Meezan Bank Project Final

Executive Sumamry
Internship is an integral part of MBA program. It provided me the opportunity to

develop practical know how of concepts which before that were only in theoretical
form. My internship in Meezan Bank, Bahria Town Branch, Bahria Town, Rawalpindi was
full of learning regarding various aspect of banking. The report contains practical
knowledge, which I gained during my internship.
Meezan Bank limited is one of the largest private banks in Pakistan, and it has
bright future forward. All information in this report is based on my observation,
interviews and practical involvement in different tasks during my internship in Bank.
Assessment of the needs and wants of the customers is an ongoing process at

Meezan Bank, which helps to continually develop new products and services. To
continuously offer courteous, professional and advanced banking solutions, the team of
bank has recently been rejuvenated by going though training programs with a focus on
information technology.
To make their banking solutions become accessible to more and more people, they
have embarked upon a rapid expansion program, aiming to provide a networking that makes
the services available to any of their customers in all the major urban centers
of Pakistan- with a view to go international in the near future.
With their key indicators of progress already soaring to new heights, the bank is
committed to dedicate all its energies, resources and time to bring higher value and
satisfaction to their customers, employees and shareholders.
The graph of bank is going up and up every year. The ratio of profit is increasing at
good percentage. The bank is serving the people at high level of standard by going
according to the whishes of the customers.
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Overview of the Organization
Brief History of the Organization
1947
The inception of Pakistan as the first Islamic Republic created in the name of Islam.
1980
CII presents report on the elimination of Markup genuinely considered to be the first
major comprehensive work in the world undertaken on Islamic banking and finance.
1985
Commercial banks transformed their nomenclature stating all Rupee Saving
Accounts as markup-free. However, foreign currency deposits in Pakistan and foreign loans
continued as before.
1991
Procedure adopted by banks in 1985 was declared un-Islamic by the Federal
Shariat Court (FSC). The Government and some banks/DFIs made appeals to the Shariat
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 Shariat Appellate Bench of the Supreme Court of Pakistan rejects the appeals
and directs all laws on markup 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.
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2001
The Shariah Supervisory Board is established at Al-Meezan Investment Bank led
by Justice (Retd.) Muhammad Taqi Usmani as chairman. State Bank of Pakistan sets
criteria for establishment of Islamic commercial banks in private sector and subsidiaries and
stand-alone branches by existing commercial banks to conduct Islamic banking in the
country.
2002
Meezan Bank acquires the Pakistan operations of Societe Generale 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. President General Pervez Musharraf inaugurates the new Islamic
Commercial Bank at a formal ceremony in Karachi.
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.
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.
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2005
Meezan Bank becomes the first customer of Islamic Insurance (Takaful) by signing
the first Memorandum of Understanding MoU with Pak-Kuwait Takaful Company Limited
(PKTCL). The signing of this MoU has ushered Pakistan into a new era of Islamic
Insurance (Takaful).
2006
A number of new dedicated Islamic Banks, namely Bank Islami and Dubai Islamic
Bank, commence operations in Pakistan. Meezan continues its leadership position in the
industry by more than doubling it branch network to a total of 62 branches in 21 cities,
clearly establishing itself as the largest Islamic Bank of the country. Meezan Bank becomes
the first Islamic bank to introduce 8 am to 8 pm banking at selected branches in Karachi.
2007
Meezan Bank opens up its 100th branch. Two new dedicated Islamic Banks start
operations in Pakistan, namely Emirates Global Islamic Bank and Dawood Islamic Bank.
2008
With 166 Branches (including 35 sub-branches) in 40 cities across Pakistan,
Meezan Bank is clearly positioned as the leading Islamic Bank in the country. Work starts
on the construction of Meezan Bank’s new Head Office building. The financing and
investment portfolio of local Islamic banks reached Rs. 185 billion in December 2008
compared to Rs. 137.6 billion in December 2007. Market share in the overall banking
increased to five per cent at end December 2008 compared with four per cent at end
December 2007. Total assets of Islamic banking reached Rs. 271.1 billion in December
2008 compared to Rs. 205.2 billion in December 2007.
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Nature of the Organization
Meezan Bank is a commercial bank which receives deposits from the people who
have it spare and invests it with those who are in need of them. It has got the license of
commercial banking from the State Bank of Pakistan and is registered under the legislation
of Banking Companies Ordinance 1962. It has dedicated itself to do business of banking
according to Islamic rules and regulations and is supervised by a Shariah Board who
keeps an eye on the operations of the bank and ensures that the same must be in
accordance with the teachings of Islam and there must be no element of Riba in it.
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ACCOUNTS DEPARTMENTS
STRUCTURE AND FUNCTIONS

