.

2009​: The branch network reached 201 branches (including sub-branches) in 54 cities
nationwide.

2010: The Bank developed MEEZAN Business Plus, a Mudaraba-based account that
offers an array of free services for businesses, MEEZAN Euro Savings Account and
MEEZAN Pound Savings Account. Bank’s branch network reached 222 branches in
63 cities across Pakistan.

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2011​: The inauguration of the new Head office in Karachi. During the year, 53
branches were opened to reach a landmark of 275 branches in 83 cities across
Pakistan.

2012:​ Completed 10 years of operations.

2013:​ Over 350 branches in over 100 cities

On ​18 October 2014​, the Bank acquired the HSBC Pakistan operations. After
conversion of the business and branches of HSBC (Honkong and Shanghai Banking
Corporation) Pakistan to MEEZAN Bank; the HSBC Pakistan Accounts and Term
Deposit Receipts (TDRs) converted to MEEZAN Bank accounts and Certificates of
Islamic Investments (COIIs).
2014: ​Meezan bank reaches a branch network of 428 branches in 117 cities. The bank
acquired Pakistan operations of HSBC mobile banking application launched.

2015: Agreement signed with Karandaz Pakistan. Meezan Upaisa the first Islamic
branchless banking service launched successfully.​ 550 branches in over 130 cities.

2016:​ ​Launch of new corporate website.

1.2. Business philosophy

Our investment philosophy is based on a long-term strategic view, seeking to deliver


sound investment returns with acceptable levels of risk and consistent value creation

for our investors in a Shariah compliant manner​.

1.2.2. Code of business

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Employees shall maintain strict secrecy regarding the Bank's affairs and shall not
(except so far as is necessary and appropriate in the normal course of their
employment disclose to any person, any information as to the practice, dealing or
affairs of the Bank or any of their customers, which may come to their knowledge by
reason of their employment. During the course of employment and after its
termination for whatever reason, the employee must not disclose to anyone (nor use
for any purpose other than the business of the Bank) any information relating to the
Bank or its employees which is not already available to the public unless authorized to
do so. Such information includes customer data, product manuals, technical secrets,
confidential research work, technical processes, operating manuals, marketing plans
and strategies and other confidential financial or business information of the Bank.

1.3. VISION STATEMENT

“​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 and just society for mankind.”

1.3.2. MISSION STATEMENT

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“To be a Premier Islamic Bank, offering a one-stop shop for
innovative value-added products and services to our customers within the bounds of
Shariah, while optimizing the stakeholders’ value through an organizational culture
based on learning, fairness, respect for individual enterprise and performance.”

1.3.3. SERVICE MISSION

“To develop a committed service culture which ensures the


consistent delivery of our products and services within the highest quality service
parameters, promoting Islamic values and ensuring recognition and a quality banking
experience to our customers.”

1.3.4. Business Volume

Key business result 2016 2015 Growth

Financing Rs.312 Billion Rs.208Billion


50%

Branch network 571 Branch 551 Branch


4%

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Presence 146 Cities 143 Cities
2%

Deposit Rs.564Billion Rs.472Billion


20%

Total asset Rs.658Billion Rs.532Billion


24%

Profit after tax Rs.5.56Billion Rs.5.02Billion


11%

Equity Rs.2.81Billion Rs.25.6Billion


10%

Trade business (import and export) Rs.552Billion Rs.461Billion


20%

1.3.5. VALUES

1.3.5.1. Core Values:


​Shariah-compliance, Integrity, Professionalism, Innovation, Service, Excellence,
Social Responsibility.

1.3.5.2. Staff​:

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Committed, motivated and professionally trained employees who are empathic to
their customers’ needs.

1.3.5.3. Brand Personality:


A sober and established, strong, empathic, professional person; who is an extremely
loyal and dependable friend and business partner, and is committed to offering
comprehensive value-based Shariah-compliant financial solutions.

1.3.5.4. Relationships:
Our relationships are long-term. We recognize and value our customers’ needs above
all and strive to ensure their fulfillment. All customers are treated with
professionalism and in a friendly manner. It is our Endeavour to ensure that they
receive efficient and timely service. The MEEZAN Bank experience is a unique one.

1.3.5.5. Strategy:
By implementing robust(​durable) and aggressive (​competitive​) strategic and tactical
initiatives on the side of consumer banking, MEEZAN Bank aims to fulfill its prime
objective of providing customers accessibility and convenience, within an atmosphere
and culture of dedicated service and recognition of their needs.

1.3.5.6. Technology:
MEEZAN Bank has a strong technology focus. It has invested heavily in
state-of-the-art software applications – namely Temenos T-24 and Oracle. It has also
recently upgraded its hardware platform and also has a ‘hot’ disaster recovery site in
place to cater to any unforeseen eventualities.

1.3.5.7. Strategy of Hiring in MEEZAN Bank


The strategy used for hiring in MEEZAN Bank is Trend Analysis.

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“The Trend Analysis is a method of analysis that allows traders to predict what will
happen in the future. Trend analysis is based in historical data about the employee’s
performance given the overall trends of the market and particular indicators within the
market”.

1.4. MARKET STANDING OF MEEZAN BANK:

MEEZAN BANK ​market standing can be revealed by credit rating which it gets from
credit rating companies like PACRA is most reliable source of credit rating.
Entity Ratings by PACRA: Long Term: AA- , Short Term: A1+.
Long Term Rating AA: Very High Credit Quality. AA Ratings denote a very low
expectation of credit risk. They indicate very strong capacity for timely payment of
financial commitments. This capacity is not significantly vulnerable for foreseeable
events.
Short Term Rating A1+: Obligations supported by the highest capacity for timely
repayment.

1.4.1. AWARDS AND ACHIEVEMENTS:

Al Meezan has been time and again recognized for its consistency in performance,
outshining the competitors in domestic and global Islamic funds market. It is
recognized as Pakistan’s largest private sector Asset Management Company. Below is
a list of the awards and accolades we have received from foreign bodies and respected
industry organizations in recognition of our investment management and service
excellence.

1.4.2. Company award

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Sr.# Description of Award Given By Announced in
1. Pakistan’s Financial Services AI Global Media 2016
Firm of the Year 2016 publication
2. Best of the Best in Finance AI Global Media 2016
Award-Pakistan 2016 publication
3. Best Private Sector Asset Wealth & Finance-Int’l 2016
Management & Investment
Firm 2016 – Pakistan
4. Best Investment Advisory Firm Wealth & Finance-Int’l 2016
2016 – Pakistan
5. Excellence in Equity Award Investor Review Magazine 2016

6. Shariah Compliant Investment The European 2016


Company of the Year- Pakistan
2016
7. Best in Private Sector Asset Corporate Live Wire 2016
Management 2017
8. Most Outstanding Shariah Acquisition International 2016
Compliant Asset Management (AI)
Company
9. Asset Management Company of IFFSA Awards, Islamic 2016
the Year, Pakistan Finance Forum of South
Asia
10. Best Islamic Asset Management Asset Triple A Awards, 2015
House of the year 2015 in Hong Kong.
Pakistan
11. Best Investment Management Wealth & Money 2015
Company, Pakistan-2015 Management Awards

12. Best Islamic Asset Management APAC Insider Business 2015


Company – Pakistan Awards

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13. Best Discretionary Portfolio APAC Insider Business 2015
Manager – Pakistan Awards
14. Excellence in Shariah Innovation &Excellence 2015
Compliant Financial Services – Awards- Corporate
Pakistan Livewire

15. Most Outstanding Asset Innovation &Excellence 2015


Management Company Awards- Corporate
Livewire

16. Best Regional Fund IFN Islamic Investor 2014


Performance 2014 Awards 2014
17. Best Islamic Asset Management Asset Triple AAwards, 2014
House of the year 2014 in Hong Kong
Pakistan
18. Best Islamic Asset Management Asset Triple AAwards, 2013
House of the year 2013 in Hong Kong
Pakistan
19. Best Islamic Asset Management Asset Triple AAwards, 2012
House of the year 2012 in Hong Kong
Pakistan
20. Best Islamic Asset Management Asset Triple AAwards, 2011
House of the year 2011 in Hong Kong
Pakistan
21. Fund Manager of the Year 2011 Financial Daily, Pakistan 2011

1.4.3. GROWTH OF MEEZAN BANK

JCR-VIS Credit Rating Company Limited has reaffirmed the entity ratings of Meezan
Bank Limited at ‘AA/A-1+’, a statement issued by the company.

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JCR-VIS has also reaffirmed sukuk ratings of Meezan Bank at ‘AA-’. Outlook on the
assigned ratings is ‘Stable’. The previous rating action was announced on June 2, 2016. The
assigned ratings to Meezan Bank incorporate the bank’s healthy customer franchise and a
sound funding base, largely comprising cost effective retail deposits. Ratings also reflect
strong asset quality indicators and adequate capitalization levels.

Meezan Bank continues to dominate the Islamic banking industry in the country with a
market share of 36 percent in total Islamic banking deposits, the statement added. With
aggressive branch expansion pursued over the last five years, branch network has more than
doubled to 571 (2011: 275) branches as at the end of December 2016.

Resultantly, deposit base has grown at a CAGR of 27 percent over the last five years
and market share in total banking deposits has increased to five percent (2016: 4.9
percent; 2011: 2.9 percent).

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CHAPTER 2

MANAGEMENT STRUCTURE

● Organizational chart
● Corporate profile
● Management hierarchy
● Policy formation process
● Managerial policies

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2. ORGANIZATIONAL STRUCTURE:
2.1. Meezan team
The business segments of the banks are:
1. Corporate Banking
2. Investment Banking
3. Commercial Banking
4. Treasury & Financial Institutions
5. Asset Management

2.1.1. Corporate Banking Performance:

2.1.1.1. Corporate Assets:


Over the years, Meezan bank has been able to grow its corporate assets portfolio
considerably despite the challenges. With a focused development strategy, we have
been able to build a healthy and well diversified portfolio that has resulted in our
corporate assets book to grow at a CAGR of 31% per annum over the last 5 Years.

2.1.1.2. Corporate Trade Business:


The Bank’s trade business (import and export) performed very well in 2016 in both
volume and income and registered a growth of 20% and 27.5%, respectively,
notwithstanding the fact that exports of the country as a whole dropped by 13%
during the year. The total trade business volume in 2016 crossed Rs 552 billion.

2.1.1.3. Investment Banking:


Whether it’s advising a client on a multi-billion Rupee merger / acquisition
transaction or marketing & distribution of structured finance transactions, our

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Investment Banking brings superior innovation, experience and the required skill set
to deliver according to the exact requirements of our clients.

2.1.1.4. Commercial Banking:


Meezan Bank Limited has been at the forefront of the Islamic Banking since the last
decade. More than a bank unlike others in the post-renaissance context we have been
serving our clientele with utmost diligence to harness and garner long term
relationships, the efforts for which are evident from the growth of our asset size.
Committed to its vision, the commercial banking team at MBL has been dedicated to
providing on the edge services to our clients while exploring new industries and
sectors to cater to the expanding demands of the industrious and progressive
individuals driving the engine of Pakistan’s economy.

2.1.1.5. Treasury & Financial Institutions


Al Meezan Investment Management Limited 2009was an eventful year. Rising
interest rates, coupled with a freeze in the local stock market for more than three
months resulted in a severe loss of confidence and led to a liquidity crunch in the last
quarter. Meezan Bank remained unaffected by this crises , rather becoming a
formidable player in the local money market , placing funds with major banks and
non-banking financial institutions using Shariah – approved structures. Treasury was
not only able to deploy its excess liquidity, but also benefit from the SLR eligible
security that was in its custody for the period.

2.1.1.6. Asset management


Al Meezan is the largest fund manager in private sector in Pakistan and the Only
Shariah compliant Asset Management Company in Pakistan. Al Meezan has
successfully completed 20 years of its existence in 2015. This is one of the longest

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track records in private sector in the area of investment management in Pakistan and
has emerged as one of Pakistan’s leading investment solutions provider in a Shariah
compliant manner. The Shariah Advisor of Meezan Bank Limited, also the Shariah
Advisor of Al Meezan, supervises the operations to ensure Shariah compliance of the
funds.

2.1.1.7. Products
I. Murabaha

For working capital financing,


primarily to secure raw materials.

II. Istisna / Tijarah

For supporting the clients in securing


the payments and maintenance of
working capital for smooth operation
of business.

II. Ijarah/Diminishing Musharka

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Long-term facilities for acquisition of
fixed assets like vehicles, plant and
machinery etc. These are the
alternatives to conventional leasing
solution operation of the business.

III. Bai Salam


Export bill discounting solution, the facility can be availed in combination with
Istisna / Tijarah and Murabaha as retirement channels.

IV. Non-Funded Lines

Both foreign and inland sight LCs and


Usance LCs along with Letter of
Guarantees are available at our
counters.

V. Sectors

Sectors like, ship breaking, cotton


ginning, oil milling, textile spinning,
flour milling and trading, rice milling
and trading,, sugar milling, petroleum
transportation, fertilizer trading, to
name just a few among others from all

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three arenas of the economy’s
industry have been enjoying services
that are custom made to ensure the
execution of every transaction in a
fluid and risk-defined p​rotocol.

VI. Services Provided


Developing, floating and managing Islamic Mutual Funds.
Structuring and managing Discretionary and Non-Discretionary Portfolios.
Providing Investment Advisory Services.

Organization chart

Resident Shariah Board Member Shariah Audit and


Advisor

Internal Audit and Business Risk return

Product Development & Shariah Complaince

Company Secretariat

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FINANCE

The organizational structure of the Bank consists of top level management, middle
level management and lower level management. The top level management comprises
of president, executive vice president, and divisional heads. The middle level
management comprises of departmental heads, SVPs and VPs. The lower level
management comprises of AVPs, Managers, and Operation Managers. The reporting
system at horizontal level is much effective and successful. The reporting system at
vertical level i.e. from lower level management to middle level management is also
accurate, timely and complete. The middle level management gives information to

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high level management at which decision are made, rules and regulations are
amended keeping in view the present scenario.

2.1.2. Auditors
The retiring auditors A.F. FERGUSON&Co. Chartered Accountants, a member firm
of Pwc network, being eligible, have offered themselves for reappointment for the
year ending December 31, 2016.The Board of Directors, on the suggestions of Audit
Committee, recommended reappointment of the above firm as statutory auditors of
the Bank for year 2016.

2.1.3. Statement of Compliance with the Code of Corporate Governance


For the year ended December 31, 2016
This statement is being presented to comply with the Code of Corporate Governance
(CCG) contained in Regulation No. 5.19 of the listing regulations of the Pakistan
Stock Exchange Limited where the Bank is listed for the purpose of establishing a
framework of good governance, whereby a listed company is managed in compliance
with the best practices of corporate governance. the Bank has applied the principles
contained in the Code in the following manner:

1. The Bank encourages representation of independent, non-executive directors and


directors representing minority interests on the Board of Directors. As at December
31, 2016 the Board included:

Category No. Name

Independent 3 Mr. Mohammad Abdul Aleem


Directors Mr. Noorur Rahman Abid

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Mr. Talal S.A. Al-Shehab

Executive 2 Mr. Irfan Siddiqui


Directors Mr. Ariful Islam

Non- Executive 7 Mr. Riyadh S. A. A. Edrees


Directors Mr. Faisal A.A.A. Al-Nassar
Mr. Bader H.A.M.A. Al-Rabiah
Mr. Mansur Khan
Mr. Alaa A. Al-Sarawi
Mrs. Syeda Azra Mujtaba
Mr. Muhammad Zarrug Rajab

2. The Directors have confirmed that none of them is serving as a director on more than
seven listed companies in Pakistan including the Bank

3. All the resident Directors of the Bank are registered as taxpayers and none of them
has defaulted in payment of any loan to a banking company, a Development Financial
Institution or a Non-Banking Financial Institution or, being a member of a stock
exchange, has been declared as a defaulter by that stock exchange.

4. Casual vacancy occurred on the Board upon resignation of Mr. Rana Ahmed
Humayun on July 1, 2016 which was filled up by the Board within 90 days. The
approval from the State Bank of Pakistan for this appointment was received on
August 19, 2016.
5. The Bank has prepared a “Code of Conduct” and has ensured that appropriate steps
have been taken to disseminate it throughout the Bank along with its supporting
policies and procedures.
6. The Board has developed a Vision / Mission statement, overall corporate strategy and
significant policies of the Bank. A complete record of particulars of significant

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policies along with the dates on which they were approved or amended has been
maintained.
7. All the powers of the Board have been duly exercised and decisions on material
transactions, including appointment and determination of remuneration and terms and
conditions of employment of the CEO, other executive and non-executive directors,
have been taken by the Board.

8. The meetings of the Board were presided over by the Chairman and the Board met at
least once in every quarter. Written notices of the board meetings, along with agenda
and working papers, were circulated at least seven days before the meetings. The
minutes of the meetings were appropriately recorded and circulated.

9. The Bank is in compliance with respect to training requirements of its directors as


eleven directors have completed their training till December 31, 2016.

10. The remuneration and terms and conditions of employment of the Chief Financial
Officer (CFO) have been approved by the Board of Directors. Further, a new
Company Secretary has been appointed by the Board of Directors subsequent to the
year end on January 5, 2017 upon retirement of the existing Company Secretary.
There was no new appointment of Head of Internal Audit during the current year.

11. The Directors’ Report for this year has been prepared in compliance with the
requirements of the Code and fully describes the salient matters required to be
disclosed.

12. The financial statements of the Bank were duly endorsed by the CEO and CFO before
the approval of the Board.
13. The Directors, CEO and Executives do not hold any interest in the shares of the Bank
other than that disclosed in the pattern of shareholding.

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14. The Bank has complied with all the corporate and financial reporting requirements of
the Code.

15. The Board has formed an Audit Committee. It comprises of three members, all of
whom are Non-Executive Directors and the Chairman of the Audit Committee is an
Independent Director.

16. The meetings of the Audit Committee were held at least once every quarter prior to
approval of interim and final results of the Bank and as required by the Code. The
terms of reference of the committee have been formed and advised to the committee
for compliance.

17. The Board has formed a Human Resources and Remuneration Committee. It
comprises of three members; a Non-Executive Director, an Independent Director and
an Executive Director. The Chairman of the committee is a Non-Executive Director.

18. The Board has set up an effective internal audit function comprising of professionals,
who are suitably qualified and experienced for the purpose and are conversant with
the policies and procedures of the Bank.

19. The statutory auditors of the Bank have confirmed that they have been given a
satisfactory rating under the quality control review program of the ICAP, that they or
any of the partners of the firm, their spouses and minor children do not hold shares of
the Bank and that the firm and all its partners are in compliance with the International
Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the
ICAP.

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20. The statutory auditors or the persons associated with them have not been appointed to
provide other services except in accordance with the listing Regulations and the
auditors have confirmed that they have observed IFAC guidelines in this regard.

21. The ‘closed period’, prior to the announcement of interim/ final results and business
decisions, which may materially affect the market price of the Bank’s securities, was
determined and intimated to directors, employees and the stock exchange.

22. Material/price sensitive information has been disseminated among all market
participants at once through the Pakistan Stock Exchange.

23. The Bank has complied with the requirements relating to maintenance of register of
persons having access to inside information by a designated senior management
officer in a timely manner and maintained proper record including basis for inclusion
or exclusion of names of persons from the said list.

24. We confirm that all other material principles included in the Code have been
complied with.

2.2. CORPORATE PROFILE

2.2.1. SHARI’AH BOARD:

• Justice (Ret’d) Maulana Muhammad Taqi Usmani - Holds position of deputy


Chairman of Islamic Fiqh Academy, Jeddah plus chairmanship on the Shariah boards
of a number of leading Islamic Law and Financial Institutions around the globe
including AAOFII, IFSB.

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• Sheikh Essam M. Ishaq – from Bahrain Sheikh Essam M. Ishaq graduated in Political
Science from McGill University, Canada. Associated with Al Baraka Islamic Bank,
Bahrain, Bahrain Development Bank.

• Dr. Muhammad Imran Usmani – is an LLB, M. Phil, and Ph. D in Islamic Finance
and graduated as a scholar from Jamia Darul-Uloom, Karachi where he also
completed a specialization course in Islamic Jurisprudence. He has been teaching at
Jamia Darul-Uloom since 1990 and is also a visiting faculty member at the IBA,
Karachi. Dr. Usmani serves as an Advisor/Member of Shariah Boards of SBP, HSBC,
France; GFG, USA; LTSB Bank, UK; Credit Suisse, Switzerland; Future Growth

Equity, South Africa​.

2.2.2. BOARD OF DIRECTORS:


1. H. E. Sheikh Ebrahim Bin Khalifa Al-Khalifa (Chairman)

2. Mr. Abdullateef A. Al-Asfour (Vice Chairman)

3. Mr. Irfan Siddiqui (President & CEO)

4. Mr. Ariful Islam (Deputy CEO)

2.2.3. STRATEGIC DIRECTION-2015


• 550 branches

• 475 Billion Deposits

• 550 Billion Trade Business

“Establish Islamic Banking as banking of first choice”

2.2.4. Branch Network


Over 550 branches in over 140 cities across Pakistan, Meezan Bank is the largest
Islamic Bank and the 7th largest Bank (in terms of Branch Network) in Pakistan. This
is a milestone that is not only the success story of Meezan Bank but also the
continuing success story of Islamic banking in Pakistan. With this extensive network,

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our existing and potential customers are now closer than ever in benefiting from
Islamic Banking at their doorstep. All branches provide real-time online banking
facilities to customers.
As the first and largest dedicated Islamic bank in Pakistan, Meezan Bank team
continues to build on its Vision of establishing "Islamic Banking as Banking of First
Choice". One of the key objectives of the Bank is to have its footprint strategically
placed throughout the country enabling the public to avail the benefits of
Shariah-compliant Banking in their neighborhood.