Accounts department in the bank works as an internal audit department of the
organization. All the vouchers prepared and all the cheques that are processed are finally
come to the accounts department where these are sorted and summarized.
OBJECTIVE:
The objective of this department is to conduct the internal audit and to provide
exact information of daily transactions.
FUNCTIONS:
Three main functions of accounts department are as follow:

1. Data controlling
2. Reporting and expense
3. Budgetary performance review and analysis
1) DATA CONTROLLING:
The main features of data controlling are:
• To match physical data with computer generated data
• To check authorization control of transactions
• Is the data property authorized
• To keep a track of record of all transactions (physical data) for future evidence
• To arrange the data in some order to facilitate or to ease the process of data
Retrieval
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Aspects of Data Controlling
• Customer activity
• General ledger
Dual effect of transactions is stated like debit credit.
Firstly receiving of voucher then main sorting is done which is done on the basis of main
numbering.
2) REPORTING AND EXPENSE:

The major reports generated by this section are:
• Daily branch position
• Daily position of deposits and advances
• Daily MIS report (management information system)
• Daily foreign currency account report
• Daily fund rupee position report
• Statement of affairs
Weekly reports are of foreign exchange and then monthly and quarterly reports are
made. Daily branch position of bank is not faxed and is kept with the bank. Daily foreign
currency report is faxed to treasury. The bank deal in three foreign currencies that are: US
dollar, EURO and GBP (stands for Great Britain Pound). Daily fund rupee position is faxed to
the state bank. Statement of affairs is not faxed.
3) BUDGETARY PERFORMANCE:
This section includes the disbursements, which are as follows:
Modes of remittances:
• Demand draft D.D
• Telegraphic transfer T.T
• Pay order slip
They are also called BPG bills payable general.
Demand draft is for outstation purpose .It secures the payment because at first, the cash is
deposited in the bank and then draft is made.
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Demand draft is having four copies, which are kept as follow:
1. One is kept with the customer. (Gray copy)
2. One with bank (photo copy)
3. One with the head office (pink)
4. One with the entity being financed (yellow)
Pay order is for local transfer of money that is within the city.
Two other ways of disbursement in the bank are
1. Pay slip
2. Cash payment voucher
1) Pay slip is used when the bank has to pay less then Rs.5000
2) Cash payment voucher is used by the bank when it has to pay more than Rs.5000.
In the accounts section I came to know about some other terms like
• Provision
• Rupee traveller’s cheque
• Deposit certificate
• Inter branch credit advice
• Inter branch debit advice
• Outward bills for collection
• Inward bills for collection
• Society for world wide transactions
• Term finance
Provisions are the amount kept separately to be debited for the expenses of bank. Deposit
certificates are being taxed as:
Simple deposit 3% tax
Services deposit 5% tax
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ACCOUNT OPENING AT MEEZAN BANK
These accounts at Meezan Bank are divided into three categories. These are as follows.
1. Business Account
2. Personal Account
3. Club Society Account
1) Business Account
This account is related to the business community. This account is also further subdivided into
three categories.
a) Sole proprietor account
b) Partnership account Limited
c) Company account
a) Sole proprietor accounts

These accounts are the account opened by businesses, which are owned by single persons. The
following documents are required to open the account.
Document required
• Introducer of account who is already account holder of the bank
• Copy of NIC
• Request on letterhead of the company
• Every signature must be stamped with company stamp
• Declaration of sole proprietorship
b) Partnership account
These are the accounts specifically opened for the partnership firms. The documents required
for this type of account are as follows.
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Document required:
Introducer of account who is already account holder of the bank