The cities in which the Bank presently operates are as follows:

Abbottabad Jhang Peshawar

Ahmedpur East Jhelum Phalia

Arifwala Kabirwala Pir Mahal

Attock Kahror Pacca Pishin

Bahawalnagar Kahuta Qalanderabad

Bahawalpur Kamalia Qilla Saifullah

Bannu Kamoke Quetta

Battagram Karachi Rahim Yar Khan

Burewala Karak Raiwind

Chakwal Kasur Rajanpur

Chaman Khairpur Rashidabad

Charsadda Khan Bela Rawalakot

Chichawatni Khanewal Rawalpindi

Chiniot Khanpur Rawat

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Chishtian Kharian Sadiqabad

Chung Khushab Sahiwal

Dadu Kohat Sakrand

Dadyal Kot Addu Samundri

Daska Kot Radha Kishan Sanghar

Depalpur Kotli Azad Kashmir Sara-e-Alamgir

Dera Ghazi Khan Kunri Sargodha

Dera Ismail Khan Lahore Sawari

Digri Lalamusa Shahdadpur

Dina Larkana Shakargarh

Dinga Layyah Sheikhupura

Dukki Liaquatpur Shikarpur

Dunyapur Lodhran Sialkot

Faisalabad Loralai Sukkur

Fateh Pur Mailsi Swabi

Fort Abbas Mandi Bahauddin Swat

Gaggo Mandi Mansehra Tando Adam

Ghotki Mardan Tando Allahyar

Gilgit Baltistan Mehar Tarlai

Gojra Mian Channu Tando Mohammad


Khan

Gujar Khan Mianwali Taunsa

29
Gujranwala Mirpur Azad Kashmir Taxila

Gujrat Mirpur khas Timergara

Hafizabad Moro Toba Tek Singh

Haripur Multan Umerkot

Haroonabad Muridkay Vehari

Hasilpur Muslim Bagh Wah Cantt

Hassan Abdal Muzaffarabad Wazirabad

Havelian Muzaffargarh Zhob

Hub (Lasbela) Narowal

Hyderabad Nawabshah

Islamabad Nowshera

Jacobabad Okara

Jalalpur Jattan Pabbi

Jampur Pakpattan

Jaranwala Pattoki

2.2.5. The list of Board of Directors of Meezan Bank Limited is as under:


1) Mr. Riyadh S.A.A. Edrees (Chairman)
2) Mr. Faisal A.A.A. Al-Nassar
3) Mr. Bader H.A.M.A. AlRabiah
4) Mr. Rana Ahmed Humayun
5) Mr. Alaa A. Al-Sarawi
6) Syeda Azra Mujtaba
7) Mr. Muhammad Zarrug Rajab

30
8) Mr. Mohammad Abdul Aleem
9) Mr. Noorur Rahman Abid
10) Mr. Talal S.A. Al-Shehab
11) Mr. Irfan Siddiqui (President & CEO)
12) Mr. Ariful Islam (Deputy CEO)

2.2.6. Business Segments:


​ he business segment of Meezan bank are:
T
1. Retail Banking, SME, Commercial and Agriculture (Ijaz Farooq)
2. Treasury and Financial institutions (Muhammad Abdullah Ahmad)
3. Corporate and Investment Banking (Syed Amir)
4. Consumer Finance (Arshad Majeed)

2.2.7. Computerized Working Environment:


In bank all the work is done on computers. All the entries are made in computer.
Balance is fed into the computer. This increases efficiency of the bank. All the
branches are centrally controlled through LAN settings. It helps them to co-ordinate
more easily for making efficient and fastest consumer service.

2.3. MANAGEMENT HIERARCHY

31
2.3.1. MANAGEMENT HIERARCHY IN MAIN BRANCH

32
2.3.2. Hybrid structure:
Because of complex banking environment, Meezan Bank use hybrid type of structure
that has the following characteristics:

2.3.2.1. Function:
● Allows economies of scale that all employees are located in the same place and share
all facilities.
● Enables in-depth knowledge and skill development.
● Enables organization to accomplish functional goals.

2.3.2.2. Divisional:
● Leads to client satisfaction because responsibilities and contact points are clear.

33
● Best in large organization.
● Horizontal
● Promotes flexibility and rapid response to changes in customer needs.
● Promotes a focus on team work and collaboration.
● Direct the attention of everyone toward the delivery of values to the customer.

2.4. Policy Formulation in Pakistan:


The system at Meezan Bank is totally centralized. All the policies are formulated at
the top level and implemented at the middle and lower level. The policies are
formulated at Karachi, which is the main Head Office of MBL. The most important
thing about policy formulation at MBL is that the policies are “dynamic’’ in nature.
These are to be framed according to the macro and micro environmental forces, so
they keep on changing.

2.4.1. Main Categories of Policies:


➢ Functional policies regarding
● Main business areas
● Consumer banking product
● EBBS-the efficient IT system
➢ Managerial policies
➢ Accounting policies

2.4.2. Functional policies:

2.4.2.1. Business Areas in Pakistan:

First of all they have made a policy regarding ‘Business Areas in Pakistan’ which
covers the areas of businessoffered by MBL in Pakistan. The detail of the policy is as
under:

34
● Consumer Banking
● Branch Banking
● Assets Sales
● Corporate and Institutional Banking
● Custody and Clearing Services
● Cash management
● Trade Finance
● Treasury Operations

2.4.3. Managerial policies:


Managerial policies include the following;
● Investment Policies
● Lending Policies
● Profit Rates
● Repayment and Collateral
● Audit and Control
● Servicing Policies
● Personal Policies
● Research and Development Policies
● Marketing Policies
● Recruitment Policies
● Environmental Policy
● Creditor Payment Policy
● Promotional Policies

2.4.4. Accounting policies:


➢ Accounting Convention
➢ Bad and Doubtful Debts

35
➢ Debt Securities, Equity shares and Treasury Bills
➢ Deferred Taxation
➢ Off-balance Sheet Financial Instruments

2.5. Credit Rating


2016 2015

Long term AA AA
Short term A1+ A1+

​The JCR-VIS Credit Rating Company Limited, an affiliate of Japan Credit Rating
Agency, Japan, has reaffirmed the Bank’s long-term entity rating of AA (Double A)
and short-term rating at A1+ (A One Plus) with stable outlook. The short-term rating
of A1+ is the highest standard in short-term rating. The rating indicates sound
performance indicators of the Bank.

36
CHAPTER 4

MARKETING MIX

● Product
● Price
● Place
● Promotion
● Publicity

3. Marketing strategy

An organization's strategy combines all of its marketing goals into one comprehensive
plan. A good marketing strategy should be drawn from market research and focus on

37
the product mix in order to achieve the maximum profit and sustain the business.
The marketing strategy is the foundation of a marketing plan.
“The set of controllable tactical marketing tools that the firm blends to produce
in response to wants in the target market.”
Marketers use numerous tools to elicit desired responses from their targetmarket.
These tools constitute a market mix.
Various elements of marketing strategy are as follows:

➢ Products
➢ Price
➢ Place
➢ Promotion
➢ People
➢ Physical environment
➢ Process

MBL PRODUCTS AND SERVICES

38
39
3.1. Introduction of Products
Types of products offered

➢ Riba Free Meezan Providence


➢ Riba Free - Certificates of Islamic Investment
➢ Riba Free - Monthly Musharakah Certificate
➢ Riba Free - Dollar Saving Account
➢ Riba Free - Rupee Saving Account
➢ Riba Free - Current Accounts
➢ Islamic Agricultural Financing
➢ Car Ijarah - Islamic Car Financing
➢ Labbaik Saving Account
➢ Kid club Account
➢ Teens club account
➢ Business plus accont
➢ Meezan customer ease
➢ Bike Ijarah
➢ Easy Home

Other product offered


● Online Real Time ATM
● Online Real Time Facility
● 24/7 Call Center
● Internet Banking
● Alerts and Notification by E-mail
● Electronic Banking
● Meezan Upaisa
● Takaful Coverage

40
● Meezan Premium Banking
● Online Banking
● Mobile Banking App
● Meezan WebPay
● Meezan VISA Debit Card
● Debit Card
● Meezan ATM Network
● SMS Banking
● SMS Alerts

Islamic mode of finance

1. Musharakah

2. Mudarabah
3. Ijarah

41
3.1.1. Riba

3.1.1.1. Riba Free Meezan Providence:


It is a long-term investment product especially designed for the need and to fulfil the
requirements of the corporate and business concerns for purpose of investing their
provident, pension and Gratuity Funds as any sensible and wise person who wants to
invest his earning, his main concerns would be total security along with the best
returns possible, especially as these earnings or funds are a trust from his employees
and one that bears an important responsibility.

Meana Providence rests on the well-known and solid financial strength of Meana
Bank, which has a strong and credible balance sheet with excellent operating
profitability, including a capital adequacy ratio that has placed the Bank at the top of
the industry.
Furthermore, its sterling track record shows consistently beneficial and highly
competitive returns for their broad range of investors. Finally, comes the benefit of
truly Halal returns, a benefit you may not have had the opportunity to enjoy before
and one that you can now pass on to your employees, many of whom would be
grateful for such an opportunity.

3.1.1.2. Key Features of Meana Providence:

➢ A 100% hill investment in strict compliance with Shariah


➢ High returns
➢ Long Term security ensured

42
➢ Minimum investment amount: PKR 1,000,000
➢ Available tenures of 3, 5 and 7 years.
➢ Pre-mature withdrawal options available

3.1.1.3. Riba –Free-Certificates of Islamic Investment:


This investment product is designed to meet the short term and long-term needs. The
minimum investment is PKR 50,000 and it is available in tenures of 3 and 6 months,
1, 2, 3 and 5 years.

Furthermore, these certificates can be encased at any time without any charge or
penalty, only the profit rates will be adjusted according to the tenure completed. You
can earn profit on your investment on the following basis:

➢ Monthly profit on 1, 2, 3 and 5 years


➢ Quarterly profit on 1, 2, 3 and 5 years
➢ At maturity profit payment for all tenures

In the Riba Free COII, you enter into the Musharakah agreement that is strictly in
conformity with the principles of Islamic Shariah. The deposits of the customers
together with the Bank’s contribution are invested in a pool that consists of Ijarah and
Murabaha financing. The profit/loss on this pool is calculated every month on the
basis of profit sharing ratio determined by assigning weightings. Such weightings are
assigned at the beginning of every month and are displayed on the bank notice board
and website. This facility is available during the course of investment. However,
profit shall be paid only after completion of one month of investment.

3.1.1.4. Riba Free-Monthly Musharakah Certificate:

43
The riba free Monthly Musharakah
Certificates are a flexible investment
product which has been designed to
give the depositor a monthly return
which is Halal. The depositors
participate with the bank in the pool of
investments which is comprised of
Murabaha and Ijarah transactions. The
minimum investment required is
required is only PKR 100,000 and you
receive profit for each complete month
of investment with the bank. The profit
rate, so calculated, is applied to all
investments which mature between the
periods starting from the 6thday of each
month to the 5thday of the next month.
During your relationship with us, you
would be entitled to receiving the
following additional benefits.

1. Personalized cheque books.


2. No restriction on withdrawals.
3. Call centre facilities.
4. Monthly profit payment to your current or saving account with us.
5. Free bank balance certificates
6. Personal financial consultancy services
7. Access to priority desk

44
3.1.1.5. Riba Free-Dollar Saving Account:

With a minimum of only $100 you can open a Dollar Saving Account with us
under a Mudarabah arrangement that is strictly in conformity with the principles of
Islamic Shariah. The return earned on the Mudarabah pool is calculated every month
and the profit ratio for all investors is declared at the beginning of the month. If you
maintain a minimum average monthly balance of $ 500, you shall be eligible to
receive profits that shall be disbursed to you get when they bank with us, we offer the
following additional conveniences to our customers.every month. Apart from first
class service and personalized attention that our customers

➢ Personalized cheque books


➢ No restriction on withdrawals or number of transactions.
➢ Call centre facilities
➢ Monthly profit payment
➢ Free bank balance certificates
➢ Taking stop payment instructions.
➢ Taking hold mail instructions.
➢ Issuance of duplicate statement of account.
➢ Personal financial consultancy services.
➢ Access to priority desk.

3.1.1.6. Riba Free-Rupee Saving Account


With a minimum of only PKR 10,000
THE Rupee Saving Account can be
opened under musharakah agreement.
The profit earned is calculated every
month. And if the client maintains a
monthly balance of PKR 10,000 the

45
client is eligible for the profits that will
be disbursed every month. However,
the clients of COII may open this
account with any minimum balance.

Profit calculation is based on weight ages in the following tiers:


● PKR 10,000 up to PKR 9,999,999
● PKR 10,000,000 up to PKR 49,999,999
● PKR 50,000,000 up to PKR 99,999,999
● PKR 100,000,000 and above

3.1.1.7. Riba Free - Current Account


In this type of account, the client is allowed to deposit or withdraw money as he likes.
He may, thus, deposit or withdraw several times in a day as he likes. Usually the
bank allows this and charges service charges are deducted by the bank from current
deposit account. It gives advantage for paying debts by the convenient and safe means
of sending cheese through the post thus avoiding the trouble and loss.

This bank account that is ideal for businesses and individuals looking for Shariah
compliant banking and ease of access. With a minimum amount of only Rs. 10,000
this product offers you a range of benefits including personalized checking facility, no
restrictions on the number of transactions, free Call Centre facilities, free balance
certificates, priority banking and much more.

3.1.2. Islamic Agricultural Financing:


Meezan Bank is considered as a trend
setter in Islamic Banking in Pakistan

46
mainly on account of offering wide
range of Shariah-Compliant banking
solutions to cater different needs of its
customers. Following its track record,
Meezan Bank is now offering Islamic
Agricultural Financing Products to
farmers.

PMYBL SCHEME:
Under this scheme, financing will be available to the youth of Pakistan under the four
major categories, along with the eligibility criteria:

1. Small Entrepreneur:
Unemployed youth, especially educated ones who are looking for establishing or
extending Shariah compliant business in their personal capacity through establishment
of enterprise.

2. Microenterprise:
Individuals who have successfully completed 3-4 cycles with Akhuwat and want to
graduate from their current business size.

3. Agriculture (Tractor Ijarah):


Young farmers who require Tractor financing.

3.1.3. Car ijarah


3.1.3.1. Car Ijarah –Islamic Car Financing:

47
Car Ijarah is Pakistan's first
"Interest Free" car-financing
based on Islamic financing
mode of Ijarah or Islamic
leasing. This product is ideal for
interest averse individuals,
looking for a car financing that
provides the convenience of a
well-designed product while
avoiding an interest based
transaction. Car Ijarah totally
halal auto finance facility that is
very affordable, with quick
processing and minimal
documentation. Car financing
that is very competitively priced,
hassle-free, and totally Halal.

As Ijarah is basically is the transfer of usufruct of a fixed asset to another person for an
agreed period, at an agreed consideration. Under car Ijarah agreement the car will be given to
the customer for the period agreed on the time of contract. In car Ijarah the asset remains in
the ownership and risk of bank and the customers only pay the rentals for use of the asset:
just like house rent. The product has grown all over the country with a portfolio of Rs 291
million as of 31st December with non-performing contracts.

3.1.3.1.1. Key Features of Car Ijarah:


➢ No application fees

48
➢ Ease of acquiring any new locally assembled car
➢ No upfront Insurance Payment
➢ No advance Rental
➢ Available in tenures of 3, 4 and 5 years

➢ Minimum security deposit as low as 20%

3.1.4. Labbaik saving account:


Meezan Labbaik Saving
Asaan is an ideal deposit
product for you if you are an
individual saver and wish to
save for your spouse, children,
parents, etc. You can take
benefit from this special
Mudarabah based Deposit
account (available in six
months to twenty years plan)
for Umrah & Hajj where you
will also be entitled for profit
on the deposited amount, thus
providing Customers a bigger
incentive to save for
Umrah/Hajj through Meezan
Labbaik Saving Asaan.
Meezan Labbaik Saving
Asaan Account can be opened
by Individuals.

49
3.1.4.1. Key feature:

➢ Minimum deposit required to open an account is Rs. 1,000/-


➢ Labbaik Saving Plan is available for six (06) months to twenty (20) year
➢ Customers can deposit additional amounts in order to complete the deposit amount
and make the desired journey sooner
➢ Customers will deposit monthly contribution as per the deposit schedule plan
➢ After completion of the desired deposit amount, customers will have a right to travel
with Meezan Bank or redeem their funds to go with an alternate company
➢ No pre-mature withdrawal schedule will be applied
➢ Available for individuals, where customers can open a single / joint account with
family members
➢ Customers may redeem 50% of the contribution as per defined procedure, one-time in
the entire deposit tenure
➢ Labbaik Saving Account is a non-chequing account, where no cheque book or VISA
Debit Card will be issued

3.1.5. Kid club saving account:

50
Are you still not 12 years old? Then
Meezan Bank has something very
special for you; a chance of having
your own Mudarabah-based Meezan
Kids Club Account. You can now
put all your pocket money, Eidi and
all your other cash in this account,
where it will be safe and invested in
line with Islamic principles. When
you get this account opened, you
will get to learn a lot more about
managing your savings. We will also
make sure you have fun while
learning to save the right way.

3.1.5.1. Key feature:


➢ Pen your account with Rs 500/- only
➢ Specifically, for kids under the age of 12 years
➢ Exciting gifts on account opening
➢ Halal profit every month
➢ Free personalized “Kids Club Certificate”
➢ Personalized Cheque Book
➢ Free first Visa Debit Card in different colors for boys and girls
➢ Free Online Banking service and Internet Banking facility
➢ SMS alerts on your transactions
➢ Free Takaful Coverage* upto Rs. 1 million in case of an Accidental Death and Free
ATM Takaful Coverage* upto Card Limit *Maintaining a monthly average balance of
Rs 10,000 and above.

51
➢ Upgrade to a Meezan Teens Club Account after your 12th birthday
3.1.6. Teens club account:

Meezan Teens Club Account is a


Mudarabah- based relationship where
you will be the Investor (Rab-ul-Maal)
and the Bank will be the Manager
(Mudarib). Your funds will be utilized
by the Bank to provide Islamic
financing to customers.

Meezan Bank is a keen Socially


Responsible Organization and
realizing this responsibility, the Teens
Club Account aims to provide a forum
to teens where their maturing minds
are groomed in a modern yet Islamic
way. The Teens Club Account
provides a blend of fun learning with
special focus on character and value
building.

3.1.6.1. Key feature:

➢ Open your account with Rs. 1000/- only


➢ Specially for teens of 12 to 18 years of age
➢ Exciting gifts on account opening

52
➢ Halal profit every month
➢ Free personalized “Teens Club Certificate”
➢ Personalized Cheque Book
➢ Free first Visa Debit Card in different colors for boys and girls
➢ Free Online Banking service and Internet Banking facility
➢ SMS alerts on your transactions
➢ Free Takaful Coverage* upto Rs. 1 million in case of an Accidental Death and
Permanent Disability free ATM Takaful Coverage* upto Card Limit*Maintaining a
monthly average balance of Rs 10,000 and above.

3.1.7. Business plus account:

Meezan Business Plus is a


Mudaraba-based account that allows
you to conduct your banking
transactions while availing a wide
range of free services and therefore
provides you the ideal blend of
convenience & flexibility that you
deserve in Islamic banking.
Meezan Business Plus Account can be
opened by Individuals and businesses
including Sole Proprietorships,
Partnerships and Limited Companies.

3.1.7.1. Key feature:


➢ Minimum investment required to open an account is Rs. 100/-

53
➢ There is no restriction on withdrawals or numbers of transactions
➢ Free Cheque books** and free Pay Orders
➢ Free Account Statements**
➢ There is no deduction of service charges if the balance maintained is low
➢ Free Hold Mail Facility
➢ Free SMS alert service
➢ Free Inter City Clearing
➢ Free Takaful Coverage* upto Rs. 1 million in case of an Accidental Death and
permanent Disability free ATM Takaful Coverage* upto Card Limit *Maintaining a
monthly average balance of Rs 10,000 and above.
➢ Withdraw money as many times as you need in a single day

3.1.8. Meezan Consumer Ease:

Durable Goods Financing is first ever


Shariah-compliant limit based financing
facility, which allows customers to purchase
laptops, generators and various consumer
durable items such as LED TVs, air
conditioners, washing machines, mobile
phones etc. on easy and affordable monthly
installments. A one -time limit approval
makes the process simple and hassle-free for
the customer, making him/her eligible for
multiple financing facilities for Riba-free
goods. The Consumer Ease products are
based on Shariah concept of Musawamah,
which is a general and regular kind of sale.

54
3.1.9. Bike Ijarah:

Based on Ijarah principle, Meezan Bike


Ijarah is a Shariah-compliant solution
under which the Bank purchases the
bike and rents it out to the customer for
a period of 1 to 3 years, agreed at the
time of the contract. Rental payments
start after delivery of vehicle to the
customer. The facility includes full
comprehensive Takaful cover as well.

3.1.10. Easy home:

Based on the principle of Diminishing


Musharakah, Easy Home is a
Shariah-compliant home financing
facility, in which a customer can buy
or build a house, renovate an existing
house or replace the conventional
house loan with Easy Home facility.
With flexible financing tailored to
support the customer's need, Meezan
Easy Home provides one of the best
home financing options in the country

55
with a hassle-free process and a quick
turn-around time.

3.1.11. OTHER PRODUCTS OFFERED

3.1.11.1. On line Real Time ATM:

Free ATM Card

● Per Day Limit of PKR 20K


● Rs 15 charges for use of other ATM Network
● Acceptable at all ATM outlets
● Debit card at Orix out lets (PKR 50k/Day)

3.1.11.2. On line Real Time Facility:


● Absolutely free from all branches of MBL
● Collection of Cheques absolutely free
● Available to PKR current, saving & Karobari Munafa acc.
● Mon - Sat9-5
● Friday9-12-30 & 3-5
● Saturday9-12-30

3.1.11.2. 24/7 Call Center:

24/7 call center provides you access to a wide range of Tele-banking solutions and
personalized banking service.

3.1.11.2.1. Key Features:

● Check account balances


● Instruct issuance of pay orders and demand drafts
● Transfer funds between your own accounts

56
● 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)

3.1.11.3. Internet Banking:

Internet Banking allow to have access to accountsregardless of where they may be in


the world.

3.1.11.3.1. 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

3.1.11.4. Alerts and Notification by E-mail:

● Low/High balance alert


● Credit/Debit transaction alert
● Request resolution alert
● Complaint resolution alert

57
3.1.11.5. Future Features:

● Alerts by SMS/Fax
● Utility bill payments
● Interbank funds transfers
● Payment to nominated accounts at MBL
● Standing orders for repeated payment.

3.1.11.6. Electronic Banking:

Electronic Banking provides non-stop banking convenience, twenty-four hours a day,


seven days a week.

● Visa Debit Card


● Internet Banking

● ATM Network

● Meezan Quickpay

● SMS Alerts

● 24/7 Call Center

3.1.11.7. Meezan Upaisa:

Meezan Upaisa is a joint venture of Ufone and Meezan Bank and is the world’s first
Islamic Branchless Banking platform that enables customers to send money, perform
bill payments and top-up transactions through Shariah-compliant banking system. The

services include the​ ​following key features:

■ ​Sending Money - Meezan Upaisa offers send money transaction to its customers
with competitive pricing. Customers just need to present their Original CNIC to send
money to any person pan Pakistan.

58
■ ​Bill Payments - Customers can pay their utility, internet bills at any Meezan Upaisa
Retailerwithout any extra charges.

■ ​Top Ups - Customers can top up their mobile credits for any teleco of their choice.
In addition, postpaid bills can also be paid through Meezan Upaisa Retailers and is
supported by a digital receipt of the transaction performed.

3.1.11.8. Takaful Coverage:

In line with its customer focused strategy, Meezan Bank is offering takaful coverage
to all of its account holders in case of accidental death or permanent disability.
customers maintaining an average monthly balance of Rs. 10,000 and above, are
entitled to a Takaful cover of upto Rs. 1 million. In addition, ATM cash withdrawal
Takaful Coverage, on the amount withdrawn from any ATM, is offered to all the
account holders, in case money is snatched within the radius of 1.5 kms and 30
minutes.

3.1.11.9. Meezan Premium Banking:

Meezan Premium Banking is the Bank’s Shariah-compliant priority banking service


developed to address the needs of high net worth customers. Premium Banking
customers enjoy special privileges such as:

■ Meezan Visa Platinum Debit Card - a very prestigious card, offering discounts at
selected retail outlets and restaurants across the country.

■ Access to International CIP lounges at Karachi, Lahore, Islamabad, Multan and


Sialkot airports.

■ Dedicated Premium Banking Centres at Karachi, Lahore, Islamabad, Sialkot and


Faisalabad.

■ Premium Phone Banking-a dedicated Call Centre exclusively for Premium Banking
customers.

■ Fee waivers on selected banking services. Online Banking

59
3.1.11.10. Online Banking:

Meezan Bank offers free Online Banking facility on all Pak Rupee accounts to its
Online Banking customers. This enables the Bank’s customers to access their
accounts and conduct banking transactions from any of Meezan Bank's 571 branches
nationwide, regardless of which branch or city they have their account in. This facility
provides great convenience for depositing and withdrawing cash, making pay orders
and availing numerous other banking services.

Transfer Funds Pay Utility Bills View last 8 transactions Check Account Balances
top-up Mobile Phones And more Download the App FREE!

3.1.11.11. Mobile Banking App:

Designed for the customer on the move, the app is available to download through
Google Play and Apple App Stores. Compatible with all major Android and iOS
versions, the App allows customers to view account activity view transactions date
wise, pay bills, top-up mobile phone credits, transfer funds and block/unblock cards in
a fast, convenient and a secure way.

3.1.11.12. Meezan WebPay:

Shopping has never been more convenient than with Meezan WebPay. The service
allows all Debit Card holders to shop and purchase with online retailers over the
internet. With POS equivalent limits customer enjoys the freedom​ ​to transact.

3.1.11.13. Meezan VISA Debit Card

Meezan VISA Debit Card provides convenience to customers to access their money
anytime and anywhere, at all outlets and ATMs displaying the VISA symbol. Meezan
VISA Debit Card is accepted at more than 30 million retail outlets and 2.3 million
ATMs worldwide. The new NFC based payment capability on our VISA Debit Cards
allows customers to pay for any transaction on the go by just tapping the card at the

60
merchant counters accepting NFC payments. Equipped with an EMV chip, the cards
provide advanced security and greater convenience. User Guide Terms and
Conditions Mini Statement Prepaid Mobile Phone Airtime Purchase Postpaid Mobile
Bill Payment IBFT (Inter Bank Funds Transfer) Cash Withdrawal Utility Bill
Payment MasterCard

111-331-331 & 111-331-332 www.meezanbank.com

3.1.11.14. Meezan MasterCard Titanium

3.1.11.14.1. Debit Card:


Meezan MasterCard Titanium Debit Card is the first Titanium debit card launched in
Pakistan. The debit card comes packed with benefits for the frequent traveler offering
free access to airport lounges across the Middle East, coupled with a wide array of
exclusive offers and discounts within Pakistan and worldwide.

3.1.11.14.2. Meezan ATM Network:


Meezan Bank offers a nationwide network of over 550 ATMs located at its branches
and at prominent off-site locations across the country. The Bank also offers access to
more than 8,000 ATM locations country-wide via 1Link and MNET networks.

3.1.11.14.3. SMS Banking:


Meezan SMS Banking is an interactive service that allows our customers to access
their account on demand anytime, anywhere from their mobile phone. It's not only
simple and easy but also free to use.

3.1.11.14.4. SMS Alerts:


Meezan Bank's SMS Alerts service keeps customers informed about activities in their
accounts; enabling them to keep track of their financial transactions. Once customer
signs up for SMS Alerts, he/she will receive an SMS whenever there is a debit or

61
credit transaction in their account. Meezan SMS provides transaction details along
with latest account balance.

3.1.11.15. Type of Accounts:

Meezan Bank offers the largest range of Riba-free Deposit Accounts for Personal
Banking.

3.1.11.15.1. Local Currency Accounts:


➢ Rupee Current Account - A Convenient, Secure and Stable Deposit Account
➢ Rupee Savings Account - Ensuring Truly Halal Savings with Comprehensive Returns
➢ Meezan Bachat Account - The convenience of a Saving Account with Halal Profit
➢ Labbaik Saving Aasaan - A specialized Saving Account designed to save for Umrah
& Hajj
➢ Business Plus Account - Serving you the perfect blend of convenience and flexibility
➢ Meezan Kids Club Account - Specialized saving account for kids under the age of 12
years
➢ Meezan Teens Account - Mudarabah based saving account specifically for teens
➢ Meezan Asaan Current Account - A Convenient, Secure and Stable Deposit Account
➢ Meezan Asaan Savings Account - Ensuring Truly Halal Savings with Comprehensive
Returns

3.1.11.15.2. Foreign Currency Accounts:


➢ Dollar Current Account - A Truly Halal Dollar Current Account
➢ Dollar Saving Account - A Truly Halal Dollar Saving Account
➢ Euro Current Account - A Truly Halal Euro Current Account
➢ Euro Saving Account - A Truly Halal Euro Saving Account
➢ Pound Current Account - A Truly Halal Pound Current Account
➢ Pound Saving Account - A Truly Halal Pound Saving Account

3.1.11.16. Procedure of opening Account:

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The procedure of opening the account is as given under for account ​Mis Maria Raza
proved so helpful to me to learn that opening of an account and its all procedure
which is as under: For opening of an account there are different types of account
holders are required for all these types. The operation/procedure requirement that is
needed for “Individual Account” differs greatly from the “Joint Accounts”
proprietorship A/C, Partnership A/C, Private Limited Company A/C and Public
Limited Company A/C.

3.1.11.16.1. Individual’s Account:


When a single man or woman opens an account in his or her own name and has the
right to operate it is called individual A/C.

3.1.11.16.2. Documentation:
➢ Copy of National Identity Card.
➢ Proof of Income
➢ Proper Identification (Introduction).

3.1.11.16.3. Operations:
● The person place in the type of account and type of operation required in the account
opening form.
● He/she fills in part 1 of the form a fix his/her either two of four similar signature ( or
thumb expression in the signature space ) and get it introduced and signed by a person
who already has an account with the bank and write his account number in the
specific rows in a specific space.
● The person fills his or her father, mother, husband/wife or any other relative’s name
his/her address, phone number, his or her sign to certify this requirement. This
requirement is needed because in his/her absence bank can have correspondence with
a specific person.

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● The person deposits the initial amount for opening account onto the cash counter. The
person put his signature on form on two places in “authorized Signature” and fills in
the “Title of Account” space by writing his name.
● If the person put his signature in Urdu or any other language other than English he
signed a “Vernacular Form”.
● If the person has changed its signature then he must have to sign the “signature
change
● undertaking”.
● The next step is entering in computer because the centralized account
opening structure and generation of account number.

3.1.11.16.4. Account Opening Form:


First of all the customer fills the account opening form (AOF). Filling of account
opening form includes type of account, currency of account, name, and address,
signature of customer and signature of introducer and attach a photocopy of national
identity card. He also signs an undertaking that he will follow the rules and
regulations of the bank.

3.1.11.17. Introduction:
The signature and account number of the account holder introducing the account to
the new person is obtained on the account opening form.

3.1.11.17.1. Specimen Signature Card:


The signature of the client is obtained on a specimen signature card (S.S Card). The
card is obtained with two signatures from the customer. Every time a cheque is
received for payment from the client the signature on the cheque is verified by
comparing it with S.S Card.

3.1.11.17.2. Requisition slip:


A requisition slip for Cheque book is also given to the customer. The customer fills it
and gives it to the account opening Officer.

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3.1.11.17.3. Know Your Customer Form:
Every account holder fills this form. The basic purpose of this form is to get some
basic information about the customer’s business and source of incomes.

3.1.11.17.4. Account Number:


When all the formalities are completed an account, number is allotted to the customer
and all the information is entered into the computer and register. Then that account
number is written on S.S Card and account opening form.

3.1.11.17.5. Depositing of amount in account:


The client deposit cash in the account. For this purpose, cash pay-in-slip is used. The
minimum initial deposit is fixed for each account according to the nature of account.
For example, for PLS saving account the minimum requirement is Rs.100 only.

3.1.11.17.6. Issuance of a Cheques Book:


After opening an account with the bank the account holder makes a request in the
name of the bank for the issuance of a Cheque book. Such a request is known as
Requisition Slip. BAL issues Cheque books from 10 leaves to 50 leaves. When he
used this book completely then he can apply for another known as subsequent Cheque
Book. This process takes a day because the Cheque books come from the Karachi
head office.

3.1.11.17.7. Entry of Cheques Book:


Before issuance of a Cheque book the bank stamp every leaf with the account number
of the customer enter it in the cheque book register and computer and issues the
cheque book to the customer after his signature on the register.

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3.1.11.17.8. Letter of Thanks:
A letter of thanks is prepared. One letter is for the customer and one for the
introducer. One copy is send to the customer and the other copy is kept in the record
along with other documents.

3.1.11.17.9. Amendments/Changes in Accounts:


BAL provides the facility of amendments in accounts, whenever required by the
customers. Account holder gives an application along with necessary documents to
the bank. Then the amendments are made in the account of the depositor. These
amendments can be made by filling certain application forms. These forms are as
follows:

3.1.11.17.9.1. Change of Address Form:


To change the address of the account holder.

3.1.11.17.9.2. Change of signature form:


To change the signatures of the customer.

3.1.11.17.9.3. Liability / Inquiry Form:


This form is used if some person has acquired loan from the bank and he wants to
close his current account then he fills this form and this form is send to credit
department. When the credit department declares him free from any debt obligations
then his account is closed.

3.1.11.17.9.4. Mandate To The Third Party To Operate The Account:


This form is used to enable any third party to operate the account.

3.1.11.18. Closing of Accounts:


The procedure of closing of account is as follows.
1. .First of all the customer gives the request to close the account.
2. His signatures are verified.

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3. He withdraws all his money from his account but in case of current account Rs. 150 is
deducted as a charge of closing the account.
4. A liability form is send to the credit department if he has taken a loan from the bank.
If he is cleared from all the liabilities then further proceeds are taken.
5. Permission is granted by the authorized person (the manager).
6. Account is closed in the computer system.
7. His specimen signature card is attached with the account opening form and marked
closed.

3.1.12. Islamic Mode of Financing:


These modes of financing have been written by Maulana Taqi Usmani who is the
former Chairman of Shariah board of Meezan Bank. After studying these we will be
in a position to understand the 90% working of the bank. The important modes of
financing are:

1. Musharakah

2. Mudarabah
3. Ijarah

3.1.12.1. Musharakah:
Hadees-e-Qudsi:
Allah Subhan-o-Tallah has declared that He will become a partner in a business
between two Mushariks until they indulge in cheating or breach of trust ​(Khayanah).

3.1.12.1. Introduction:
i. 'Musharakah' is a word of Arabic origin which literally means sharing. In the context
of business and trade it means a joint enterprise in which all the partners share the
profit or loss of the joint venture. It is an ideal alternative for the interest-based

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financing with far reaching effects on both production and distribution. In the modern
capitalist economy, interest is the sole instrument indiscriminately used in financing
of every type. Since Islam has prohibited interest, this instrument cannot be used for
providing funds of any kind. Therefore, 'Musharakah' can play a vital role in an
economy based on Islamic principles.

3.1.12.1.2. Difference between Interest and Musharakah:


Interest' predetermines a fixed rate of return on a loan advanced by the financier
irrespective of the profit earned or loss suffered by the debtor, while Musharakah does
not envisage a fixed rate of return. Rather, the return in Musharakah is based on the
actual profit earned by the joint venture. The financier in an interest-bearing loan
cannot suffer loss while the financier in Musharakah can suffer loss, if the joint
venture fails to produce fruits. Islam has termed interest as an unjust instrument of
financing because it results in injustice either to the creditor or to the debtor. If the
debtor suffers a loss, it is unjust on the part of the creditor to claim a fixed rate of
return; and if the debtor earns a very high rate of profit, it is injustice to the creditor to
give him only a small proportion of the profit leaving the rest for the debtor.

3.1.12.1.3. The Concept of Musharakah:


“Musharakah” is a term frequently referred to in the context of Islamic modes of
financing. The connotation of this term is a little limited than the term "Shirkah"
more commonly used in the Islamic jurisprudence. For the purpose of clarity in the
basic concepts, it will be pertinent at the outset to explain the meaning of each term,
as distinguished from the other.

"Shirkah" means "Sharing" and in the terminology of Islamic Fiqh, it has been
divided into two kinds:

3.1.12.1.4. Some objections on Musharakah Financing


1) Risk of Loss

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2) Dishonesty
3) Secrecy of the Business
4) Clients' Unwillingness to Share Profits
Let us now examine some objections raised from practical point of view against using
Musharakah as a mode of financing.

3.1.12.1.5. Risk of Loss:


It is argued that the arrangement of musharakah is more likely to pass on losses of the
business to the financier bank or institution. This loss will be passed on to depositors
also. The depositors, being constantly exposed to the risk of loss, will not want to
deposit their money in the banks and financial institutions and thus their savings will
either remain idle or will be used in transactions outside of the banking channels,
which will not contribute to the economic development at national level. This
argument is, however, misconceived.

Before financing on the basis of musharakah, the banks and financial institution will
study the feasibility of the proposed business for which funds are needed. Even in the
present system of interest-based loans the banks do not advance loans to each and
every applicant. They study the potentials of the business and if they apprehend that
the business is not profitable, they refuse to advance a loan. In the case of
musharakah, they will have to carry out this study with more depth and precaution.
Moreover, no bank or financial institution can restrict itself to a single musharakah.

There will always be a diversified portfolio of musharakah. If a bank has financed 100
of its clients on the basis of musharakah, after studying the feasibility of the proposal
of each one of them, it is hardly conceivable that all of these Musharakah or the
majority of them will result in a loss. After taking proper measures and due care,
what can happen at the most is that some and them make a loss. But on the other
hand, the profitable Musharakah are expected to give more return than the

69
interest-based loans, because the actual profit is supposed to be distributed between
the client and the bank. Therefore, the Musharakah portfolio, as a whole, is not
expected to suffer loss, and the possibility of loss to the whole portfolio is merely a
theoretical possibility which should not discourage the depositors. This theoretical
possibility of loss in a financial institution is much less than the possibility of loss in a
joint stock company whose business is restricted to a limited sector of commercial
activities. Still, the people purchase its shares and the possibility of loss does not
refrain them from investing in these shares. The case of the bank and financial
institutions is much stronger, because their Maharajah activities will be so diversified
that any possible loss in one Musharakah will be more than compensated by the
profits earned in other Musharakah.

Apart from this, 'an Islamic economy must create a mentality which believes that any
profit earned on money is the reward of bearing risks of the business. This risk may
be minimized through expertise and diversifying the portfolio where it becomes a
hypothetical or theoretical risk only. But there is no way to eliminate this risk totally.
The one, who wants to earn profit, must accept this minimal risk. Since this
understanding is already there in the case of normal joint stock companies, nobody
has ever raised the objection that the money of the shareholders is exposed to loss.
The problem is created by the system which separates the banking and financing from
the normal trade activities, and which has Compelled the people to believe that banks
and financial institutions deal in money and papers only, and that they have nothing to
do with the actual results emerging in trade and industry. Therefore, it is argued that
they deserve a fixed return in any case. This separation of financing sector from the
sector of trade and industry has brought great harms to the economy at macro-level.
Obviously, when we speak of Islamic banking, we never mean that it will follow this
conventional system in each and every respect. Islam has its own values and
principles which do not believe in separation of financing from trade and industry.
Once this Islamic system is understood, the people will invest in the financing sector,

70
despite the theoretical risk of loss, more readily than they invest in the profitable joint
stock companies.

3.1.12.1.6. Dishonesty:
Another apprehension against Musharakah financing is that the dishonest clients may
exploit the instrument of Musharakah by not paying any return to the financiers. They
can always show that the business did not earn any profit. Indeed, they can claim that
it has suffered a loss in which case not only the profit, but also the principal amount
will be jeopardized. It is, no doubt, a valid apprehension, especially in societies
where corruption is the order of the day. However, solution to this problem is not as
difficult as is generally believed or exaggerated.

If all the banks in a country are run on pure Islamic pattern with a careful support
from the Central Bank and the government, the problem of dishonesty is not hard to
overcome. First of all, a well-designed system of auditing should be implemented
whereby the accounts of all the clients are fully maintained and properly controlled. It
is already discussed that the profits may be calculated to the basis of gross margins
only. It will reduce the possibility of disputes and misappropriation. However, if any
misconduct, dishonesty or negligence is established against a client, he will be
subjected to punitive steps, and may be deprived of availing any facility from any
bank in the country, at least for a specified period.

These steps will serve as strong deterrent against concealing the actual profits or
committing any other act of dishonesty. Otherwise also, the clients of the banks
cannot afford to show artificial losses constantly, because it will be against their own
interest in many respects. It is true that even after taking all such precautions, there
will remain a possibility of some cases where dishonest clients may succeed in their
evil designs, but the punitive steps and the general atmosphere of the business will
gradually reduce the number of such cases (Even in an interest-based economy, the
defaulters have always been creating the problem of bad debts) But it should not be

71
taken as a justification, or as an excuse, for rejecting the whole system of maharajah.
Undoubtedly, the apprehension of dishonesty is more severe for the Islamic Banks
and Financial institutions working in isolation from the main stream of conventional
banks. They have not much support from their respective governments and central
Banks. They cannot change the system, nor can they impose their own laws and
regulations. However, they should not forget that they are not just commercial
institutions. They have been established to introduce a new system of banking which
has its own philosophy. They are duty bound to promote this new system, even if they
apprehend that it will reduce the size of their profits to some extent. Therefore, they
should start using the instrument of musharakah, at least on a selective basis. Each
and every bank has a number of clients whose integrity is beyond all doubts. The
Islamic banks should, at least, start financing them on the basis of true musharakah. It
will help setting good precedents in the market and induce others to follow suit.
Moreover, there are some sectors of financing where musharakah can be used easily.

3.1.12.1.6.1. For example:


The use of musharakah instrument in financing exports has not much room for
dishonesty. The exporter has a specific order from abroad. The prices are agreed. The
cost is not difficult to determine. Payments are normally secured by a letter of credit.
The payments are made through the bank itself. There is no reason in such cases why
the musharakah arrangement should not be adopted. Similarly, financing of imports
may also be designed on the basis of musharakah with some precautions, as explained
earlier in this chapter.

3.1.12.1.7. Secrecy of the Business:

Another criticism against musharakah is that, by making the financier a partner in the
business of the client, it may disclose the secrets of the business to the financier, and
through him to other traders.

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However, the solution to this problem is very easy. The client, while entering into the
musharakah, may put a condition that the financier will not interfere with the
management affairs, and he will not disclose any information about the business to
any person without prior permission of the client. Such agreements of maintaining
secrecy are always honored by the prestigious institutions, especially by the banks and
financial institutions whose entire business is based on confidentiality.

3.1.12.1.8. Clients' Unwillingness to Share Profits:

Many a time, it is mentioned that the clients are not willing to share with the Banks
the actual profits of their business. The reluctance is based on two reasons:

1. They think that the bank has no right to share in the actual profit, which may be
substantial, because the bank has nothing to do with the management or running of
the business and why they should (the clients) share the fruit of their labor with the
Bank who merely provides funds. The Clients also argue that conventional banks are
content with a meager rate of interest and so should be the Islamic Banks.

2. Even if the above was not a factor, the Clients are afraid to reveal their true profits to
the Banks, lest the information is also passed on to the tax authorities and Clients' tax
liability increases. The solution to the first part, though not easy, is not difficult or
impossible either. Such Clients need to be convinced and persuaded that borrowing on
interest is a cardinal sin, unless there is a dire necessity for such borrowing. Mere
expansion of business is not a dire need, by any stretch of imagination. By making a
legitimate arrangement for obtaining funds for their business, by way of Musharakah,
not only do they earn Allah's pleasure but also a legitimate return for themselves, as
well as for the Islamic Banks.

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3. In respect of the second factor, all that can be said is that in some Muslim countries,
rate of taxation is indeed prohibitive and unjust. Islamic Banks as well as their
Clients must lobby with the governments and struggle to change the laws which
hamper the progress towards Islamic banking. The governments should also try to
appreciate the fact that if rates of taxation are reasonable and if the tax-payers are
convinced that they will benefit by honestly paying their taxes, this would increase,
and not decrease, government revenues.

3.1.12.1.9. Termination of Musharakah:

Musharakah is deemed to be terminated in any one of the following events:

1. Every partner has a right to terminate the musharakah at any time after giving his
partner a notice to this effect, whereby the musharakah will come to an end. In this
case, if the assets of the musharakah are in cash form, all of them will be distributed
pro rata between the partners. But if the assets are not liquidated, the partners may
agree either on the liquidation of the assets, or on their distribution or partition
between the partners as they are. If there is a dispute between the partners in this
matter i.e. one partner seeks liquidation while the other wants Partition or distribution
of the non-liquid assets themselves, the latter shall be preferred, because after the
termination of musharakah, all the assets are in the joint ownership of the partners,
and a co-owner has a right to seek partition or separation, and no one can compel him
on liquidation. However, if the assets are such that they cannot be separated or
partitioned, such as machinery, then they shall be sold and the sale-proceeds shall be
distributed.

2. If any one of the partners dies during the currency of musharakah, the contract of
musharakah with him stands terminated. His heirs in this case, will have the option

74
either to draw the share of the deceased from the business, or to continue with the
contract of musharakah.

3. If any one of the partners becomes insane or otherwise becomes incapable of effecting
commercial transactions, the musharakah stands terminated.

Termination of Musharakah without closing the business If one of the partners wants
termination of the musharakah, while the other partner or partners like to continue
with the business, this purpose can be achieved by mutual agreement. The partners
who want to run the business may purchase the share of the partner who wants to
terminate his partnership, because the termination of musharakah with one partner
does not imply its termination between the other partners.

However, in this case, the price of the share of the leaving partner must be determined
by mutual consent, and if there is a dispute about the valuation of the share and the
partners do not arrive at an agreed price, the leaving partner may compel other
partners on the liquidation or on the distribution of the assets themselves.

The question arises whether the partners can agree, while entering into the contract of
the musharakah, on a condition that the liquidation or separation of the business shall
not be affected unless all the partners, or the majority of them wants to do so, and that
a single partner who wants to come out of the partnership shall have to sell his share
to the other partners and shall not force them on liquidation or separation.

Most of the traditional books of Islamic Fqih seem to be silent on this question.
However, it appears that there is no bar from the Shariah point of view if the partners
agree to such a condition right at the beginning of the musharakah. This is expressly
permitted by some Hanbali jurists. This condition may be justified, especially in the
modern situations, on the ground that the nature of business, in most cases today,

75
requires continuity for its success, and the liquidation or separation at the instance of a
single partner only may cause irreparable damage to the other partners.

4. If a particular business has been started with huge amounts of money which has been
invested in a long-term project, and one of the partners seeks liquidation in the
infancy of the project, it may be fatal to the interests of the partners, as well as to the
economic growth of the society, to give him such an arbitrary power of liquidation or
separation.

3.1.12.2. Murabaha:
3.1.12.2.1. Introduction:

Most of the Islamic banks and financial institutions are using "Murabaha" as an
Islamic mode of financing, and most of their financing operations are based on
"Murabaha". That is why this term has been taken in the economic circles today as a
method of banking operations, while the original concept of "Murabaha" is different
from this assumption.

"Murabaha" is, in fact, a term of Islamic Fiqh and it refers to a particular kind of sale
having nothing to do with financing in its original sense. If a seller agrees with his
purchaser to provide him a specific commodity on a certain profit added to his cost, it
is called a “Murabaha" transaction. The basic ingredient of "Murabaha" is that the
seller discloses the actual cost he has incurred in acquiring the commodity, and then
adds some profit thereon. This profit may be in lump sum or may be based on a
percentage.