• Copy of NIC of the entire partners
• Request on letterhead of the firm
• Every signature must be stamped with company stamp
• Partner ship deed
• Partnership mandate
c) Limited company accounts

This account is related to limited companies either public limited or private limited.
The documents required to open this type of account are as follows:
Document required:
Introducer of account who is already account holder of the bank

• Copy of NIC of all the Directors Request on letterhead of the company Copy of
certificate of Incorporation Memorandum and Article of Association List of
Director
• Copy of Board Resolution [prescribe format] Certificate of Commencement of
Business. Latest copy of Form A & Form 29
• Power of Attorney/Mandate [if required]
2) Personal Account
The accounts related to persons other than companied and partnership firms are
called personal accounts. These are further subdivided into three categories:
a) Personal account
b) Joint account
a) Personal account:
Personal account is own by only one person and not more then this. This account can
be current or saving depending upon the will of the customer.
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Documents required:
Introduction of nay account holder of BAL or any other bank
Copy of NIC
b) Joint account:
Joint accounts are those accounts that are owned by 2 or more persons. This account
may also be either saving or current depending on the customer’s will.
Documents required:
Introduction of nay account holder of BAL or any other bank
Copy of NIC of all the member of joint account
3) Club Society Account

The account opened by any NGO or any non-profit firm falls in this category. For
opening of such type of account the bank has to get permission from the head office. If head
office gives permission, the bank opens this account other wise refuse to do so.
Documents required:
Copy of rules
Certificate copy of resolution [prescribed format]
Accounts On the Basis Of Currency

This account is also divided into two categories. These are as follows:
1. Local Currency account
2. Foreign Currency Account
1. Local Currency account:

The account dealing with the local currency is called local currency account.
2.) Foreign Currency Account:

The account dealing with the foreign currency is called foreign currency
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account. This account is further subdivided into following.
• USD
• GBP
• Euro
• JPY
RUPEE CURRENT ACCOUNT
RIBA FREE
Meezan Bank is offering Riba-Free Current Account, a flexible Rupee based account
that is ideal for individuals and businesses looking for Shariah compliant banking and
professionalism both under one roof.
The Meezan Bank Current Account is a comprehensive Halal method of acquiring a

secure and easily maintainable Riba Free bank account.
Bundled with 24/7 and special banking services, the Meezan Bank Current Account is
an innovative value added account which provides customers both ease of utility and
unmatched service quality.
Key features of the Riba -Free Current Account
• Free Online Banking services at all Meezan Bank branches nationwide
• Instant access to funds at any online branch
• No restriction on withdrawals or number of transactions
• Bank balance certificates & duplicate statements of account
• Stop Payment & Hold Mail instructions
• 24/7 Card your ATM & Debit Card in one
• 24/7 Call Center with complete Tele-banking services
• Personal financial consultancy services
• Specialized 8 to 8 Banking at selected branches
RUPEE SAVING ACCOUNT
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A unique bank account that offers the opportunity to earn Halal profits, while
enjoying a range of added benefits. It can be opened with a minimum amount of only
Rs.10000. The profit on this account is calculated and paid on a monthly basis, and comes with
a variety of free benefits, no restrictions on transactions, priority banking and more.
• Minimum amount required to open account = Rs.10,000

• Riba Free COII Holders may open accounts without any minimum balance
requirements
Riba Free Rupee Saving Account works under the principles of Mudarabah and is strictly
in conformity with the rules of Islamic Shariah. Profit calculation and all banking transactions
are in strict adherence to the Islamic Shariah, monitored by our Shariah Advisor and the
Shariah Supervisory Board.
Key features
Apart from first class service and personalized attention that our customers get when
they bank with us, we offer the following additional conveniences:
• Instant access to funds at any online branch.
• No restriction on withdrawals or number of transactions
• Bank balance certificates & duplicate statements of account
• Stop Payment & Hold Mail instructions
DOLLAR SAVING ACCOUNT