1. Some Basic Rules of Sale:


'Sale' is defined in Shariah as 'the exchange of a thing of value by another thing
of value with mutual consent'​. Islamic jurisprudence has laid down enormous rules
governing the contract of sale, and the Muslim jurists have written a large number of
books, in a number of volumes, to elaborate them in detail. What is meant here is to

76
give a summary of only those rules which are more relevant to the transactions of
Murabaha as carried out by the financial institutions.
1. The subject of sale must be existing at the time of sale. Thus, a thing which has not
yet come into existence cannot be sold. If a non-existent thing has been sold, though
by mutual consent, the sale is void according to Shariah.
​Example​: A sells the unborn calf of his cow to B. The sale is void.
2. The subject of sale must be in the ownership of the seller at the time of sale. Thus,
what is not owned by the seller cannot be sold. If he sells something before acquiring
its ownership, the sale is void.
Example​: A sells to Be a car which is presently owned by C, but A is hopeful that he
will buy it from C and shall deliver it to B subsequently. The sale is void, because the
car was not owned by at the time of sale.

2. Some Basic Mistakes in Murabaha Financing


After explaining the concept of Murabaha and its relevant issues, it will be pertinent
to highlight some basic mistakes often committed by the financial institutions in the
practical implementation of the concept.

1. The first and the most glaring mistake is to assume that Murabaha is a universal
instrument which can be used for every type of financing offered by conventional
interest-based banks and NBFIs. Under this false assumption, some financial
institutions are found using Murabaha for financing overhead expenses of a firm or
company like paying salaries of their staff, paying the bills of electricity etc. and
setting off their debts payable to other parties. This practice is totally unacceptable,
because Murabaha can be used only where a commodity is intended to be purchased
by the customer. If funds are required for some other purpose, Murabaha cannot
work. In such cases, some other suitable modes of financing, like musharakah, leasing
etc. can be used according to the nature of the requirement.

2. In some cases, the clients sign the Murabaha documents merely to obtain funds. They
never intend to employ these funds to purchase a specific commodity. They just want

77
funds for unspecified purpose, but to satisfy the requirement of the formal documents,
they name a fictitiously commodity. After receiving money, they use it for whatever
purpose they wish. Obviously, this is a fictitious deal, and the Islamic financiers
must be very careful about it. It is their duty to make sure that the client really intends
to purchase a commodity which may be subject to Murabaha. This assurance must be
obtained by the authorities sanctioning the facility to the customer. Then, all
necessary steps must be taken to confirm that the transaction is genuine.

3.1.12.2.3.1. For example:


1. Instead of giving funds to the customer, the purchase price should be paid directly to
the supplier.
2. If it becomes necessary that the client is entrusted with funds to purchase the
commodity on behalf of the financier, his purchase should be evidenced by invoices
or similar other documents which he should present to the financier.
3. Where either one of the above two requirements is not possible to be fulfilled, the
financing institution should arrange for physical inspection of the purchased
commodities.
4. Anyhow, the Islamic financial institutions are under an obligation to make sure that
Murabaha is a real and genuine transaction of actual sale and is not being misused to
camouflage an interest-based loan.
5. In some cases, sale of commodity to the client is affected before the commodity is
acquired from the supplier. This mistake is invariably committed in transactions
where all the documents of Murabaha are signed at one time without taking into
account various stages of the Murabaha. Some institutions have only one Murabaha
agreement which is signed at the time of disbursement of money, or in some cases, at
the time of approving the facility. This is totally against the basic principles of
Murabaha. It has already been explained in this article that the Murabaha
arrangement practiced by the banks is a package of different contracts which come

78
into play one after another at their respective stages. These stages have been fully
highlighted earlier while discussing the concept of 'Murabaha Financing'. Without
observing this basic feature of Murabaha financing, the whole transaction turns into
an interest-bearing loan. Merely changing the nomenclature does not make it lawful
in the eyes of Shariah.

6. The representatives of the Shariah Boards of the Islamic banks, when they check the
transactions of the bank with regard to their compliance with Shariah, must make sure
that all these stages have been really observed, and every transaction is affected at its
due time.

7. International commodity transactions are often resorted to for liquidity management.


Some Islamic banks feel that these transactions, being asset-based, can easily be
entered into on Murabaha basis, and they enter the field ignoring the fact that the
commodity operations as in vogue in the international markets, do not conform to the
principles of Shariah. In many cases, they are fictitious transactions where no
delivery takes place. The parties end up paying differences. In some cases, there are
real commodities but they are subjected to forward sales or short sales which are not
allowed in Shariah. Even if the transactions are restricted to spot sales, they should be
formulated on the basis of Islamic principles of Murabaha by fulfilling all the
necessary conditions already mentioned in this book.
8. It is observed in some financial institutions that they affect Murabaha on commodities
already purchased by their clients from a third party. This is again a practice never
warranted by the Shariah. Once the commodity is purchased by the client himself, it
cannot be purchased again from the same supplier. If it is purchased by the bank from
the client himself and is sold to him, it is a buy-back technique which is not allowed
in Shariah, especially in Murabaha. In fact, if the client has already purchased a
commodity, and he approaches the bank for funds, he either wants to set-off his
liability towards his supplier, or he wants to use the funds for some other purpose. In

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both cases an Islamic bank cannot finance him on the basis of Murabaha. Murabaha
can be affected only on commodities not yet purchased by the client.
3.1.12.2.4. Uses of Murabaha
Murabaha can be used in following conditions​:
Short / Medium / Long Term Finance for:
➢ Raw material
➢ Inventory
➢ Equipment
➢ Asset financing
➢ Import financing
➢ Export financing (Pre-shipment)
➢ Consumer goods financing
➢ House financing
➢ Vehicle financing
➢ Land financing
➢ Shop financing
➢ PC financing

3.1.12.3. Ijarah:
​"Ijarah" is a term of Islamic fiqh. Lexically, it means ‘to give something on rent'. In
the Islamic jurisprudence, the term ‘Ijarah' is used for two different situations. In the
first place, it means ‘to employ the services of a person on wages given to him as a
consideration for his hired services."The employer is called 'mushaira' while the
employee is called 'ajar'.

Therefore, if A has employed B in his office as a manager or as a clerk on a monthly


salary, A is musta‟jir, and B is an ajir. Similarly, if A has hired the services of a

80
porter to carry his baggage to the airport, A is a musta‟jir while the porter is an ajir,
and in both cases the transaction between the parties is termed as Ijarah. This type of
Ijarah includes every transaction where the services of a person are hired by someone
else. He may be a doctor, a lawyer, a teacher, a labor or any other person who can
render some valuable services. Each one of them may be called an ‘ajir’ according to
the terminology of Islamic law, and the person who hires their services is called a
‘musta‟jir', while the wages paid to the ajir are called their 'ujrah'.

The second type of Ijarah relates to the usufructs of assets and properties, and not to
the services of human beings. 'Ijarah’ in this sense means ‘to transfer the usufruct of a
particular property to another person in exchange for a rent claimed from him.' In this
case, the term 'Ijarah' is analogous to the English term 'leasing'. Here the lessor is
called 'Mu‟jir', the lessee is called 'musta‟jir' and the rent payable to the lessor is
called 'ujrah'

Both these kinds of 'Ijarah' are thoroughly discussed in the literature of Islamic
jurisprudence and each one of them has its own set of rules. But for the purpose of the
present book, the second type of Ijarah is more relevant, because it is generally used
as a form of investment, and as a mode of financing also.

The rules of Ijarah, in the sense of leasing, are very much analogous to the rules of
sale, because in both cases something is transferred to another person for a valuable
consideration. The only difference between Ijarah and sale is that in the latter case the
corpus of the property is transferred to the purchaser, while in the case of Ijarah, the
corpus of the property remains in the ownership of the transferor, but only its usufruct
i.e. the right to use it, is transferred to the lessee.

Therefore, it can easily be seen that ‘Ijarah’ is not a mode of financing in its origin. It
is a normal business activity like sale. However, due to certain reasons, and in
particular, due to some tax concessions it may carry, this transaction is being used in

81
the Western countries for the purpose of financing also. Instead of giving a simple
interest - bearing loan, some financial institutions started leasing some equipment’s
to their customers. While fixing the rent of this equipment, they calculate the total
cost they have incurred in the purchase of these assets and add the stipulated interest
they could have claimed on such an amount during the lease period. The aggregate
amount so calculated is divided on the total months of the lease period, and the
monthly rent is fixed on that basis.

The question whether or not the transaction of leasing can be used as a mode of
financing in Sharia depends on the terms and conditions of the contract. As mentioned
earlier, leasing is a normal business transaction and not a mode of financing.
Therefore, the lease transaction is always governed by the rules of Sharia prescribed
for Ijarah. Let us, therefore, discuss the basic rules governing the lease transactions, as
enumerated in the Islamic Fqih. After the study of these rules, we will be able to
understand under what conditions the Ijarah may be used for the purpose of financing.

Although the principles of Ijarah are so numerous that a separate volume is required
for their full discussion, we will attempt in this chapter to summarize those basic
principles only which are necessary for the proper understanding of the nature of the
transaction and are generally needed in the context of modern economic practice.
These principles are recorded here in the form of brief notes, so that the readers may
use them for quick reference.

3.1.12.3.1. Basic Rules of Leasing:


1. Leasing is a contract whereby the owner of something transfers its usufruct to another
person for an agreed period, at an agreed consideration.
2. The subject of lease must have a valuable use. Therefore, things having no usufruct at
all cannot be leased.
3. It is necessary for a valid contract of lease that the corpus of the leased property
remains in the ownership of the seller, and only its usufruct is transferred to the

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lessee. Thus, anything which cannot be used without consuming cannot be leased out.
Therefore, the lease cannot be affected in respect of money, eatables, fuel and
ammunition etc. because their use is not possible unless they are consumed. If
anything of this nature is leased out, it will be deemed to be a loan and all the rules
concerning the transaction of loan shall accordingly apply. Any rent charged on this
invalid lease shall be an interest charged on a loan.
4. As the corpus of the leased property remains in the ownership of the lessor, all the
liabilities emerging from the ownership shall be borne by the lessor, but the liabilities
referable to the use of the property shall be borne by the lessee.

3.1.12.3.1.1. Example:
A has leased his house to B. The taxes referable to the property shall be borne by A,
while the water tax, electricity bills and all expenses referable to the use of the house
shall be borne by B, the lessee.
5. The period of lease must be determined in clear terms.
6. The lessee cannot use the leased asset for any purpose other than the purpose
specified in the lease agreement. If no such purpose is specified in the agreement, the
lessee can use it for whatever purpose it is used in the normal course. However, if he
wishes to use it for an abnormal purpose, he cannot do so unless the lessor allows him
in express terms.
7. The lessee is liable to compensate the lessor for every harm to the leased asset caused
by any misuse or negligence on the part of the lessee.
8. The leased asset shall remain in the risk of the lessor throughout the lease period in
the sense that any harm or loss caused by the factors beyond the control of the lessee
shall be borne by the lessor.
9. A property jointly owned by two or more persons can be leased out, and the rental
shall be distributed between all the joint owners according to the proportion of their
respective shares in the property.
10. A joint owner of a property can lease his proportionate share to his co-sharer only,
and not to any other person.

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It is necessary for a valid lease that the leased asset is fully identified by the
parties.

3.1.12.3.1.2. Example:
A said to B. "I lease you one of my two shops." B agreed. The lease is void, unless the
leased shop is clearly determined and identified.

3.1.12.3.1.3.​ ​Determination of Rental:


11. The rental must be determined at the time of contract for the whole period of lease. It
is permissible that different amounts of rent are fixed for different phases during the
lease period, provided that the amount of rent for each phase is specifically agreed
upon at the time of effecting a lease. If the rent for a subsequent phase of the lease
period has not been determined or has been left at the option of the lessor, the lease is
not valid.
3.1.12.3.1.3.1. Example:
A lease his house to B for a total period of 5 years. The rent for the first year is fixed
as Rest. 2000/- per month and it is agreed that the rent of every subsequent year shall
be 10% more than the previous one. The lease is valid.

3.1.12.3.1.3.2. Example:
In the above example, A puts a condition in the agreement that the rent of Rest.
2000/- per month is fixed for the first year only. The rent for the subsequent years
shall be fixed each year at the option of the lessor. The lease is void, because the rent
is uncertain.
12. The determination of rental on the basis of the aggregate cost incurred in the purchase
of the asset by the lessor, as normally done in financial leases, is not against the rules

84
of Sharia, if both parties agree to it, provided that all other conditions of a valid lease
prescribed by the Sharia are fully adhered to.
13. The lessor cannot increase the rent unilaterally, and any agreement to this effect is
void.
14. The rent or any part thereof may be payable in advance before the delivery of the
asset to the lessee, but the amount so collected by the lessor shall remain with him as
'on account' payment and shall be adjusted towards the rent after its being due.
15. The lease period shall commence from the date on which the leased asset has been
delivered to the lessee, no matter whether the lessee has started using it or not.
16. If the leased asset has totally lost the function for which it was leased, and no repair is
possible, the lease shall terminate on the day on which such loss has been caused.
However, if the loss is caused by the misuse or by the negligence of the lessee, he will
be liable to compensate the lessor for the depreciated value of the asset as; it was
immediately before the loss.

3.1.13. Consumer Finance:


Consumer finance provides for construct a home, purchase a car, etc:

➢ Easy Home
➢ Car Ijarah
➢ Laptop Ease

3.1.14. Services:
Meezan Bank is dedicate in its efforts to provide a quality banking experience to our
customer via a range of unique Banking Services

● Labbaik Travel Aasaan


● Online Banking
● 8 to 8 Banking
● Ladies Banking
● Home Remittance
● Western union Money Transfer

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3.1.15. Competitors

The major competitors of Meezan Bank Limited are Bank Islami, Dubai Islamic Bank
Pakistan Ltd, Albarka Islamic Bank. The other competitors are Bank Al-Falah
Limited, Bank Al Habib Limited, Askari Bank Limited, United Bank Limited, Allied
Bank Limited, Soneri Bank Limited, Faisal Bank Limited.

3.2. PRICE:
“The amount of money customers pays for the products of company”
MBL provides different products to its customers. Pricing of products means the
commission paid by the customers in return of services provide by the bank. The
commission paid for the services mainly includes:

➢ Markup/ interest
➢ Bank charges
➢ Fees and bank commission

These charges and commission are prescribed on schedule of bank charges(SOC) that
keeps on changing time to time, and issued by the bank periodically (generally after
six months)

MBL charges a certain markup along with principle amount, which is to be recovered
in installment.

MBL has charges price called as bank charges for all the financing facility and other
services provided by bank. These prices are approved by SBP.

There has been a lot of controversy regarding the price of banking companies. Some
scholar argues that the markup received by the bank is rent for capital that is issued by
others. On contrary, some called it purely RIBA. This is however a very controversial
and sensitive issue is and I would like not to give any comment on it.

3.3. PLACEMENT:

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“​The product should be available from where your target consumer finds it
easiest to shop. This may be High Street, Mail Order or the more current option
via e-commerce or an online shop.”

Meezan Bank (Urdu ‫ )ﻣﯿﺰان ﺑﯿﻨﮏ‬is the first and largest Islamic commercial Bank of Pakistan.
The Bank is headquartered in Meezan House - Karachi, Pakistan. It has a network of over 550
branches in more than 140 cities of Pakistan. It commenced operations in 2002 when State
Bank of Pakistan issued first-ever license for Islamic commercial banking. The Bank has a
market share of 35% in Islamic banking industry of the country.
JCR-VIS Credit Rating Company Limited, an affiliate of Japan Credit Rating Agency, has
rated the Bank’s short term rating at A1+ (A-One Plus), the highest standard in short term
rating, and the long-term entity rating at AA (Double A) with “Stable” outlook, making it the
only Islamic bank with AA credit rating in the Islamic banking industry of Pakistan.
Head Office​: Meezan House, C-25, Estate Avenue, SITE, Karachi - Pakistan.
PABX​: (92-21) 38103500 ​UAN​: 111-331-331 & 111-331-332
www.meezanbank.com

3.3.1. Branch Network


Alhamdulillah, Meezan Bank has established 571 branches in 146 cities across
Pakistan. This is a milestone that is not only the success story of Meezan Bank but
also the continuing success story of Islamic banking in Pakistan. With this extensive
network, our existing and potential customers are now closer than ever in attaining
Islamic banking at their doorstep. All branches provide real time online banking
facilities to customers.
As the first and largest dedicated Islamic bank in Pakistan, Meezan Bank's team
continues to build on its Vision of establishing “Islamic banking as banking of first
choice". One of the key objectives of the Bank is to have its footprint strategically
placed throughout the country enabling public to avail the benefits of
Shariah-compliant banking in their neighbourhood.
The Bank presently operates in the following cities of Pakistan:

Abbottabad Jhang Peshawar

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Ahmedpur East Jhelum Phalia

Arifwala Kabirwala Pir Mahal

Attock Kahror Pacca Pishin

Bahawalnagar Kahuta Qalanderabad

Bahawalpur Kamalia Qilla Saifullah

Bannu Kamoke Quetta

Battagram Karachi Rahim Yar Khan

Burewala Karak Raiwind

Chakwal Kasur Rajanpur

Chaman Khairpur Rashidabad

Charsadda Khan Bela Rawalakot

Chichawatni Khanewal Rawalpindi

Chiniot Khanpur Rawat

Chishtian Kharian Sadiqabad

Chung Khushab Sahiwal

Dadu Kohat Sakrand

Dadyal Kot Addu Samundri

Daska Kot Radha Kishan Sanghar

Depalpur Kotli Azad Kashmir Sara-e-Alamgir

Dera Ghazi Khan Kunri Sargodha

Dera Ismail Khan Lahore Sawari

Digri Lalamusa Shahdadpur

88
Dina Larkana Shakargarh

Dinga Layyah Sheikhupura

Dukki Liaquatpur Shikarpur

Dunyapur Lodhran Sialkot

Faisalabad Loralai Sukkur

Fateh Pur Mailsi Swabi

Fort Abbas Mandi Bahauddin Swat

Gaggo Mandi Mansehra Tando Adam

Ghotki Mardan Tando Allahyar

Gilgit Baltistan Mehar Tarlai

Gojra Mian Channu Tando Mohammad


Khan

Gujar Khan Mianwali Taunsa

Gujranwala Mirpur Azad Kashmir Taxila

Gujrat Mirpur khas Timergara

Hafizabad Moro Toba Tek Singh

Haripur Multan Umerkot

Haroonabad Muridkay Vehari

Hasilpur Muslim Bagh Wah Cantt

Hassan Abdal Muzaffarabad Wazirabad

Havelian Muzaffargarh Zhob

Hub (Lasbela) Narowal

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Hyderabad Nawabshah

Islamabad Nowshera

Jacobabad Okara

For 2017, Meezan Bank has planned to expand its Branch Network by 30 branches
countrywide. Meezan Bank's mission is to provide itscustomers dedicated and pure
Islamic banking facilities with the greatest of convenience and personalized services.
It remains the Bank'sendeavour to establish solid foundations of Islamic banking in
Pakistan.

Branch Service Officers (Cash Officers)​ This is a career-oriented permanent


position in the Branch Banking team for newly qualified graduate,' with clearly
defined learning and career paths

Candidates meeting the above criteria may apply at www.meezan.rozee.pk. Only


online applications will be entertained.

www.meezanbank.com 24/7 Call Center 111-331-331 & 111-331-332

3.4. Promotion
“Promotion refer to entire set of activitics which communication the product,
brand, service to the user”
Promotion is a very important component of marketing as it can boost brand
recognition and sales. Promotion is comprised of various elements like:
● Sales Organization
● Public Relations
● Advertising
● Sales Promotion

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Advertising typically covers communication methods that are paid for like television
advertisements, radio commercials, print media, and internet advertisements. In
contemporary times, there seems to be a shift in focus offline to the online world.

Public relations, on the other hand, are communications that are typically not paid for.
This includes press releases, exhibitions, sponsorship deals, seminars, conferences,
and events.

Word of mouth is also a type of product promotion. Word of mouth is an informal


communication about the benefits of the product by satisfied customers and ordinary
individuals. The sales staff plays a very important role in public relations and word of
mouth.

It is important to not take this literally. Word of mouth can also circulate on the
internet. Harnessed effectively and it has the potential to be one of the most valuable
assets you have in boosting your profits online. An extremely good example of this is
online social media and managing a firm’s online social media presence.

In creating an effective product promotion strategy, you need to answer the following
questions:

➢ How can you send marketing messages to your potential buyers?


➢ When is the best time to promote your product?
➢ Will you reach your potential audience and buyers through television ads?
➢ Is it best to use the social media in promoting the product?
➢ What is the promotion strategy of your competitors?

Your combination of promotional strategies and how you go about promotion will
depend on your budget, the message you want to communicate, and the target market
you have defined already in previous steps.

3.5. People
“People of both target market and people directly related to the business.”

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Thorough research is important to discover whether there are enough people in your
target market that is in demand for certain types of products and services.
The company’s employees are important in marketing because they are the ones who
deliver the service. It is important to hire and train the right people to deliver superior
service to the clients, whether they run a support desk, customer service, copywriters,
programmers…etc.
When a business finds people who genuinely believe in the products or services that
the particular business creates, it’s is highly likely that the employees will perform the
best they can.
Additionally, they’ll be more open to honest feedback about the business and input
their own thoughts and passions which can scale and grow the business.
This is a secret, “internal” competitive advantage a business can have over other
competitors which can inherently affect a business’s position in the marketplace.

3.6. Process
“The process of doing so can be modeled in a sequence of steps: the situation is
analyzed to identify opportunities, the strategy is formulated for a value
proposition, tactical decisions are made, the plan is implemented and the results
are monitored.”
The systems and processes of the organization affect the execution of the service.
So, you have to make sure that you have a well-tailored process in place to minimize
costs.
It could be your entire sales funnel, a pay system, distribution system and other
systematic procedures and steps to ensure a working business that is running
effectively. Tweaking and enhancements can come later to “tighten up” a business to
minimize costs and maximiser profits.

3.7. Physical evidence

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In the service industries, there should be physical evidence that the service was
delivered. Additionally, physical evidence pertains also to how a business and it’s
products are perceived in the marketplace.

It is the physical evidence of a business’ presence and establishment. A concept of


this is branding. For example, when you think of “fast food”, you think of
McDonalds.

When you think of sports, the names Nike and Adidas come to mind.

You immediately know exactly what their presence is in the marketplace, as they are
generally market leaders and have established a physical evidence as well as
psychological evidence in their marketing.

They have manipulated their consumer perception so well to the point where their
brands appear first in line when an individual is asked to broadly “name a brand” in
their niche or industry.

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CHAPTER 4

FINANCIAL ANALYSIS
● Horizontal analysis

94
● Vertical analysis
● Ratio analysis

FINANCIAL ANALYSIS OF THE MEEZAN BANK LIMITED FOR THE


THREE YEARS ( 2014, 2015,2016)

4. FINANCIAL ANALYSIS

The purpose of the analysis of financial statement (FS) is to examine past and current
financial data so that a company’s performance and financial position can be evaluated
and future risk and potentials can be estimated. The analysis can yield valuable
information about trends relationship, the quality of company earnings and its
financial strengths and weaknesses. Financial statements among other things include
balance sheets and income statements. Balance sheet represents assets and liabilities of
the business at a given data, besides showing the ability of the business to service the
loans on the strengths of its financial structure. It also helps in evolving secured basis
for extending financial support. Apart from showing the profitability of a business,
income statement discloses how the business has been constructed and determines
factors behind rise or decline in the net worth.

The financial analysis involves:

➢ Horizontal analysis

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➢ Vertical analysis
➢ Ratio analysis

4.1. Horizontal analysis:

The percentage analysis of increases and decreases in corresponding items in


comparative financial statements is called horizontal analysis. Horizontal analysis
involves the computation of amount changes and percentage changes from the
previous to the current year. It is also called “Year to Year” analysis in which we
compare each amount with the base amount for a selected base year. This analysis is
also called “index analysis”.