Meezan Bank is pleased to offer Riba-Free Dollar Saving Account, a foreign-currency
based investment opportunity that is set up on the principles of Shariah and as a result is free
from the element of markup.
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With a minimum of only $100 a Dollar Saving Account can be opened 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. On maintaining a
minimum average monthly balance of $ 500, profits are disbursed every month.
Additional Features
Apart from first class service and personalized attention, the following additional
conveniences are also provided:
• Personalized cheque books
• No restriction on withdrawals or number of transactions.
• Monthly profit payment
• Taking stop payment instructions
• Taking hold mail instructions
• Issuance of duplicate statement of account
KAROBARY MUNAFA ACCOUNT

Karobari Munafa is a savings account specifically tailored for large Corporate or Govt.
controlled entities. It allows customers to earn higher returns on surplus cash balances. It has
no preset transaction limits and comes with a variety of free packaged benefits.
Key Features
• Profit will be calculated on a Daily Product Basis
• Minimum balance requirement for account opening is Rs. 1 Million
• No restriction on deposits and withdrawals Free facilities: chequebooks and payorders
Dedicated account / relationship manager
The Karobari Munafa Account works under the principles of Mudarabah and is strictly in
conformity with the rules of Islamic Shariah. Profit calculation and all banking transactions
are in strict adherence to the Islamic Shariah, monitored by our Shariah Advisor and the
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Shariah Supervisory Board.
MEEZAN BACHAT ACCOUNT

Meezan Bachat Account is a unique saving account that provides high monthly
returns with the flexibility to withdraw savings if needed. Thus Meezan Bachat Account
offers a higher expected rate of return with the convenience of a savings account.
With a Meezan Bachat Account, higher the profit with a higher account balance.
Profit is given even if balance falls below Rs. 25,000/- in any one month. Profit is credited to
account every month and is calculated with reference to the minimum balance maintained in
the account during the preceding month.
The Riba-Free Meezan Bachat Account works under the principles of Mudarabah and
is strictly in conformity with the rules of Islamic Shariah. Profit calculation and all banking
transactions are in strict adherence to the Islamic Shariah, monitored by Shariah Advisor and
the Shariah Supervisory Board.
Key Features
• Highest expected rate of return
• Riba-free profit paid every month
• Minimum balance for account opening is just Rs.25,000/-
• Maximum balance limit for getting highest profit rate is Rs. 1,000,000/-
• Waiver of application fee for Car Ijarah & Easy Home for accounts with
minimum balance of Rs. 500,000
• Free bank balance certificates.
• 24/7 Internet Banking – free and instant access to your account(s) anytime &
• Anywhere Personal financial consultancy services
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CERTIFICATE OF ISLAMIC INVESTMENT
The Riba Free Certificate of Islamic Investment Certificate is a Shariah compatible
investment certificate with a minimum investment of Rs. 50,000 and tenures from 3
months to 5 years. Profit on investment may be earned on the following basis:
• Monthly profit on 1, 2, 3 and 5 years (Minimum Investment Rs. 200,000)
• Quarterly profit on 1, 2, 3 and 5 years
• At maturity profit payment for all tenures
• Withdraw investment any time during the course of investment. (Profit shall be paid
only after completion of one month of investment)
Riba-Free Certificate of Islamic Investment (COII) works under the principles of

Mudarabah and is strictly in conformity with the rules of Islamic Shariah. Profit calculation
and all banking transactions are in strict adherence to the Islamic Shariah, monitored by
Shariah Advisor and the Shariah Supervisory Board.
Invest in Certificate of Islamic Investment