4.2. Vertical analysis:

It is the analysis of financial statements, where all balance sheet items are divided
by total assets and all income statement items are divided by net sales or revenues.
The balance sheet uses this presentation on individual items like cash or a group of
items like current assets. Cash is listed as an individual entry in the assets section
with the total balance being listed on the left and its percentage of total assets being
listed on the right.

4.3. RATIO ANALYSIS:

A ratio is a simple mathematical expression of the relationship of one item to


another. Ratio analysis involves the method of calculating and interpreting financial
ratios to assess the organization’s performance. Financial ratios of ban can be
divided into basic forms, which are as follows.

96
Most investors are familiar with a few key ratios, particularly the ones that are
relatively easy to calculate. Some of these ratios include the current ratio, return on
equity (ROE), the debt-equity (D/E) ratio, the dividend payout ratio, and the
price/earnings (P/E) ratio.

Consolidated Statement of Financial Position as

At December 31, 2016

Meana bank limited


Balance sheet
At the end of December 31, 2016
ASSETS 2016 2015
Cash and balances with treasury banks 56,037,043 43,685,791
Balances with other banks 12,067,855 11,205,707
Due from financial institutions 129,115,165 101,079,476
Investments - net 134,796,574 150,137,212

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Islamic financing and related assets - net 311,530,270 207,568,823
Operating fixed assets 9,031,686 8,161,435
Deferred tax assets - -
Other assets - net 10,689,082 14,111,489
Total assets 663,267,675 535,949,933

LIABILITIES
Bills payable 9,130,998 6,560,324
Due to financial institutions 32,005,501 13,609,551
Deposits and other accounts 563,999,852 471,799,473
Sub-ordinated Sukuk 7,000,000 -
Deferred tax liabilities 1,955,203 730,923
Other liabilities 14,403,557 13,569,243
Total liabilities 628,495,111 506,269,514

NET ASSET 34,772,564 29,680,419


OWNER EQUITY
Share capital 10,027,379 10,027,379
Reserves 9,724,001 8,611,679
Unappropriated profit 11,340,678 9,238,479
31,092,058 27,877,537
NON-CONTROLLING INTEREST 1,221,989 944,623
32,314,047 28,822,160
Surplus on revaluation of investments 2,458,517 858,259
(including amount relating to share of profit
from associates) - net of tax

Total owner equity 34,772,564 29,680,419


DATA SOURCE:​ Data collected from Financial Statement of Bank

98
Balance sheet​ (​Horizontal Analysis)

THE MEEZAN BANK OF LIMIMTED

BALANCE SHEET

AT THE END OF DECEMBER 31,2016


2013 2014 2015 2016

ASSETS % % % %

Cash and balances with 100 4.00 52 96


treasury banks

99
Balances with other banks 100 54 215 239
Due from financial institutions 100 111 125 1634
Investments - net 100 (24) (0.97) (11)
Islamic financing and related 100 37 62 144
assets - net
Operating fixed assets 100 12 45 61
Deferred tax assets 100 305 -

Other assets - net 100 185 172 106


Total assets 100 32 62 101

LIABILITIES
Bills payable 100 55 81 152
Due to financial institutions 100 35 19 181
Deposits and other accounts 100 31 62 94
Sub-ordinated Sukuk 100 - - -

Liabilities against assets subject 100 - - -


to finance leases
Deferred tax liabilities 100 - - -
Other liabilities 100 100 125 139
Total liabilities 100 33 62 102

NET ASSET 100 26 56 83

OWNER EQUITY
Share capital 100 - - -
Reserves 100 104 142 173
Unappropriated profit 100 37 113 161
100 29 56 73
NON-CONTROLLING 100 - - -
INTEREST

100
Surplus on revaluation of 100 (38) (14) 144
investments (including amount
relating to share of profit from
associates) - net of tax

Total owner equity 100 26 56 83

INTERPRETATION

BALANCE SHEET –HORIZONTAL ANALYSIS

Horizontal analysis of financial statements encompasses comparison of financial ratio or a


line item over a number of accounting periods. It shows relative changes in different items
over a period of time. It is useful to assess trends over a period.

ASSET SIDE ANALYSIS

CASH BALANCES WITH TREASURY BANK

Total assets of MBL have increased over year 2012 to year 2016.This asset shows an
increasing trend, as it is the requirement of SBP to maintain a certain percentage amount of
deposits of Islamic banks with it. This contribution shows an increasing trend while with the
excessive amount in hand

BALANCES WITH OTHER BANKS

The balances provide safety with regard to the liquidity position of the bank. Though this
asset normally reduces the risk of shortage of ready cash in both certain or uncertain
circumstances. There is an up and down ratio of this bank.in 2016 this ratio is normally very
high which shows it has ready cash available to meet any circumstances.

LENDING TO FINANCIAL INSTITUTIONS

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Bank has provided more loans to financial institutions because there is decrease in the ratio in
2016 -13%as compare to 2012.

INVESTMENT

In 2016 there is Decrease in investment by 11% which shows bank investing in various
business activities. While in 2016 Decrease in investment shown in due to excessive
securities sold by the bank.

OPERATING FIXED ASSETS

Operating fixed assets which include the capital work in progress, property and equipment,
and intangible assets show an increase in 2015 due to expansion in network of branches and
to meet other operational need but a decrease in 2016 because of its non-expansion in
network of branches.

LIABILITY SIDE ANALYSIS

BILLS PAYABLE

Bills payable of the bank has decreased in 2015 of total assets which shows that the bank is
efficiently controlling its payable.

BORROWING FROM FINANCIAL INSTITUTIONS

In 2016 there is increasing trend in borrowing from financial institutions which is not good
indication for the bank. This shows that bank borrowing is greater much from financial
institutions. But in 2015 there is much decrease in these borrowing.

DEPOSITS AND OTHER ACCOUNTS

Deposits are not accurately handled by the bank there is decreasing trend of the deposits
which are in 2012 is 36% and decrease in 2016 by 20%.

CAPITAL FUND

102
In 2014 capital fund is increasing which shows increasing trend.it is the good sign for the
bank. The reserves have also increasing in 2014 by 26% which is an indication of stable
business

BALANCE SHEET (VERTICAL ANALYSIS)

THE MEEZAN BANK OF LIMIMTED


BALANCE SHEET
AT THE END OF DECEMBER 31,2016

103
ASSETS 2016 2015 2014
Cash and balances with treasury 161% 147% 125%
banks
Balances with other banks 35% 38% 23%
Due from financial institutions 371% 341% 380%
Investments – net 388% 506% 478%
Islamic financing and related assets – 896% 69% 736%
net
Operating fixed assets 26% 27% 26%
Deferred tax assets - - 2%
Other assets – net 31% 48% 62%
Total assets 1907% 1806% 1832%

LIABILITIES
Bills payable 26% 22% 24%
Due to financial institutions 92% 46% 65%
Deposits and other accounts 1622% 1590% 1593%
Sub-ordinated Sukuk 20% - -
Liabilities against assets subject to - - -
finance leases
Deferred tax liabilities 6% 2% -
Other liabilities 41% 46% 50%
Total liabilities 1807% 1706% 1732%

NET ASSET 100% 100% 100%


OWNER EQUITY
Share capital 29% 34% 42%
Reserves 28% 29% 30%

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Unappropriated profit 33% 31% 25%
89% 94% 97%
NON-CONTROLLING INTEREST 4% 3% 0%
Surplus on revaluation of investments 93% 97% 0%
(including amount relating to share of
profit from associates) - net of tax
7% 3% 3%

Total owner equity 100% 100% 100%

INTERPRETATION

BALANCE SHEET-VERTICAL ANALYSIS

Vertical analysis of the balance sheet shows that the percentage of various items in terms of
total assets which is considered as a base. Vertical analysis is a method in which the
relationship between the items in the financial statement is identified by expressing all
accounts as a proportion of total accounts.

ASSET SIDE ANALYSIS

CASH BALANCE WITH TREASURY BANKS

This shows increasing contribution in 2016 which is 161% as compare to 2014 which was
125% of total assets this increasing trend shows that the bank has more cash with treasury
banks in 2014 than 2016.

BALANCES WITH OTHER BANKS

This portion includes the same amount of balances with other banks throughout the three
years of analysis which shows 2016 in 35% of compositions of balances are held with other
banks as concerned with total assets.

DUE FROM FINANCIAL INSTITUTIONS

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This ratio has significantly increases in 2016 but reduces in 2015 by 30% of total assets
which is not a good sign for the bank. An increase in ratio may shows that the bank has
provided more loans to other financial institutions.

INVESTMENTS

Investment is meant for utilizing the idle funds available with the banks. IN 2016 there is
decreasing in ratio by 388% which is much more same as in 2014 but as compare to 2015 it
has increased which indicates that bank is good position in investing its funds effectively.

ISLAMIC FINANCING AND RELATED ASSETS

Operating fixed assets which include the capital work in progress, property and equipment,
and intangible assets show an increase in 2016 due to expansion in network of branches and
to meet other operational need but a decrease in 2015 is 699% because of its non-expansion
in network of branches.

OPERATING FIXED ASSETS

There is decreased contribution of operating fixed assets in consecutively 3 years 2016, 2015,
2014 which shows the bank has not using its operating assets effectively.

LIABILITIES SIDE ANALYSIS

BILLS PAYABLE

Bills payable in 2016 are “26%” which shows that Bank is not efficiently controlling its
payable in 2016.

DUE TO ​FINANCIAL INSTITUTIONS

In year 2016 there is a increases contribution of borrowing from financial institutions from
92% to 46% of total assets by the bank which is healthy indication. This mode of financing is
an expensive one so the increase in percentage is unfavorable for the bank. This increase may

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be because of more balance of banks deposits accounts with Pakistan and the more balances
in current accounts outside the Pakistan.

DEPOSITS AND OTHER ACCUNTS

Deposits are the life blood of bank to survive in the industry but it puts obligations in the
bank to keep on hand reserve to meet the deposits requirements. This percentage is
respectively increasing by 16% by 15% in 2016.

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Profit &loss statement (​Horizontal Analysis)

THE MEEZAN BANK OF LIMIMTED

PROFIT & LOSS STATEMENT


FOR THE YEAR ENDED DECEMBER 31,2016

2013 2014 2015 2016


% % % %
Profit / return earned on Islamic 100 24 43 36
financing and related assets,
investments and placements
Profit on deposits and other dues 100 23 19 3
expensed
Net spread earned 100 26 71 74
(Reversal of provision) / provision 100 328 234 (194)
against non-performing Islamic
financing and related assets – net
(Reversal of provision) / provision 100 154 (466) 96
against diminution in the value of
investments
Provision against off balance sheet 100 - - -
obligations
Reversal of provision against 100 (75) (100) (100)
amounts due from financial
institutions
Bad debts written off directly 100 - - -
100 400 503 (298)
Net spread after provisions 100 22 67 78
OTHER INCOME

Fee, commission and brokerage 100 25 130 213


income

Dividend income 100 (8) (40) 12

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Income from dealing in foreign 100 170 144 100
currencies

Capital gain on sale of investments - 100 (7) (60) (18)


net

Other income 100 27 200 256

Total other income 100 36 52 96

100 26 64 82
OTHER EXPENSES

Administrative expenses 100 26 70 94

Other (reversal of provisions) / 100 (3959) (2471) 2867


provisions

Other charges 100 912 (17) (26)

Workers Welfare Fund 100 25 62 80


Total other expenses 100 28 70 93

100 22 54 66
Share of results of associates before 100 - - -
taxation

Extraordinary / unusual items 100 - - -

Profit before taxation 100 22 58 86


Taxation - Current 100 41 63 109

- Prior years 100 (100) (364) (200)

- Deferred 100 (73) 53 (6)

100 38 128 132


Profit after taxation 100 16 28 67
INTERPRETATION

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INCOME STATEMENT-HORIZONTAL ANALYSIS

Horizontal analysis (also known as trend analysis) is a financial statement analysis technique
that shows changes in the amounts of corresponding financial statement items over a period
of time. It is a useful tool to evaluate the trend situations. The statements for two or more
periods are used in horizontal analysis.

Net spread earned

A spread is the difference between an investment's lowest current offering price among
dealers and the higher price a dealer charges a customer. Spread earned decreased over the
period of time in 2016 which is 26% much more lowest than other two years. ​This decrease
due to decrease in loans and advances, deposit with customers and financial institution and
low securities purchased under resale agreements.

OTHER INCOME
Other income is bank and creditor income derived primarily from fees including dividend and
transaction fees, insufficient funds (NSF) fees, annual fees, monthly account service charges,
Capital gain on sale of investments, inactivity fees, check and deposit slip fees, and so on.
This income is decrease in 2016 which is 26% which means it has decrease 26% of the cash
of the bank.

ADMINISTRATIVE AND OPERATING EXPENSES

Administrative and operating expenses increased a rise of 13%. The rise in expenses is
primarily due to full year impact of increase in staff expenses, rent and associated costs as a
result of addition of 123 branches during year 2015– an investment which has reaped fruits
for the Bank, as is evident from the strong growth in deposits and profits over the years. With
a network of 571 branches in 146 cities, the Bank maintains its position as the largest Islamic
Bank in Pakistan both in terms of deposits and branch network​.

PROFIT BEFORE TAXATION

110
Profit before tax (PBT) is a profitability measure that looks at a company's profits before the
company has to pay corporate income tax by deducting all expenses from revenue including
interest expenses and operating expenses except for income tax. Profit before taxation has
decrease in year 2016 by 22% as comparing to 2014 and 2015.this profit is lower due to
except of deduction taxes.

PROFIT AFTER TAXATION

In year 2016 this profit after taxation has also decrease by 16% as compared to year 2015 &
2014 which is good indication of the investors for investing in the bank. ​A company's
after-tax profit margin is important because it tells investors the percentage of money a
company actually earns per dollar of revenue. ​PROFIT AFTER TAX (PAT) is the net profit
earned by the company after deducting all expenses like interest, depreciation and tax. Hence
the profit of the bank after deducting all taxes is greater than the prior years.it is not better in
year 2016.

111
PROFIT & LOSS STATEMENT (VERTICAL ANALYSIS)

THE MEEZAN BANK OF LIMIMTED


PROFIT & LOSS STATEMENT
FOR THE YEAR ENDED DECEMBER 31,2016
2016 2015 2014
% % %
Profit / return earned on Islamic financing
and related assets, investments and
placements 100 100 100
Profit on deposits and other dues expensed 41 45 54
Net spread earned 59 55 46
(Reversal of provision) / provision against
non-performing Islamic financing and
related assets – net - 1 2
(Reversal of provision) / provision against
diminution in the value of investments - - -
Provision against off balance sheet
obligations - - -
Reversal of provision against amounts due
from financial institutions - - -
Bad debts written off directly - - -
(1) 2 2
Net spread after provisions 60 53 45

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OTHER INCOME

Fee, commission and brokerage income


13 9 5
Dividend income
1 1 1
Income from dealing in foreign currencies
4 4 6
Capital gain on sale of investments - net
3 1 4
Other income
1 1 -
Total other income
22 16 17
81 69 61
OTHER EXPENSES

Administrative expenses
51 42 36
Other (reversal of provisions) / provisions
- - -
Other charges
- - -
Workers Welfare Fund 1 1 1
Total other expenses
52 43 37
30 26 24
Share of results of associates before taxation
4 1 -
Extraordinary / unusual items
- - -
Profit before taxation 33 27 24
Taxation - Current
10 8 8
- Prior years
1 2 -
- Deferred
1 2 -
12 12 8
Profit after taxation 21 15 16
INTERPRETATION

113
INCOME STATEMENT-VERTICAL ANALYSIS

Vertical analysis of income statement shows that the percentage of various items in terms of
total markup returns which is considered as a base. Vertical analysis is a method in which the
relationship between the items in the financial statement is identified by expressing all
accounts as a proportion of total account.

PROFIT / RETURN EARNED ON ISLAMIC FINANCING AND RELATED ASSETS,


INVESTMENTS AND PLACEMENTS

​When a vertical analysis is done on an income statement, it will show the top-line sales
number as 100%, and every other account will show as a percentage of the total sales
number.

NET SPREAD EARNED

As compare to 2014 in 2016 spread has increased by 59% of sales which is the greater
difference than in 2015 and 2014. This would be a good sign for the bank.

INCOME

This income also increased in 2016 over the period of time which is 22% of sales. There is
increasing trend in income which shows its income is increasing as 22% of sales over the
period of time.

PROFIT BEFORE TAXATION

There is increasing trend in 2016 of profit before paying any taxes which is 33% more than
other previous two years while in 2015 it was only 27% of sales. While in 2016 it is 33% of
sales.

PROFIT AFTER TAXATION

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It also shows increasing trend over the period of three years of time.in 2016 profit after tax is
21% of sales while in 2015 it was 15% and in 2014 it was 16%.it does also shows increasing
trend in the profit of the bank. This is due to its huge investment activities larger deposits and
loyalty among customers

4.3. FINANCIAL RATIO ANALYSIS:

A ratio is a simple mathematical expression of the relationship of one item to another. Ratio
analysis involves the method of calculating and interpreting financial ratios to assess the
organization’s performance. Financial ratios of ban can be divided into basic forms, which
are as follows.

Most investors are familiar with a few key ratios, particularly the ones that are relatively easy
to calculate. Some of these ratios include the current ratio, return on equity (ROE), the
debt-equity (D/E) ratio, the dividend payout ratio, and the price/earnings (P/E) ratio. While
there are numerous financial ratios, ratio analysis can be categorized into six main groups:

➢ Liquidity Ratios:

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liquidity ratios measure a company's ability to pay off its short-term debts as they
come due using the company's current or quick assets. Liquidity ratios include current
ratio, quick ratio, and working capital ratio.

➢ Solvency Ratios:

Solvency ratio also called financial leverage ratios, solvency ratios compare a
company's debt levels with its assets, equity, and earnings to evaluate whether a
company can stay afloat in the long-term by paying its long-term debt and interest on
the debt. Examples of solvency ratios include debt-equity ratio, debt-assets ratio, and
interest coverage ratio.

➢ Profitability Ratios:

These ratios show how well a company can generate profits from its operations. Profit
margin, return on assets, return on equity, return on capital employed, and gross
margin ratio are examples of profitability ratios.

➢ Efficiency Ratios:

Efficiency ratio also called activity ratios, efficiency ratios evaluate how well a
company uses its assets and liabilities to generate sales and maximize profits. Key
efficiency ratios are the asset turnover ratio, inventory turnover, and days' sales in
inventory.

➢ Coverage Ratios:

These ratios measure a company's ability to make the interest payments and other
obligations associated with its debts. Times interest earned ratio and debt-service
coverage ratio are two examples of coverage ratios.
➢ Market Prospect Ratios:
Market prospect ratio e.g. dividend yield, P/E ratio, earnings per share, and dividend
payout ratio. These are the most commonly used ratios in fundamental analysis.
Investors use these ratios to determine what they may receive in earnings from their

116
investments and to predict what the trend of a stock will be in the future. For example,
if the average P/E ratio of all companies in the S&P 500 index is 20, with the majority
of companies having a P/E between 15 and 25, a stock with a P/E ratio of 7 would be
considered undervalued, while one with a P/E of 50 would be considered overvalued.
The former may trend upwards in the future, while the latter will trend downwards
until
it matches with its intrinsic value

3.4.1. LIQUIDITY RATIOS:

Liquidity refers to the amount of cash a company can generate quickly to settle its debts. A
reasonable level of liquidity is essential to the survival of a company, as poor cash control is
one of the main reasons for business failure.

1. Current ratio
2. Liquidity ratio

4.3.1.1. Current Ratio:


The Current Ratio is calculated by dividing Current Assets by Current Liabilities.
Current Assets are the assets that the firm expects to convert into cash in the
coming year and Current Liabilities represent the liabilities which have to be paid
in cash in the coming year. The appropriate value for this ratio depends on the
characteristics of the firm's industry and the composition of its Current Assets.
However, at a minimum, the Current Ratio should be greater than one.

Formula
​Current Ratio​ ​= ​(Current Assets) / (Current Liabilities)

2016 64,354,6907 1.06 times W-1


60,513,6351 W-2

2015 51,367,7009 1.04 times W-1


49,196,9348 W-2

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2014 29,728,764 ​0.07 time W-1
40,150,6813 W-2

WORKING
W-1
Current Assets​ = Provided in the financial statements

W-2
Current Liabilities​ = Provided in the financial statements

INTERPRETATION
Current ratio is a financial ratio that measures whether a company has enough resources to
pay its debt over the next business cycle or not by comparing firm's current assets to its
current liabilities. If we compare the ratio of last two years, we come to know that in 2016
meezan bank limited have 1.06 times the current assets than current liabilities. It means that a
company has enough assets to pays the liabilities. In the same way, the ratio of current assets
is increasing in 2015. By considering them, we conclude that meezan bank limited ratio has

118
gradually increasing over three years span, which shows better financial strength to meet
obligations, in this way companies are able to procure more working capital facilities from
banks

4.3.1.2. Quick Ratio:

The Quick Ratio recognizes that, for many firms, Inventories can be rather
illiquid. If these Inventories had to be sold off in a hurry to meet an obligation the
firm might have difficulty in finding a buyer and the inventory items would likely
have to be sold at a substantial discount from their fair market value.
This ratio attempts to measure the ability of the firm to meet its obligations relying
solely on its more liquid Current Asset accounts such as Cash and Accounts
Receivable. This ratio is calculated by dividing Current Assets less Inventories by
Current Liabilities.

Formula
Cash + Marketable Securities +
Quick Ratio Receivables
=
Current Liabilities

2016 68,104,898 0.12 times W-1


60,513,635 W-2

2015 54,891,498 0.11times W-1


49,196,9348 W-2

2014 35,229,641 ​0.08 time W-1


40,150,6813 W-2

WORKING
W-1
Cash + Marketable Securities + Receivables​ = Provided in the financial statements

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W-2
Current Liabilities​ = Provided in the financial statements

Explanation
Quick ratio also called acid test ratio of meezan bank is increase from year 2014 to 2016. The
year 2016 is better because in this year the quick ratio is 0.12 higher as compare to
succeeding two years in which it is low. The higher the acid test ratio is the higher the bank is
able to meet its short-term obligations.

INTERPRETATION
The depicts increasing trend of quick ratio of Meezan bank. In 2014, the acid test ratio is 0.08
which is lower among other two years and indicates the less liquidity for the Meezan bank. In
year 2015, it increases to 0.11 and also in year 2016 it increases to 0.12.

4.3.2. Profitability Ratios:

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These ratios show how well a company can generate profits from its operations. Profit
margin, return on assets, return on equity, return on capital employed, and gross
margin ratio are examples of profitability ratios.
1. Net spread to gross return
2. Net profit before tax to gross income
3. Net profit after tax to gross income
4. Administrative expense to income before provision
5. Return on equity
6. Return on asset
7. Advance to deposit ratio
8. Investment to deposit ratio
9. Capital adequacy ratio
4.3.2.1. Net spread to gross return:

The difference between the underwriting price received by the issuing


company and the actual price offered to the investing public. The gross
spread is the compensation that the underwriters of an initial public offering
(IPO) make to cover expenses, management fees, commission (or takedown)
and risk. The majority of profits that the underwriting firm earns through the
deal are often achieved through the gross spread. In addition to the gross
spread, an initial public offering typically involves "fixed costs," such as
legal and accounting consultants, and registration fees.
Net spread
Gross return
Formula
Net spread to gross return=

2016 18,557 59.04% W-1


31430 W-2

2015 18,217 55.01% W-1


33,114 W-2

2014 13,363 46.39% W-1

121
28,803 W-2

W-1
Net spread ​= Provided in the financial statements

W-2
Gross return​ = Provided in the financial statements

INTERPRETATION
Net Spread to gross income increase over the period of time in 2016 which is 59.04% much
more lowest than other two years. ​This increase due to increase in loans and advances,
deposit with customers and financial institution and low securities purchased under resale
agreements.

4.3.2.2. Net profit before tax to gross income:

Profit before tax measures a company's operating and non-operating profits before
taxes are considered. It is the same as earnings before taxes. ​Gross income,
or gross pay, is an individual's total pay before accounting for taxes or other
deductions. At the company level, it's the company's revenue minus the cost of

122
good sold. In this case it is also referred to as gross profit and, when expressed as
a percentage of revenue, gross margin.

Net profit before tax to gross income​ = Net profit before tax
Gross income
Formula

2016 8,943 24.02% W-1


373 W-2

2015 8,452 22.41% W-1


378 W-2

2014 6,898 20.56% W-1


336 W-2

W-1
Net profit before tax ​= Provided in the financial statements

W-2
Gross income​ = Provided in the financial statements

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INTERPRETATION
There is increasing trend in 2016 of profit before paying any taxes which is 24.02% more
than other previous two years while in 2015 it was only 22.41% of sales. While in 2016 it is
24% of sales.

4.3.2.3. Net income after taxes (NIAT):

Net income after taxes(NIAT) is the number of ​sales​ dollars remaining after
all ​operating expenses​, interest, ​depreciation​, ​taxes​ and preferred ​stock
dividends​ have been deducted from a firm's total ​revenue​.

Formula
Net income after taxes= ​net income before tax
Gross income

2016 5,562 14.94% W-1


373 W-2

2015 5,032 13.32% W-1

124
378 W-2

2014 4,570 13.62% W-1


336 W-2

W-1
Net profit after tax ​= Provided in the financial statements

W-2
Gross income​ = Provided in the financial statements

INTERPRETATION
The Bank posted profit after tax of Rs 5.56 billion as compared to Rs 5.02 billion, an increase
of 11% over the previous year.​In year 2016 this profit after taxation has also increase by
11% as compared to year 2015 & 2014 which is good indication of the investors for investing
in the bank. ​A company's after-tax profit margin is important because it tells investors the
percentage of money a company actually earns per dollar of revenue. ​PROFIT AFTER TAX
(PAT) is the net profit earned by the company after deducting all expenses like interest,
depreciation and tax. Hence the profit of the bank after deducting all taxes is greater than the
prior years.it is better in year 2016.

4.3.2.4. Administrative Expenses to income before provision:

Administrative expenses are the expenses that an organization incurs not directly
tied to a specific function such as manufacturing, production or sales. These

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expenses are related to the organization as a whole as opposed to an individual
department. Salaries of senior executives and costs of general services such as
accounting are examples of administrative expenses.

Formula

Administrative Expenses to income before provision= ​Administrative Expenses


Income before provision

2016 15,596 64.04% W-1


24,539 W-2

2015 13,799 60.49% W-1


22,251 W-2

2014 10,753 59.35% W-1


6,898 W-2

W-1

Administrative​ ​Expenses​ ​= Provided in the financial statements


W-2
​ ​Income before provision​ ​= Provided in the financial statements

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INTERPRETATION
Administrative and operating expenses increased to Rs 15.6 billion from Rs 13.8 billion, a
rise of 13%. The rise in expenses is primarily due to full year impact of increase in staff
expenses, rent and associated costs as a result of addition of 123 branches during year 2015
an investment which has reaped fruits for the Bank, as is evident from the strong growth in
deposits and profits over the years. With a network of 571 branches in 146 cities, the Bank
maintains its position as the largest Islamic Bank in Pakistan both in terms of deposits and
branch network.

4.3.2.5. Return On Assets (ROA) Ratio

Return on assets is the ratio of annual net income to average total assets of a
business during a financial year. It measures efficiency of the business in using its
assets to generate net income. It is a profitability ratio.

Formula

The formula to calculate return on assets is:


Annual Net Income
ROA​ =
Average Total Assets
Net income is the after-tax income. It can be found on income statement. Average
total assets are calculated by dividing the sum of total assets at the beginning and at
the end of the financial year by Total assets at the beginning and at the end of the year
can be obtained from year ending balance sheets of two consecutive financial years.

2016 5,562 0.94% W-1


6,57,767 W-2

2015 5,023 1.04% W-1


5,31,850 W-2

2014 4,570 1.19% W-1


4,37,510 W-2

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W-1
Net income​ = Provided in the financial statements
W-2

Total asset ​= Provided in the financial statements

INTERPRETATION
The average of return on total assets is 0.94%. It measures the overall effectiveness of
management in generating profits with its available assets. The higher return on assets is in
2013 which is 1.19%.

4.3.2.6. Return On Equity (ROE) Ratio:

Return on equity or return on capital is the ratio of net income of a business during
a year to its stockholders' equity during that year. It is a measure of profitability of
stockholders' investments. It shows net income as percentage of shareholder
equity.

Formula

The formula to calculate return on equity is:


ROE​ = Annual Net Income

128
Average Stockholders'
Equity
Net income is the after-tax income whereas average shareholders' equity is
calculated by dividing the sum of shareholders' equity at the beginning and at the
end of the year by 2. The net income figure is obtained from income statement and
the shareholders' equity is found on balance sheet. You will need year ending
balance sheets of two consecutive financial years to find average shareholders'
equity.

2016 5,562 20.71% W-1


28,149 W-2

2015 5,023 20.57% W-1


25,557 W-2

2014 4,570 22.20% W-1


23,275 W-2

W-1
Net income​ = Provided in the financial statements
W-2

Total shareholder equity ​= Provided in the financial statements

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INTERPRETATION
The average of return on common equity is 20.71%. It measures the return earned on the
common stockholders’ investment in the firm. This return is higher in 2013, which is 22.20%.

Capital Adequacy ratio


Capital Adequacy is a measurement of a bank to determine if solvency can be maintained
due to risks that have been incurred as a course of business. Capital allows a financial
institution to grow, establish and maintain both public and regulatory confidence, and
provide a cushion (reserves) to be able to absorb potential loan losses above and beyond
identified problems. A bank must be able to generate capital internally, through earnings
retention, as a test of capital strength. An increase in capital as a result of restatements due to
accounting standard changes is not an actual increase in capital.

The Capital Growth Rate, which is calculated by subtracting prior period equity capital from
current period equity capital, then dividing the difference by prior period equity capital,
indicates that either earnings are extremely good, minimal dividends are being extracted or
additional capital funds have been received through the sale of new stock or a capital
infusion, or it can mean that earnings are low or that dividends are excessive. The capital
growth rate generated from earnings must be sufficient to maintain pace with the asset
growth rate.
The 1988 Basel Committee Capital Accord established a benchmark for measuring bank
capital (and for correctly calculating / risk weighting assets, which became the denominator
of the capital ratio).

Formula
Capital adequacy ratio​ = share capital
Total risk weighting asset

2016 1,0027 12.91% W-1


6,57,767 W-2

2015 5,023 10.98% W-1

130
5,31,850 W-2

2014 4,570 11.88% W-1


4,37,510 W-2

W-1
Share capital​ = Provided in the financial statements
W-2

Total risk weighting asset ​= Provided in the financial statements

INTERPRETATION
Bank’s Capital Adequacy Ratio (“CAR”) and will support the future growth strategy of the
Bank.​ It measures the capital growth rate in the firm. This ratio is higher in 2016, which is
12.91% rather than compare in 2015, 2014 year.

4.3.2.7. Cash Ratio:

The cash ratio is the ratio of a company's total ​cash and cash equivalents​ to
its ​current liabilities​. The metric calculates a company's ability to repay

131
its ​short-term debt​; this information is useful to ​creditors​ when deciding how
much debt, if any, they would be willing to extend to the asking party. The cash
ratio is generally a more conservative look at a company's ability to cover
its ​liabilities​ than many other ​liquidity ratios​ because other assets,
including ​accounts receivable​, are left out of the equation.
Formula
Cash
Current
liabilities
Cash ratio ​ =

2016 56,037,043 8.71% W-1


64,354,6907 W-2

2015 43,685,791 8.50% W-1


513,677,009 W-2

2014 29,728,764 7.15% W-1


41,579,7332 W-2

W-1
Cash​= Provided in the financial statements
W-2

Current liabilities​= Provided in the financial statements

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INTERPRETATION
The depicts increasing trend of cash ratio of Meezan bank. In 2014, the cash ratio is 7.15
which is lower among other two years and indicates the less liquidity for the Meezan bank. In
year 2015, it increases to 8.50 and also in year 2016 it increases to 8.71.

4.3.2.8. Advance to deposit ratio

The formula for the loan to deposit ratio is exactly as its name implies, loans
divided by deposits. The loan to deposit ratio is used to calculate a lending
institution's ability to cover withdrawals made by its customers.

Advance
Total deposit
Formula

Advance to deposit ratio =

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2016 32,005,501 55.2% W-1
5,64,024 W-2

2015 13,609,551 28.84% W-1


4,71,821 W-2

2014 15,465,418 46.2% W-1


3,804,22 W-2
W-1
Advance​ = Provided in the financial statements
W-2

Total deposit​= Provided in the financial statements

INTERPRETATION
Advance to Deposits ratio (ADR) of the Bank now stands at an impressive 55%, as compared
to 44% in 2015. The depicts increasing trend of advance to deposit ratio of Meezan bank. In
2014, the advance to deposit ratio is 46% which is lower among other two years and indicates
the less liquidity for the Meezan bank. In year 2015, it decrease to 28% and also in year 2016
it increases to 55%.

4.3.2.9. Investment to deposit ratio

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He deposits ratio refers to the deposits raised by the bank from saving account,
current account, Recurring deposit account and Fixed Account But all these are
income to bank which earns an interest to the bank as well as the individual who
has deposited the same in the bank, and once again these money will be invested
in the income earning sources like share market, bonds etc., which would earn a
profit for the banks. The total of all the long term and short-term investment made
by the bank on other sources like banks, share market, loans and advances divided
by the total amount of deposits raised by the bank by various account as
mentioned above.
Investment
Total deposit
Formula

Investment to deposit ratio​=

2016 13,479,6574 23.08% W-1


56,7024 W-2

2015 150,137,212 31.01% W-1


4,71,821 W-2

2014 114,089,252 29.99% W-1


3,804,22 W-2

W-1
Advance​ = Provided in the financial statements
W-2

Total deposit​= Provided in the financial statements

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INTERPRETATION
The depicts decreasing trend of investment to deposit ratio of Meezan bank. In 2014, the
investment to deposit ratio is 29% which is lower among other two years and indicates the
less liquidity for the Meezan bank. In year 2015, it increases to 31% and also in year 2016 it
decreases to 23%.

4.3.3. Market Prospect Ratios:


Market prospect ratio e.g. dividend yield, P/E ratio, earnings per share, and dividend
payout ratio. These are the most commonly used ratios in fundamental analysis.
Investors use these ratios to determine what they may receive in earnings from their
investments and to predict what the trend of a stock will be in the future. For example,
if the average P/E ratio of all companies in the S&P 500 index is 20, with the majority
of companies having a P/E between 15 and 25, a stock with a P/E ratio of 7 would be
considered undervalued, while one with a P/E of 50 would be considered overvalued.
The former may trend upwards in the future, while the latter will trend downwards
until it matches with its intrinsic value.
1. Price to book ratio

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2. Earnings per share
3. Price/earnings ratio
4. Break up value

4.3.3.1. Price-To-Book Ratio - P/B Ratio:

Price to book ratio (also called market to book ratio) is a relative valuation statistic
which measures the proportion of the current market price of a share of a
company's common stock to the book value per share of the company. Price to
book value tells whether investors in general value the company above, at or
below the face value of the company's assets as they appear in its financial reports.
Market value of a share is determined by the average opinion of the investors
about the company. Book value on the other hand, is determined using accounting
principles. There are a number of factors that are not captured by accounting
information, for example, value of a company's brands, reputation, growth
potential, etc. Such factors create divergence between the two figures and make
price to book ratio a useful tool for finding investor feeling about a company's
future outlook.
Investors who specialize in buying companies whose current market prices are
suppressed place significant emphasis on price to book ratio. They buy companies
with low price to book ratio but good return on equity and sell them when the
market adjusts its opinion about the company's true worth. Price to book ratio can
also be used to find out how much a company is worth by comparing its book
value to the average price to book value of the industry or competitors. The
price-to-book ratio (P/B Ratio) is a ratio used to compare a stock's ​market value​ to
its ​book value​. It is calculated by dividing the current ​closing price​ of the stock by
the latest quarter's ​book value​ per share.

Also known as the "price-equity ratio".

Market Price per Share


Shareholder equity
Formula

P/B Ratio =

2016 67.24 2.40 W-1


2,8149 W-2

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2015 45.75 1.79 W-1
25,557 W-2

2014 47.00 2.03 W-1


23,275 W-2

W-1
​Market Price per Share​ = Provided in the financial statements
W-2

Shareholder equity​ = Provided in the financial statements

INTERPRETATION
The depicts increasing trend of Meezan Bank in price to earnings ratio. However, this
increasing trend is better for bank because instead of this increasing trend the investors are
paying more than the book value. The year 2016 is better among others because in this year
the P/E ratio is higher. In 2014, the price to book ratio is 2.03 which is lower among other
two years and indicates the less liquidity for the Meezan bank. In year 2015, it decrease to
1.7and also in year 2016 it decreases to 2.40.

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4.3.3.2. Earnings per share (EPS):

Earnings per share (EPS) is a profitability indicator which shows dollars of net
income earned by a company in a particular period per share of its ​common
stock​ (also called ordinary shares). Earnings per share is calculated by dividing
net income for a period attributable to common stock owners by the weighted
average number of common shares outstanding during the period.

Formula

EPS​ is calculated using the following formula:


Net Income – Preferred dividends
Earnings per Share (EPS)​ =
Number of Common Shares Outstanding

2016 5,562 5.55 W-1


10,027,379 W-2

2015 5,023 5.00 W-1


10,027,379 W-2

2014 4,570 4.55 W-1


10,027,379 W-2

W-1
Net Income – Preferred dividends​ = Provided in the financial statements
W-2

​Common Shares Outstanding​ = Provided in the financial statements

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INTERPRETATION
The EPS of Meezan bank is better in all years. It indicates the earnings earned on each share
of outstanding common stock of the bank. The highest EPS is in year 2016 in which it is 5.00
that indicates the highest earning on behalf of each share of outstanding common stock.
Overall EPS of Meezan is favorable as it is of best interest of present and prospective
stockholders and management. The graph depicts the ups in EPS of MBL. In 2014, EPS is
4.55, in 2015 it increases to 5.00. in year 2016, EPS increase to 5.55. year 2016 shows better
earnings per share among other two years.

4.3.3.3. Breakup Value per share :

The sum-of-parts value of a publicly traded company. This value is derived by


analyzing each business segment of a company independently. This is usually
applied to large cap stocks that are likely to operate in several different markets or
industries.

Formula

BUPS is calculated using the following formula:

Breakup value per share =


Net asset

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Total number of
shareholder

2016 34,772,564 28.07 W-1


10,027,379 W-2
2015 29,680,419 25.49 W-1
10,027,379 W-2

2014 23,877,767 23.21 W-1


10,027,379 W-2

W-1
Net asset ​= Provided in the financial statements
W-2

​Total number of Shares ​= Provided in the financial statements

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INTERPRETATION
The graph depicts the ups in breakup value per share of MBL. In 2014, EPS is 23.21, in 2015
it increases to 25.49 in year 2016, breakup value increase to 28.07. year 2016 shows better
breakup value among other two years.

4.3.3.4. Price/Earnings (P/E) Ratio:

Price/Earnings or P/E ratio is the ratio of a company's share price to its earnings
per share. It tells whether the share price of a company is fairly valued,
undervalued or overvalued.

Formula

Market Price per


P/E Ratio
share
=
Earnings per Share
Current share price is obtained from secondary markets like NYSE, NASDAQ,
etc. while EPS is calculated as (net income minus preferred dividends)/weighted
average number of shares outstanding.

L​eading and Trailing P/E Ratio

If the EPS is the figure for the current period the P/E ratio is called trailing P/E
ratio. For better analysis the EPS should be the one expected to prevail in the next
reporting period, say next year. P/E ratio calculated based on expected P/E ratio is
called leading P/E and is a more meaningful estimate of the company's justified
P/E ratio.

2016 67.24 12.1 W-1


5.55 W-2
2015 45.75 9.1 W-1
5.01 W-2

2014 47.00 10.3 W-1


4.56 W-2

W-1

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Market price per share ​= Provided in the financial statements
W-2

​Earnings per share ​= Provided in the financial statements

INTERPRETATION
The graph depicts the ups and down in price/earnings ratio of MBL. In 2014, EPS is 10%, in
2015 it decreases to 9% in year 2016, P/E ratio increase to 11%. year 2016 shows better P/E
ratio among other two years.

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CHAPTER 5

SWOT ANALYSIS

● Strength
● Weakness
● Opportunity
● Threats

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5. SWOT ANALYSIS

SWOT Analysis of Meezan Bank Limited:

SWOT Analysis can be very helpful for every organization to get large number of
benefits by just checking their Strengths, Weaknesses, Opportunities and Threats. In
SWOT two types of factors are calculated internal factors are Strengths and
Weaknesses where External factors are Opportunities and Threats. SWOT Analysis

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tells the accurate position of business and tells what type of actions should be taken
by Managements to improve the organization.
Meezan Bank being a quality organization strives to provide quality to all its
stakeholders, customers, employees and environment. In Pakistan, it is operating in a
very volatile economic and political environment. I have summarized its major
strengths, weaknesses, opportunities and threats in the following paragraph:

5.3. Strengths:
1. MBL has the privilege to be the first Islamic banking sector which gives a competitive
edge over all other banks and being the pioneer of this industry MBL is enjoying
major share of it.
2. The largest Islamic banking sector with 571 branches nationwide.
3. Strong growth of its Islamic banking SBU.
4. The members of its Shariah supervisory board of MBL are internationally renowned
scholars, serving on the boards of many Islamic banks operating in different countries.
5. Dedicated professional staff.
6. The working environment of the bank is very friendly and cooperative. There is no
bossiness in the higher management. The upper management consults its staff in
making decisions and provides them independence in their job areas. For the objective
is performance and not conformance with the boss.
7. Online banking service means that a customer can withdraw and deposit his money at
any branch in the country. Where this service is not present, cheque must be presented
only in that branch on which they are drawn. But with this facility, a person has
access to its funds at any branch of the bank. That would mean that any person who
has an account with the bank, has an account in 24 branches of it. It provides a lot of
comfort and convenience to the customers.
8. Being an Islamic bank, MBL has a wide national network. As an emerging markets
bank, it has branches in all the major cities of Pakistan with the facility of online
banking, it is very easy for its customers to transact all over the country.

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9. Attention and sensitivity to the competition prevailing in the country.
10. Strong shareholding.

5.4. Weakness:

1. Meezan Bank Limited has no Credit card facility.


2. The Islamic economic system is not something that can work in isolation of the
geo-political and legislative system, as well as, and more importantly the
society's behaviors towards the injunctions of Islamic Shariah in personal and
collective matters. Accordingly, one can easily imagine that in an economy whereby
most of the businessmen are not honest in fairly presenting the financial statements
of their businesses, how difficult it is to introduce a profit-and-loss sharing based
financial solution.
3. Lengthy & extensive documentation.
4. Lack of promotions and advertising of their products and service.
5. High charges for different activities such as online or Demand Draft as compared to
competitors.

6. It was observed in the bank that the degree of satisfaction of the employees was quite
low. First, the pays are lower those offered in other banks. Secondly, the employees
are given targets that are too difficult to achieve. For example, the targets given to the
personnel in sales and services department are higher than another bank in the
country, be it a local bank or a foreign bank. This makes the job too stressful and
tensed It is good to keep the people under a continuous move, but to overstress them
can be harmful to them and as well as to the organization.

5.5. Opportunities:

1. House financing sector can be targeted to maximize the profit.


2. Growing demand of Islamic financial product and services.

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3. Venturing into Islamic groups outside the countries as opportunity to expand business
in UAE and Golf states. i.e. financial institutions.
4. Coming up with. Products for the SME to targeting the medium level customers.
5. Doing business with companies having Islamic mindset. I-e Islamic financial
Institutions.
6. Increase branch network within the country.
7. To open overseas branches throughout the world like National Bank of Pakistan and
Habib Bank Limited or merger with other foreign banks outside Pakistan. Increasing
focus/target on different types of customers, MBL can open women branches,
especially in those areas where women class want to get involved but couldn’t due to
environmental restriction.
8. The formation of new and energetic marketing teams can increase the disbursement of
loans and new customers can be searched out.
9. They can capture a large portion of the market, if they expand its ATM and branch
network to other countries of the as well.

5.6. Threats:

1. New competitors setting up their Islamic banking sections and they have the
infrastructure, skill, ability, resources & attitude to capture the market more than the
Meezan bank.
2. Rising customers’ expectations
3. Change in Government's attitude towards Islamic banking.
4. Fears on the credibility of Islamic banking ethical compliance and monitoring
systems.
5. High Interest Rate from SBP.
6. SBP has not special policy regarding Islamic Banking.
7. Govt. policies are mostly for conventional banking system not for specially designed
for Islamic banking.

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8. Fears on the credibility of Islamic banking ethical compliance and monitoring
systems.

Reviewing this SWOT analysis from time to time would help evaluate the
bank's position. It would help the management in comparing their strengths of the past
with those of the present and to what extent the management has been able to
overcome the weaknesses.

CHAPTER 6
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TRAINING PROGRAMME

● Divisional or departmental details


● Activities of intern

6.1. Divisional or departmental details​ ​of Meezan Bank Limited:


“​Specialized functional area within an organization or a division, such as
accounting, marketing, planning. Generally, every department has its own manager
and chain of command.”

​There are following two main departments of MBL which further sub divided into

different sections which are as follow:


Personal Banking Department​:

➢ Bank Accounts
➢ Term deposits
➢ Consumer Finance
➢ Home remittance

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➢ 1Meezan Upaisa
➢ Premium Banking
Business Banking Department:
➢ SME Business Banking
➢ Corporate Banking
➢ Islamic Advisory Services
➢ Agricultural Finance
➢ Correspondent Banking
➢ Asset Management
Following is given the brief Description of each department:

6.1.1. Personal Banking:

​Personal Banking department basically directly related with the customer this
department holds the asset or the deposit of the bank which comes from the accounts and
accounts related to the customers, this department is handled by BDO’s (Business
Development Officer), PBO (Personal Banking Officer) and other employees also all of
the employees have supposed to bring the targeted deposit in the bank through providing
valuable services to the customers.

6.1.1.1. Account Opening Department:

This department is responsible for the new customers account opening procedure,
and many other services relating to the other services like providing ATM, Cheque
books, MS alerts and E-Statement related to the accounts of the customers:

Meezan Bank Offers its customers ​Individual, Sole-Proprietor​ and​ Joint ​accounts.

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Following are the types of accounts Meezan Bank Offers:

● Meezan Rupee Saving Account


● Meezan Rupee Current Account
● Meezan Asaan Saving account
● Meezan Asaan Current Account
● Meezan Bachat Account
● Meezan kids club Account
● Meezan teen Club Account
● Meezan Business Plus Account
● Meezan Foreign Currency Account
● Labaik Saving Account

6.1.1.2. Term Deposits:


Meezan Bank provides a complete range of short term and long term deposit certificates
with the flexibility of monthly, quarterly, semi-annual and annual returns​.
It includes the following products and services:

● Certificate of Islamic Investment (Periodic profit from 3


months to 5 years)
● Meezan Amdan certificate
● Meezan Mudarbah certificate
● Dollar Mudarbah certificate

6.1.1.3. Consumer Finance:

​Consumer Finance includes the Ijarah of house hold products including Car
Ijarah, Bike Ijarah, LED, Fridge etc​.

6.1.1.4. Home remittance:

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M​eezan Easy Remit is a Home Remittance service which provides an easy, fast and
reliable way for Pakistanis who are working abroad to send money to their families
and relatives living in Pakistan. The money sent from abroad can be immediately
collected from any branch of Meezan Bank which has a strong presence of more than
570 branches and 146 cities in Pakistan.

6.1.1.5. Meezan U-paisa:


To support the financial inclusion and expand the reach of Riba-free banking
services, Meezan Upaisa enables every citizen of Pakistan to send and receive money
nationwide using their original CNIC.
Through this first Islamic Branchless Banking service of the world, launched in
collaboration with Ufone, an Etisalat group company, you may also pay
Utility/ISP/Phone Bills anywhere, anytime in Pakistan​.

6.1.1.6. Premium Banking:

Meezan Premium Banking is a prestigious way of Islamic banking specially designed


to meet your financial needs. Experience your banking needs with our Premium
Banking services and value added benefits available to you from our personalized
and free banking services to customary discounts and privileges tailored to your
lifestyle at finest retail outlets, restaurants and hotels across the country.

6.1.2. Business Banking Department:

​Business Banking includes the following Banking departments:

6.1.2.1. Small Business banking department:

Meezan Bank provides Shariah compliant banking services like financing, trade and
deposit related services to small & medium sized enterprises. We combine the

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expertise of in-house product specialists and Shariah scholars to provide Sharia
compliant financing solutions to meet the working capital finance, import finance,
export re-finance long-term finance, documentary credit requirements and project
financing needs of our customers.

6.1.2.1.1. Eligibility Criteria:

1. Small Enterprises:

● Annual Sales Turnover​: up to Rs.150 Mn


● Number of employees​: Up to 50
● Max Financing allowed​: up to Rs.25 Mn

2. Medium enterprises​:

● Annual Sales Turnover​: Rs.150 Mn up to Rs.800 Mn


● Number of employees​: 51 to 250 (Manufacturing & Service
Concerns) - 51 to 100 (Trading Concerns)
● Max Financing allowed​: up to Rs.200 Mn

6.1.2.2. Corporate Banking:

We provide a comprehensive range of financial services to large number of corporate


clients including multinationals and public sector entities, by partnering with them to
build long-term relationships. By drawing on the expertise of in-house product
specialists and Shariah scholars working under the guidance of our Shariah
Supervisory Board, we, at Meezan Bank can provide Shariah-compliant financing
solutions to meet the working capital finance, import finance, export re-finance,

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long-term finance, documentary credit requirements and project financing needs of
our customers.

Our Corporate Banking relationship teams work closely with Treasury, Cash
Management, Investment Banking, Commercial Banking and Consumer Banking
departments to develop and deliver value added banking products that fulfill the
diverse business needs of our corporate clients.

6.1.2.3. Corporate Assets:


Over the years, Meezan bank has been able to grow its corporate assets portfolio
considerably despite the challenges. With a focused development strategy, we have
been able to build a healthy and well diversified portfolio that has resulted in our
corporate assets book to grow at a CAGR of 31% per annum over the last 5 Years.

6.1.2.4. Corporate Trade Business:

The Bank’s trade business (import and export) performed very well in 2016 in
both volume and income and registered a growth of 20% and 27.5%, respectively,
notwithstanding the fact that exports of the country dropped by 13% during the
year. The total trade business volume in 2016 crossed Rs 552 billion.

6.1.2.5. Islamic Advisory Services:

In line with our vision of establishing Islamic Banking as banking of first choice,
Meezan Bank believes in working for the larger benefit of the society. Meezan Bank
has the unique combination of experts in areas like Islamic law & Jurisprudence,
Accounting, Auditing, Capital Markets, Corporate Finance and Islamic Finance. Our
expertise, accumulated over the years, enables us to provide world class service and
unmatched Shariah-compliant solutions to most sophisticated problems in a timely
manner.

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We’re working to expand the market, not merely our market share. The continuous
interaction with the academia has enabled us to produce a stream of expert
practitioners-cum-trainers. Our trainings are not only backed by solid theoretical
foundations, they are continuously updated based on real life experiences. Our case
studies help learners gain hands-on experience of various aspects of Islamic finance.
6.1.2.6. Islamic Capital Market Services:
6.1.2.6.1. Skuk Structuring:
As a leader in structured finance products, Meezan Bank has been involved in
Sukuk Structuring, Shariah Advisory and Syndication/Consortium financing,
lead-managing a number of new Shariah-compliant Sukuk issues and syndicated
transactions with its corporate clients.
IFAS provides assistance in execution of Sukuk transactions and development of
Sukuk structures based on client-specific requirements. Our multi-layered
approach enables both commercial and Shariah considerations to be incorporated
into proposed structures. Emphasis is placed on developing structures to achieve
wide Shariah acceptance and marketability of Sukuk.

6.1.2.6.2. Mutual Funds:

Mutual Funds are an important financial intermediary in developing markets


where capital markets are volatile and investors do not have the expertise, savings
and time to devote themselves to making a well-diversified profitable and
Shariah-compliant portfolio. ​Islamic investment principles require persistent
Shariah Compliance. Islamic Mutual Funds are therefore catering to this important
need and we provide them with technical expertise in managing their portfolios in
Shariah-compliant manner.

6.1.2.6.3. Stock Market Indices:

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Meezan Bank has initiated the formation and subsequent management of a
domestic Islamic Market Index i.e. KMI-30 index in collaboration with Karachi
Stock Exchange (now Pakistan Stock Exchange PSX). Shariah Compliance is
necessary not only at the time of IPO, but it also encompasses all operations of the
enterprise at all stages of the organizational life cycle.

6.1.2.6.4. Agricultural Finance:

Meezan Bank is recognized as the leader and trendsetter in Islamic Banking in


Pakistan by it being the first to provide a myriad of Shariah-compliant financial
products for both domestic and corporate customers. Continuing this tradition,
Meezan Bank has also launched Islamic Agricultural Finance to enable the
farming sector to avail Shariah-compliant financing for their needs.

In addition to other permissible modes of financing, the Bank offers the following
specific agricultural products finance.

It provides following services:

● Meezan Tractor Asaan


● Meezan Agri Asaan
● Meezan Fasal Asaan

6.1.2.6.5. Correspondent Banking:

Financial Institutions, a part of the Treasury and F.I. Group, primarily focuses on
building and maintaining relationships within the Financial sector. Relations range
from authenticated communication links by way of SWIFT RMA to Trade,
Treasury and account maintenance in different currencies worldwide.

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With over 360 banks in 86 countries, our 600 globally located correspondents
provide all trade services, seeking to add value and service to our branches and
functional units. Services include advising, confirmation, discounting of letter of
credits, reimbursement undertakings and standby LCs and guarantees. Further, the
ever-increasing SWIFT RMA relationships with financial institutions serve to
route all kinds of transactions.

6.1.2.6.6. Asset Management:

Al Meezan is the largest fund manager in private sector in Pakistan and the Only
Shariah compliant Asset Management Company in Pakistan. Al Meezan has
successfully completed 20 years of its existence in 2015. This is one of the longest
track records in private sector in investment management in Pakistan and has
emerged as one of Pakistan’s leading investment solutions provider in a Shariah
compliant manner. The Shariah Advisor of Meezan Bank Limited, also the
Shariah Advisor of Al Meezan, supervises the operations to ensure Shariah
compliance of the funds.

6.1.2.6.7. Services:
Following services are provided by this department:

● Developing, floating and managing Islamic Mutual Funds.


● Structuring and managing Discretionary and Non-Discretionary.

● Providing Investment Advisory Services.

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6.2. Internship Activities

6.2.1. Work done by me:

In Meezan Bank limited I really enjoyed working with the bank staff of MBL civic
centre johar town branch and having a wish to be an employee of this organization
following the Islamic discipline. It was very difficult to work in different departments of
bank within limited time but on my request, the bank staff provides me an opportunity to
work in different departments for the sake of practical knowledge.

I started my internship from 26st July 2017 till 11th September 2017 and duration of my
internship is 6 weeks. The staff of branch is much cooperative. They imparted my training
in all departments of the branch i.e. customer service, clearing, remittance and account
opening. On the first day of my internship, the branch manager asked me some questions
about my studies. He told me some basic rules and regulations about banking operation
and introduced me with other staff members of the Bank, and introduce me with
employees working in MBL Civic Centre branch.
I have done the following activities during my internship:
● Filling Cheques
● Filling deposit slips
● Issuance of cheque book
● Remittance Printout
● Filling Account Opening Form
● Online funds transfer
● Pay Order
● Other General Banking Activities

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6.2.1.1. Filling Cheques:

For filling the Cheques, we may write the date, payee, amount in words and figures
then one signature of customer in front and two behind cheque.

6.2.1.2. Filling Deposit Slips:

For filling the deposit slips the name, account number, amount in words and figures
branch name and signature of depositor are necessary.

6.2.1.3. Issuance of cheque Books:

For issuing cheque book the signature of customer are necessary.

6.2.1.4. Remittance Printout:

For foreign Remittance, pin code, branch name, CNIC number of beneficiary,
Beneficiary’s name, CNIC expiry date, Mobile number of beneficiary, sender name
and city is noted down on remittance form and the signature of beneficiary is taken
and original ID card is seen.

6.2.1.5. Filling Account Opening Form:

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For account opening forms the CNIC number, mobile number, CNIC copies. Next of
kin’s CNIC copy, customer personal and professional information is necessary. For
thumb account the photos of customers are also necessary.

6.2.1.6. Online Funds Transfer:

For online transfer, the account of customer is necessary and amount is written in
words and figures.
6.2.1.7. Pay Order:

Pay order are negotiable instrument used for transferring the amount from one place
to another place safely. Pay order is payable on specific branch of same bank which is
written on the face of pay order.

6.2.1.8. Other Banking Activities:

Also, doing other general banking activities with my branch staff such as verification
of documents, filling of branch documents, and many more.

6.2.2. Names of Departments:

1. Account Opening Department


2. Clearing Department
3. Remittance Department
4. Cash Department

6.2.2.1. Account Opening Department:

At the start of my internship, I started my work at account opening Department


where I learned how to open an account what are the basic requirements for a

161
customer for account opening and which documents are required for further
procedure

Ans also learned how many accounts are used in bank like

➢ Single
➢ JOINT Personal
➢ Sole Proprietorship

The requirement for these types of account opening are:

➢ Select the nature of the account


➢ Original CNIC or Copy of CNIC
➢ Permanent Residential address
➢ Photos
➢ The reference of any person who has already an account.
➢ The other information related to the account filled on choice of
applicant.
➢ Signatures are done on form as well as on “Signature Specimen
Card (SS Card)” there should be no cutting or over writing
specially on SS card. The signature on SS Card scanned into
the computer as a record in the computer.

The requirements for opening the above-mentioned account are given below:

6.2.2.1.1. For Single/Normal Account:

1. Original CNIC must be originally seen by the Personal Banking Officer and its copy
is attached to the form.
2. if signatures are not strong/ or signatures are simple than photos of the person
required and thumb impression is taken on the SS Card.
3. Source of Income or Salary slip must be required.
4. If residential or mailing address is change as per CNIC than an under taking is
attached with the form.

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5. And if the signatures differ from CNIC than also undertaking attached with form on
which both signatures are taken as per form or as per CNIC.
VI.2.2.1.2. For Partnership:

1. CNIC copies of all partners must be required and they are originally seen by the
PBO.
2. Attested Copy of partnership deed dully signed by all partners of firm.
3. Attested copy of Registration Certificate with register of Firm. In case the
partnership is unregistered this fact should be clearly mentioned on the a/c opening
form.
4. Authority letter, in original, in favor of the person authorized to operate on the a/c of
the firm.

VI.2.2.1.3. For trust Account:

1. Attested Copy of certificate of registration.


2. List of all members/leading person that lead to trust.
3. Copy of CNIC of all members must be required.
Visit report is also attached with the form and the visit is done by branch manager.
These are all the requirement for all types of account opening forms. I personally
filled up many forms here for the sake of learning and practice, it tale too much time
to gather the information from the customer. I learn about different about of stamps
which are necessary for account opening

And learn about the use of the stamps on the right place. Following stamps are
required to be use on account opening form:

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1. Signature Verified
2. Signature admitted
3. Void
4. Picture Admitted
5. Original Seen
6. PBO stamp
7. Operation manager Stamp
8. Branch Manager Stamp
9. L.t, R.t thumb
10. Time, Date stamp on the front page of form.

After form completion and proper Stamping, Nadra verisys is attached and the form is
authorized by operation manager, and after that PBO, Operation manager and branch
manager do their signatures on their specified place. And the complete procedure is given
below:

3. Account Opening Form:


This department relates to open new accounts. Customers approach to Bank and an
Account Opening Form is given to him for completing and signing the same. After
completed account opening form in all respect and checked by the bank officer and
properly signed by the customer which is also verified by the Operation Manager.
Specimen Signature Card are got signed from the customer and after verifying the
information written there in, Customers are given account number and all this
information are saved in the system.

4. Completion of the Form:

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After completed account opening form in all respect and checked by the bank officer and
properly signed by the customer which is also verified by the Operation Manager.

5. Specimen Signature Card (SSC):


Specimen Signature Card are got signed form the customer and after verifying the
information written there in, Customers are given account number and all this information
are saved in the system.

6. Signature Difference Form:


The signature of the client is taken on a signature difference form if his signature
differs from the CNIC.

2. Computerized Checking:

After filling in the form, the officer connected via internet enters the record of his
customer, then the officer of the bank authenticates the record under his signature and
stamp and send it to the Branch Manager. This is known as CIF.

3. Account Number:
After completion of all formalities, an account number is allotted to the customer and
all the information are recorded in the computer. After completion of all procedures, the
bank prepares a letter and sends it to the client at his postal address to pay gratitude to
the customer.

4. Cheque Book Issuance:


Cheque Book requisition for first Cheque book is send to Head Office, Karachi for
issuance the same. The Cheque book consists of 25 leaves and the charges of the
cheque books are 10 Rs. Per leaf so if the person is opening ASAAN account than 116
rupees including tax have been deducted, and if Normal account than 250 rupees have
been deducted. And the cheque book will receive from 3-4 working days after the

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activation of account. When Cheque books received in branch call are made to inform
customers that they can receive it from bank and when customer receives the cheque
book signatures are taken from customers on cheque book receiving register.

5. ATM Card Issuance:


Meezan Bank limited provides the ATM facility to its Customers and they can
withdraw their amount at any time through ATM. ATM card requisition is also sent to
head office, Karachi for the issuance of ATM card.

Meezan bank offers following 3 types of ATM cards to its customers:

➢ Silver Card (Transaction Limit up to 50000, and charges 696 along with tax)
➢ Gold Card (Transaction limit up to 100000 and charges 1044 along with tax)
➢ Master Card (Transaction limit is up to 150000 and charges 1392 along with tax)

It also takes 3-4 working days for the processing after account activation. When
Card is received in branch than the calls are made to make them aware of that their
card has been reached in branch, when customer comes signature are taken from him
on ATM Card Register. For activation of ATM, customer has to call the help line
(111-331-331).

6. Procedure for Closing of an account:

Whenever a customer wants to close the account, he fills up an account closing form
and signs there in, account balance should be zero, approval is taken from the Branch
Manager, specimen card is taken back and is attached with the form and account is
closed.

VI.2.2.1.4. Locker Operation:

Locker facility is also available at all the branches of MBL for keeping the valuables
there in. As for as privacy is concerned, lockers are located in a specially designed
area protected with strong room doors and grills under the control of two officers,

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operated by use of Master Key and Customers Key supplied to the customer at the
time of locker is rented out. Lockers are three types: Small, Medium and Large
lockers.
Security fee of locker is Rs. 5000 which is refundable when locker is surrendered and
charges(rent) for Small Rs. 2500, for Medium Rs. 3500 and for Large Rs. 5000 per
annum. The process for providing a locker is as follow:

A separate application form is complete and signed by the customer along with a
copy of CINC with two photographs. After completing all the formalities, a locker is
allocated to the applicant and Key is given to him with locker identification card.
And whenever customer have to use the locker he has to bring his card every time
and entry is recorder in the locker operation register where locker number, name of
attendant, Time in and Time out is noted down and the signature of the customer is
taken.

Locker operation is a very critical and confidential task so only the authorize person
of bank have this right to operate the locker. And I have just record the entry of
locker operation.

VI.2.2.1.5. Stop Payment Procedure:

For stopping the payment, Bank takes sign of the customer on stop payment form
where in account number with date and amount of cheque is written. Customers also
mention the reason of stop payment then Bank mark that cheque as stop payment.
The bank will not make payments of these Cheques. And the charges deducted for
stop payments are 580 rupees rather they are 1 or 2.

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VI.2.2.2. Clearing Department:

Clearing department work with provision used for settlements of proceeds of cheque
among different through the medium of a clearing house. I learnt they’re about
Clearing of different Cheques. I was told there the main objects of clearing. After
making entries in outward and inward clearing registers. All the Cheques are sent to
NIFT (National Institutional Facilitation Technology).I have also Worked in the
clearing department.

6.2.2.2.1. NIFT:

NIFT stand for National Institutional Facilitation Technologies. Clearing House of SBP
has shifted a part of its work to private institution named NIFT. NIFT collects Cheques
from all branches of different Banks within city through its carriers and send them to the
branches on which these are drawn for clearing. NIFT prepares a sheet for each branch
and send it to each branch as well as to State Bank of Pakistan where accounts of Banks
are settled.

VI.2.2.2.2. Types of Clearing:


There are following two types of clearing:

VI.2.2.2.2.1.Inward Clearing:

When Cheques of other Banks are deposited in our bank, after clearing these
Cheques through NIFT by the other Banks on which these are drawn. Accounts of
the customers are credited. Afterwards the they check the amount in the specified
account, signature are accurate and authentic and there are accurate date and
stamping is done than clearing takes place.

VI.2.2.2.2.2. ​Outward Clearing:

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When Cheques of our bank are deposited in other Banks and these Cheques are
sent to us for verification, we debit the account of our client after verification of
their accountant person comes daily to branch for purpose of receiving checks for
clearing.On cheque transfer funds following four stamps must be required:
➢ Signature Verified
➢ Payee’s Account Credited
➢ Authorized Date
➢ Meezan Bank Ltd.
VI.2.2.3. Remittance Department:

Meezan Easy Remit is a Home Remittance service which provides an easy, fast and
reliable way for Pakistanis who are working abroad to send money to their families
and relatives living in Pakistan. The money sent from abroad can be immediately
collected from any branch of Meezan Bank which has a strong presence of more than
570 branches and 146 cities in Pakistan.
The Procedure for home remittances is as follow:
1. Customer takes the Remittance print out and fill it out which contains the basic
information like Pin code, Amount, Beneficiary’s CNIC number, Beneficiary’s
name, Beneficiary’s address, Beneficiary’s mobile number and Sender’s name
and city, at the customer must put his signatures.
2. Then customer takes this form to the authorized person who deals the whole
procedure he checks the original CNIC of Beneficiary and Verified the payment.
3. After verification customer submit his CNIC copy and after proper authorization,
customer went to cashier counter for the payment.

VI.2.2.4. Cash Department:

Cash department is usually to collect and deliver cash. When a customer comes to
the bank and wants to issue or deposit amount comes to the cash counter to give or
receives amount. So, it is the cash officer’s duty to deposit or withdraw the amount

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after verification of signature or account number of the customer. Cash officer
checks the balance and then pay the amount to the customer. The banker make
journal and ledger to enter notify the customer account all the entry is done in the
system, and take print of those entry to keep record, and check all the entry are
recording right head of account. So, all the cash dealings occurred in the banks are
over to cash officer and the cash officer is responsible for all the deposits or
withdrawals.

VI.2.2.5. Service Quality Department:

In this department, I worked from 26th july 4th September where I learnt a lot about
floor time management and quality assurance affairs in branch.

VI.2.2.6. Floor Time Management:


While standing near the main gate bank ensures that customers coming into MBL
are properly looked after. Bank also creates a sense of ownership of service quality
and develops a service mindset and ultimately a quality service culture at MBL.

Furthermore, Bank manages the sale and service area of the branch to provide
maximum opportunities to clients as well as provide a sense of comfort and personal
attention.

5.2.2.6.1. Responsibilities of Floor Time Management:

Bank maintains and file daily working sheet of Floor Time Management and
record customer’s complaints in the CRM. Bank monitors daily log of TAT sheet
and put up it to Branch Manager. Complaint handling and its follow up is made on
daily basis. Modifications and improvements are suggested in the system and
process. Try to make coordination between branch and Head Office regarding
service quality. Lead Floor Manager is assigned duty first of all.

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VI.2.2.6.2. Responsibilities of Lead Floor Manager/ Floor Manager:
Lead Floor Manager welcomes all the customers and introduces himself with a
smiling face and checks branch cleanliness and pleasant atmosphere in the branch.
He also checks availability customers stationary at proper places as well as
maintain the notice board and assist in SQ. Individual customers are provided
comprehensive services. He moves around the banking hall and cash counters area
to ensure that every customer is looked after properly.

VI.3. Department: Learning and development

The ​learning and Development department in coordination of Human Resource


Department and other stakeholders finalize the hiring. The officers are hired to fill the
existing gaps and provide the quality.

Yearly & quarterly bonuses, Good Medical Insurance, Learning opportunities.


Working in MEEZAN improves your management skills very much because of work
load, employee has to manage the balance between and work and his/her personal life.

MEEZAN Bank Ltd is the largest Islamic bank in Pakistan, with state of the art
building and work place environment, crossing over 550 branches across the country,
its increasing value and profit margins. Time to time workshops with in-house &
foreign speakers and courses are offered by the bank for its employees, Good
environment, management, and excellent co-workers make a typical day exciting and
challenging.

It is an auspicious and renowned Islamic bank. The Branch Manager and Relationship
managers are very helpful and motivate to perform the tasks assigned efficiently and
effectively. It also provides opportunity of Internship for the students who are

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interested and provide productive, learning environment and the employees get
chances to grow in future career.

6.3.1. During My Internship Program:

I started my internship program on 26​th of july, 2015 and ending date of this program
is 8​th September, 2016 in Learning and Development Department at Civic Center in
Johar Town, Lahore.

I have learnt many techniques of working in this department.

➢ Modes of Islamic Banking.

➢ Maintaining Data.

➢ Calling candidates to inform them about time, date and venue of the
recruitment test and interview.

➢ Sending schedule to the Branch managers for the training of their


employees.

➢ Generate emails to the Trainers.

➢ Checking tests of the trainees after the evaluation of the trainees


through tests.

➢ Checking the trainee’s during test as an invigilator.

➢ Preparing sheet on Excel of feedback and their results.

➢ Tele the cost sheets with costs spend on the training.

➢ Mailing Shariah Cards to the branches of the specific employees.

➢ Attend some of the training classes.

➢ Working as a team member.

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➢ Took interview of L&D branch manager on the process of hiring to
prepare an assignment of the university.

VI.3.2. Training Program:

I started my first day of internship with the introduction of the bank employees and
with introduction of bank department. In this week just know how work done in the
department of the bank.

Manager Mr. Omer Khan gave a brief introduction of the modes of the islamic
banking time to time, so the interns & employees memorize and the other employees
who already know can remind those modes.

VI.3.2.1. MURABAHA

​Literally it means a sale on mutually agreed profit. Technically, it is a contract of sale


in which the seller declares his cost and profit. Islamic banks have adopted this as a
mode of financing. As a financing technique, it involves a request by the client to the
bank to purchase certain goods for him. The bank does that for a definite profit over
the cost, which is stipulated in advance.

VI.3.2.2. IJARAH
Ijarah is a contract of a known and proposed usufruct against a specified and lawful
return or consideration for the service or return for the benefit proposed to be taken,
or for the effort or work proposed to be expended. In other words, Ijarah or leasing is
the transfer of usufruct for a consideration which is rent in case of hiring of assets or
things and wage in case of hiring of persons.

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VI.3.2.3. ISTISNA’A
It is a contractual agreement for manufacturing goods and commodities, allowing
cash payment in advance and future delivery or a future payment and future delivery.
Istisna’a can be used for providing the facility of financing the manufacture or
construction of houses, plants, projects and building of bridges, roads and highways.
BAI MUAJJAL Literally it means a credit sale. Technically, it is a financing
technique adopted by Islamic banks that takes the form of Murabaha Muajjal. It is a
contract in which the bank earns a profit margin on his purchase price and allows the
buyer to pay the price of the commodity at a future date in a lump sum or in
installments. It has to expressly mention cost of the commodity and the margin of
profit is mutually agreed. The price fixed for the commodity in such a transaction can

be the same as the spot price or higher or lower than the spot price​.

VI.3.2.4. MUDARABAH

A form of partnership where one party provides the funds while the other provides
expertise and management. The latter is referred to as the Mudarib. Any profits
accrued are shared between the two parties on a pre-agreed basis, while loss is borne
only by the provider of the capital.

VI.3.2.5. MUSHARAKAH

Musharakah means a relationship established under a contract by the mutual consent


of the parties for sharing of profits and losses in the joint business. It is an agreement
under which the Islamic bank provides funds, which are mixed with the funds of the
business enterprise and others. All providers of capital are entitled to participate in
management, but not necessarily required to do so. The profit is distributed among

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the partners in pre-agreed ratios, while the loss is borne by each partner strictly in
proportion to respective capital contributions.

VI.3.3. Learning and Experience Gained:


Informed candidates who were selected for the test of the recruitment through calls
and after their results, I got the task of generating calls to the selected candidates for
the interview and inform them about the Venue, Date of &Time. Have learnt, Mr.
Mazhar Farooqi taught me how to generate emails to the branch manager to inform
them which employees of the branch have been selected for the training and inform
them of a complete schedule of the training and generate emails to the Trainer’s.
After the training tests are being held at that time I experienced the role of Invigilator
and duties in the correspondence of Mr. Omer Khan (Manager of L&D). Checking
tests while comparing it with the keys of the test which are held. Gathering feedbacks
of the trainer from the trainees and preparing Excel sheet of the feedback result. Tele
the cost sheets with the costs spend on the training under the instructions of manager.
Generating mails of Shariah Cards to the branches of the specific employees. And
even I have attended some the classes with the permission of manager for my
knowledge. For example, I got the information about;

➢ Tijarah
➢ Istisna
➢ Sukuk’s

While working in this department it helped me in recognize the atmosphere of


working in an office and the culture of Meezan Bank, which polished my skills of
team work. The understanding of Meezan bank assisted me in preparing report which
were provided by university (University Of Lahore). One of its example is as follow,
prepared this by interviewing the Manager of Learning and Development Department.
The assignment was on the Recruitment and selection and the role of the Learning
and Development Department in this process.

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VI.3.4. PROCESS OF HIRING:
There are two types hiring in MEEZAN Bank.

1.Direct Hiring.
2.Batch Hiring.
➢ BSO (Branch Service Officer)
➢ TCO (Trainee Cash Officer)
➢ TBO (Trainee Branch Officer)

VI.3.4.1. Steps of Hiring Batches: BSO, TCO, TBO

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VI.3.4.2. Steps:
➢ Advertise/ Publicity (Dawn newspaper, Rosee.pk, MEEZAN’s web).
➢ Collection of C.V’s (Online).
➢ Screening &Short list of candidates.
➢ Generate Email to the short-listed candidates (Venue, Date of Test &Time).
➢ Generate calls to the candidates (Venue, Date of Test &Time).
➢ Recruitment Test.
➢ Short list of eligible candidates after test.
➢ Generate Email for the Interview call (Venue, Date of Test &Time).
➢ Generate Calls to the candidates (Venue, Date of Test &Time).
➢ Conduct Interview by Head of Department, HR manager & Manager of Learning and
development/ Area manager (Panel Interview)

➢ Attesting of Certificates & Degrees from Board & HEC/Universities.


➢ Final selected candidates list issued.
➢ Calling final candidates to complete the documentation of Joining / Service Agreement
on Stamp Paper (Bond)
➢ Meanwhile, List of final candidates sent to the HR Department.
➢ HR Department Issue’s ​Offer Letter​.
➢ Send to the Learning and Development Department.
➢ Generate calls of final selection
➢ And Intimate to candidates of date of joining.

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➢ Confirmation signatures by candidates of receiving Offer Letter at date of Joining.

VI.3.4.3. INDUCTION AND WELCOME:


➢ Training Session starts, 1​st day of training is the Orientation Day(Welcome party to the
trainees by the particular department too.).
➢ Introduction of MEEZAN ISLAMIC BANK and its history, Mission, Vision.
➢ Employee ID’s are issued to the employee’s
➢ In case of any objection, the documents are re-checked and send to the HR Department.

VI.3.5. TRAINING:
Training is of two types.
1. Class training​ (Theoretical Information)
2. Rotation / On-Job training​ (Practically know, how about working / Job)

Names of courses related to the fields the candidates are selected for, Counting, Cash
Handling, Currency Notes Identification, Negotiable Instruments, Other SBP regulations
& SOP Prudential Regulations, F.E. Manual, Other SBP regulations & SOP.

After 2 weeks of class training the trainees are sent to the rotation of the branches for 2
weeks so they can clear their concepts related to the theoretical training, after completing
their rotation of branches, trainees are sent back to the class training for another month.

➢ Proposed Branches for Final Placement.


➢ Send to HR Department for final Placement.

VI.3.6. CAREER PROGRESSION TRAININGS:

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● Islamic banking course - level I (IBC)
● Islamic banking course - level II (IBC)

CHAPTER 7

PROBLEMS &RECOMENDATION
● Problems
● Recommendation

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7.1. Problems

7.1.1. Islamic banks facing operational and institutional problems:

Islamic Banking has been growing at a swift speed in Pakistan as well as all over
the world. Pakistan and many Muslim countries are experiencing dual banking
system. The Islamic Banking industry has generated considerable interest in the
financial world in recent years. It is considered as Faith-based banking with
considerable growth potential.

The interest-free Islamic banking has recorded a vigorous growth in the last few
years and would further expand vastly with the help of effective legislation and
introduction of more products.

Total assets of Islamic banking in Pakistan have grown by 34 percent to Rs641


billion at the end of last calendar year. In the same degree deposits base has also
increased by 34 percent to Rs521 billion during 2011.

Market share of Islamic banking has grown exceptionally in the overall banking
industry. Total assets of Islamic banking are 7.8 percent of the total banking
industry while deposits have 8.4 percent share in the total banking sector in the
country.

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In 2002, Meezan bank limited started operations as the first local Islamic bank in
Pakistan. In a decade this Islamic Bank has shown a phenomenal growth.

Islamic banking industry has witnessed an attractive growth during the global
financial crisis. In Pakistan, many full-fledge Islamic Banks are operating with over
600 branch across the country. Many conventional banks have also opened their
Islamic windows to cater the needs of Muslims.

It is also relevant to mention that Islamic Banking industry has been facing many
bottlenecks both operational and institutional.

Some of the hitches being faced by Islamic banking in Pakistan are examined
below:

Islamic Banks have not yet been successful in creating an interest-free structure to
place their funds on a short-term basis. They face the same problem in financing
consumer loans and government deficits.
The risk involved in profit-sharing is so high that most of the Islamic banks have
taken recourse to those instruments of financing which bring them a fixed sure
return.

The problem with the Islamic banking is the lack of expert Islamic bankers who
have clear or deep perception knowledge of Islamic banking and finance. Currently,
our Universities have degree, certificate and diploma programs on Islamic Banking
and Finance. But unfortunately these programs are not up to the mark and do not
provide practical knowledge and expertise in the field of Islamic Finance. It is
advisable that both Shariah Scholars and industry experts provide training in
schools, colleges, Universities and Madrasahas.

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Islamic banks need to improve their management capabilities by training their
personnel in project appraisal, monitoring, evaluation and performance auditing.

The biggest problem for Islamic Banking is the lack of short term Investment
Avenue. Islamic Banks cannot invest in interest based instruments such as T-Bills
and Pakistan investment bonds.

To overcome the problem the Government of Pakistan issues Ijarah Sukuk to


provides some relief as an alternative to Pakistan Investment Bonds. The demand
for short term investment is stronger than of supply of limited Ijarah Sukuk.

Many Muslim countries are offering relaxed rules and regulations for Islamic
Banking industry. Pakistan should also offer such rules and regulations for Islamic
banking industry which would help this industry to grow swiftly.

Government patronage and regulatory/tax reforms play a vital role for any industry
to grow an accelerating speed. Governments like United Kingdom and Malaysia are
offering relaxed rules and taxation for exploiting the great demand for
Shariah-compliant investment by Muslim investors, especially from the Middle
East.

Pakistan can also become a regional hub for Islamic finance if proper regulatory
reforms are introduced. To achieve this goal, the Government needs to revamp the
existing structure of taxes and duties to make them conducive to Islamic finance.

To encourage people to invest in Shariah compliant products, government should


introduce incentives in the form of tax credits.

For example, the Malaysian government has given certain incentives for investors in
Islamic Finance industry till the year 2016 to make Malaysia a regional hub for
investment.

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Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI)
has introduced various Sharia'h standards to bring some consistency into the
Sharia'h based legal framework of the Islamic finance and banking industry. But
these standards needed to bring these agreements in assent with the local taxation
and law makers.

It is not possible to achieve the up to the mark level of allocative efficiency when
executives change over from Islamic banks to conventional banks to escape high
cost borrowing.

Profitability of projects the best device of efficient resource allocation, at this


situation, does not apply to Islamic banking system as it, considering the rational
behavior of the borrower, takes recourse to modes other than profit-loss-sharing.
This situation continues as long as Islamic banks operate side by side with the
conventional banks.

It has been evidenced that distributive efficiency of Islamic banking is lost when an
Islamic bank starts operation under conventional banking framework. Any shift
from profit-loss-sharing modes leads the system break the direct relationship
between the incomes of the entrepreneurs, the bank and the depositors.

In the absence of Islamic money market in Pakistan, the Islamic banks cannot invest
their surplus fund i.e., temporary excess liquidity to earn any income rather than
keeping it idle.

All the Government Treasury Bills, approved securities and Pakistan Bank Bills in
Pakistan are interest bearing. So, the Islamic banks cannot invest the permissible
part of their Security Liquidity Reserve and liquid surplus in those securities,
consequently they deposit their whole reserve in cash with state Bank. Alike the
liquid surplus also remains not invested.

Substantial problem facing Islamic banks in Pakistan is how to organize their


relationships with foreign banks, and more generally, how to conduct international

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operations. This is, of course, an issue closely related to the creation of financial
instruments, which would be accordingly consistent with Islamic principles and
acceptable to interest-based banks, including foreign banks.

Islamic Banks go very closely to the pricing policies of the government. They
cannot benefit from hidden costs and inputs, which heighten the level of prices by
certain entrepreneurs without any justification.

It is keenly observed when Islamic banks start operation within the conventional
banking structure their efficiency goes on diminishing.

The setback is not because of Islamic bank's own fault but it is the capability -
undermine operation of the conventional banking system that puts a
disadvantageous impact on the efficient operation of Islamic banks.

Even under the conventional banking framework Islamic banks can operate with
certain level of efficiency by applying in a reasonable percentage the PLS modes -
the distinguishing features of Islamic banking.

Islamic principles specify certain conditions that need to be bound to while


developing Islamic banking products. Having left with no choice due to the absence
of attractive investment avenues, Islamic banking products mainly rely on asset
based financing to generate returns for their depositors.

Due to lack of documentation in the economy, Islamic banks are finding it difficult
to enter into profit and loss sharing based real business ventures with their
customers instead of fixed return products. Moreover, businessmen and
industrialists are also reluctant to share profits with the financiers in low risk
ventures.

Some Pakistani customers are doubtful about the genuineness of Islamic banking
practices. Most customers have opinions that are based on information that is not
correct and represent lack of understanding of Fiqh issues.

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To succeed as a viable banking option, Islamic banks need whole hearted supporters
but also a number of patronizing institutions to perform functions which are being
carried out by various financial institutions in the conventional model.

Attempts should be made to change the existing structure to provide better products
and quality service within the ambit of Islamic laws.

Banking and insurance have to go hand in hand in matters of trade and business in
order to protect investments of banks against unanticipated hazards and disasters.
Unfortunately, Islamic banks have to depend on interest-based insurance companies
in the absence of Islamic insurance companies.

Islamic banks can satisfy most of the conditions if they can operate as only one
system in an economy examined above.

7.2. Recommendations:
Based on my experience &observation regarding the operations and policies of
Meezan Bank, I have tried to show some problems and recommendations for further
improvement:

➢ The employee turnover is very high which they must cut down as they are
losing several good trained employees.

➢ Lack of awareness of Islamic banking in general public.

➢ The employees usually face work over loaded problems.

➢ Branches increases but business of Meezan bank may not increase with
same speed.

➢ As for as I have observed during my training, the bank should improve


the services given to the customers so that they may feel satisfied. Bank
should increase its products to enhance its margin so that it may compete

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in the market. Further more employees are the assets of the bank which
must be motivated by the management of the bank. Employees should be
given incentive in the shape of cash award, increase in pay, promotion
etc. if the customers of the bank are satisfied and employees of the bank
are hardworking as well as loyal, the bank will make progress by leaps
and bounds. Management of the bank must try its best to satisfy the
customers as well as motivate the employees.
As for as ratio are concerned, its current ratio is much below the standard which needs to be
increased to grow in the market. Working capital is the life of every organization, in 2014
working capital is in negative but in 2015 and 2016 working capital is positive but below the
standard. Working capital must be increased by the bank so that the bank may show its
short-term solvency to meet out its short-term debt. Debt of the company is 0.9299 in 2014,
in 2015 is 0.9960 and in 2016 is 0.9284 which shows that the Bank is highly levered. Debt of
the company is on higher side which must be decreased to show it long term solvency. Net
profit Margin on sale although increasing on year to year basis but is much below than the
standard of industry which also need to be increased to grow in the markets.

7.3. For Future


Here it been a conventional bank equipped with an extensive network and
complete portfolio of products, we would have proposed….
"Early to bed, early to rise
Work like hell & ADVERTISE"
But this is not the case with Meezan Bank. The network and the portfolio of the
products offered are limited. For this we would propose...
“Early to bed, early to rise
Work like hell & IMPROVISE"
In this particular scenario, the word IMPROVISE stands for;
● Innovation
● Market perceptions
● Prudence

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● Rifle approach
● Objectives clearly understood
● Vision
● Identifying & understanding customer needs
● Satisfying customer needs
● Educating the customer
● TV. Advertising
● Press Advertising
● Spreading awareness through Dars
● Wall clocks for mosques
● Awareness through curriculum
● Umra and Haj packages
● It will ensure proper auditing and monitoring, which will in turn inspire
public confidence in the bank.
● RIBA FREE COMMERCIAL BANKING to be set up in all countries of
the world/ Muslims & non-Muslims. This will greatly facilitate
international export import trade without the fear of being involved in
any riba dealing
● Increase consumer banking
● Develop the healthy and sound competition b/w employees and bosses.
● Meezan bank does not provide job security to the employees. Mostly are
hired on contractual basis. More people must be employed on permanent
basis/ providing job security and satisfaction.
● There is no separate department for the training of new employees.
There should be establishment of a separate department for the training
of the new employee and a competent teaching staff should be hired for
their training.
● MBL should become very specific about its competitors, so that it can
understand whose its competitor is in the first degree and who is in the
second degree. Then the first-degree

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● Competitors should be closed closely.
● A research cell should continuously try to gather information about the
present action so its competitors and expected future actions. So in this
way more effective strategies can be formulated.
● The performance reward linkage should be making strong as it is said “A
happy employee delivers more than he receives from the organization".
The MBL should also try to make its employees happier.
● The management should develop in workers the operator ownership to
encourage them and make them responsible for their work.
● The worker should be given sense of teamwork and the managers should
be trained to manage the team as a good leader.
● Maximum automated machines should be used.
● New schemes should be introduced and maximum privileges should be
given to customer, so that to win money market.
● Working hours should be increased for customer​’​s convenience; night
banking service may be used to increase the business.
● New marketing strategies should be developed to attract new customers.

7.4. Conclusion:

I spent six weeks of my internship at MBL Johor town. During these six weeks, I feel
myself be a part of bank. Even this was my experience of working in a bank, but I
learned a lot in from my very first experience. Business of the bank is quite up to the
mark keeping in view the standard of banking industry. Bank is located at JOHAR
TOWN CIVIC CENTRE Road Where Bank Al Habib, Habib bank limited, Habib
metropolitan bank limited as well as Allied bank and Bank Al falah are also doing
business in the same area but Meezan Bank limited is competing with all these banks
and increasing its clients.

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Bank is giving better services to its customers as well as better facilities to its
employees, its employees are making an untiring effort to increase the profit of the
company on year to year basis as well as time their best to increase the wealth of the
shareholders. Bank is offering many products to its customers which are increasing
the margin of the bank.

One of the most important aims of the student life is to express him / her correctly and
adequately. This was believed in my mind when I first decided to go to Islamic
Meezan Bank Limited to complete my internship program. With their focused
strategy and product development initiatives planned for the year, Meezan Bank is
strongly positioned to meet these challenges. The bank has very well repute in the
market. Overall bank is going well and doing a good business but there are few
problems.

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7.5. Reference& sources​:
✓ I used following references to prepare my reports
✓ 1I collect information from manager in the form interviews
✓ Pamphlet or brochure
✓ I also study the different pamphlet of the different products and department
✓ The most important of me in the preparation in my reports are my friends and my teachers
who help me and guided at each step.
✓ Internet
✓ The very important source where I collect data about the Meezan bank is the internet. I visit
cite of the Meezan bank and AL-Meezan investment group. Following are both the websites.
✓ Website on google ​
✓ Practice and Law of Banking in Pakistan by Dr ASRAR H SIDDIQUI.
✓ Money and Banking & Finance by M. SAEED NASIR.

Internet

✓ www.meezanbank.com.pk
✓ www.google.com
✓ www.worldbank.org
✓ www.apnahyderabad.com
✓ www.meezanbank.com.pk
​www.almeezan.com.pk
Newspaper
✓ DAWN
✓ Business Recorder
✓ Annual Report 2014,2015,2016.

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CHAPTER 8

LIST OF ANNEXURES
ANNEXURE

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8. ANNEXURE
Annexure​ means something annexed; also called annex ​Annexure​ is a term substituted
in some legal documents for Appendix. Annex and '-ure' ​meaning​ action or process To
attach, append, or add, esp. to something larger or more important.

8.1. Glossary

CEO ​Chief executive officer


EPS ​Earning per share
HR Human resource
IT Information technology
SMEG Small medium enterprise
DD Demand draft
PO Pay order
ATM Atomic trailer machine
MBL Meezan bank limited
IBFT Interbank funds transfer
PAT Profit after tax
EPS Earning per share
SMS Short message service
NIFT National intuitional facilitation technologies
ROE Return on equity
ROA Return on asset
P/E Price earning
UAE United aribic emirate

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8.2. Appendix

Consolidated Statement of Financial Position as

At December 31, 2016

Meana bank limited


Balance sheet
At the end of December 31, 2016
ASSETS 2016 2015
Cash and balances with treasury banks 56,037,043 43,685,791
Balances with other banks 12,067,855 11,205,707
Due from financial institutions 129,115,165 101,079,476
Investments - net 134,796,574 150,137,212
Islamic financing and related assets - net 311,530,270 207,568,823
Operating fixed assets 9,031,686 8,161,435
Deferred tax assets - -
Other assets - net 10,689,082 14,111,489
Total assets 663,267,675 535,949,933

LIABILITIES
Bills payable 9,130,998 6,560,324
Due to financial institutions 32,005,501 13,609,551
Deposits and other accounts 563,999,852 471,799,473
Sub-ordinated Sukuk 7,000,000 -
Deferred tax liabilities 1,955,203 730,923
Other liabilities 14,403,557 13,569,243
Total liabilities 628,495,111 506,269,514

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NET ASSET 34,772,564 29,680,419
OWNER EQUITY
Share capital 10,027,379 10,027,379
Reserves 9,724,001 8,611,679
Unappropriated profit 11,340,678 9,238,479
31,092,058 27,877,537
NON-CONTROLLING INTEREST 1,221,989 944,623
32,314,047 28,822,160
Surplus on revaluation of investments 2,458,517 858,259
(including amount relating to share of profit
from associates) - net of tax
Total owner equity 34,772,564 29,680,419
DATA SOURCE:​ Data collected from Financial Statement of Bank

Consolidated Statement of Financial Position as

For the year ended December 31, 2016

THE MEEZAN BANK OF LIMIMTED


PROFIT & LOSS STATEMENT
FOR THE YEAR ENDED DECEMBER 31,2016

2016 2015
Profit / return earned on Islamic financing and
31,429,642 33,113,547
related assets, investments and placements
Profit on deposits and other dues expensed 12,871,789 14,895,778
Net spread earned 18,557,853 18,217,769
(Reversal of provision) / provision against
non-performing Islamic financing and related assets (120,246) 425,908
– net
(Reversal of provision) / provision against
(64,673) 121,093
diminution in the value of investments
Provision against off balance sheet obligations - 16,173

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Reversal of provision against amounts due from
- -
financial institutions
Bad debts written off directly - -
(184,919) 563,174
Net spread after provisions 18,742,772 17,654,595
OTHER INCOME

Fee, commission and brokerage income


3,942,236 2,891,445
Dividend income
345,288 184,320
Income from dealing in foreign currencies
1,207,563 1,471,337
Capital gain on sale of investments - net
1,012,424 488,697
Other income
357,060 301,034
Total other income
6,864,571 5,336,833
25,607,343 22,991,428
OTHER EXPENSES

Administrative expenses
16,115,217 14,049,760
Other (reversal of provisions) / provisions
-74,038 59,152
Other charges
3,600 4,067
Workers Welfare Fund 211,940 191,116
Total other expenses
16,256,719 14,304,095
9,350,624 8,687,333
Share of results of associates before taxation
1,166,467 238,580
Extraordinary / unusual items
- -

Profit before taxation 10,517,091 8,925,913


Taxation - Current
3,283,846 2,559,908
- Prior years
268,219 709,046
- Deferred
362,603 589,017

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3,914,668 3,857,971
Profit after taxation 6,602,423 5,067,942

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