Riba-Free COII is available at all branches of Meezan Bank Ltd. To make an
investment the bank requires customers to maintain either a current or a saving account with
Meezan Bank. In order to open an account, fill in the Account Opening Form, bring in the
required documents, and get introduced by an existing banker.
Additional Features
• Enjoy a range of valuable features including:
• High and very competitive returns
• Long-term security ensured
• Pre-mature withdrawal options available
• Free Online Banking services at any of our branches
MEEZAN AMDAN CERTIFICATE
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The Riba-Free Meezan Aamdan Certificate (MAC) is a long-term deposit certificate
with an exceptionally high monthly profit designed especially for those individuals and
corporations who are in need of regular stream of monthly income. MAC is a monthly income
(mahana aamdani) certificate with a variety of free packaged benefits.
Working under the principles of Mudarabah, the Meezan Aamdan Certificate and is
strictly in conformity with the rules of Islamic Shariah. Profit calculation and all banking
transactions are in strict adherence to the Islamic Shariah, monitored by Shariah Advisor and
the Shariah Supervisory Board.
Key Features
• Enjoy a range of valuable features including: High and very competitive returns
• Ensured Long-term security
• Minimum investment amount: Rs. 100,000/-
• Special attraction for Widows and Senior citizens with minimum investment of PKR
50,000/-
• Available tenures of 5½ years and 7 years
• Profit payment on monthly basis
• Pre-mature withdrawal options available. Free cheque book
• Free ATM withdrawals on investment of Rs.500,000/- and above ( 5 per month)
• Free Internet banking facility
MONTHLY MUDARBA CERTIFICATE

Riba Free Monthly Mudarabah Certificates is a flexible rupee based investment
which has been designed to give a monthly return. The minimum investment required is
only Rs. 100,000 and receive profit for each complete month of investment with the Bank.
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Working under the principles of Mudarabah and in strict conformity with the rules of
Islamic Shariah, the Profit calculation of Monthly Mudarabah Certificates and all other
banking transactions are in strict adherence to the Islamic Shariah, monitored by Shariah
Advisor and the Shariah Supervisory Board.
The weightings used for profit calculation of the Monthly Mudarabah Certificate are
in the following tiers:
Rs. 100K up to Rs. 4.99 Mn
Rs. 5.00 Mn up to Rs. 9.99 Mn
Rs. 10 Mn up to Rs. 49.99 Mn
Rs. 500 Mn & above
Additional Features
During relationship the following additional benefits are also provided:
• A 100% halal investment in strict compliance with Shariah

• Monthly profit payment to your current or saving account with us
• Bank balance certificates
• Free Online Banking services at all Meezan Bank branches
• Specialized 8 to 8 Banking and Ladies Banking at selected branches
MEEZAN PROVIDENCE CERTIFICATE
Meezan Providence Certificate is a long-term investment certificate specially designed

to cater to the needs of corporate and business concerns for purposes of investing their
Provident, Pension and Gratuity Funds.
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As any prudent investor, main concerns would be total security along with the best
returns possible, especially as these funds are a trust from employees and one that bears an
important responsibility.
Meezan Providence rests on the well known and solid financial strength of Meezan
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, a long-term entity rating of A+, and a short-term entity rating of A1. Furthermore,
our sterling track record shows consistently beneficial and highly competitive returns for broad
range of investors.
Finally, comes the benefit of truly Halal returns, a benefit may not have had the
opportunity to enjoy before and one that can now pass on to employees, many of whom
would be grateful for such an opportunity.
Riba-Free Meezan Providence Certificate (MPC) works under the works under the
principles of Mudarabah and is strictly in conformity with the rules of Islamic Shariah. Profit
calculation and all banking transactions are in strict adherence to the Islamic Shariah,
monitored by Shariah Advisor and the Shariah Supervisory Board.
Key Features
• Enjoy a range of valuable features including:
• A 100% halal investment in strict compliance with Shariah
• High Returns
• Long-term security ensured
• Minimum investment amount: PKR 1,000,000
• Available tenures of 2, 3, 5 and 7 years
DOLLAR MUDARABAH CERTIFICATE

The Riba Free Dollar Mudarabah Certificate is a flexible dollar based investment
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which has been designed under the principles of Mudarabah and is strictly in conformity
with the rules of Islamic Shariah.
The Certificate works under the principles of Mudarabah and is strictly in

conformity with the rules of Islamic Shariah. Profit calculation and all banking transactions are
in strict adherence to the Islamic Shariah, monitored by Shariah Advisor and the Shariah
Supervisory Board.
Key Features
Enjoy a range of valuable features including:
• High and very competitive returns

• Six monthly profit payments to your current or saving account with us
• Long-term security ensured. Minimum investment amount: USD 10,000/-
• Available tenures of 3 months, 6 months, 1 year, and 3 years
CAR IJARAH-AUTO FINANCE
Car Ijarah, Pakistan’s First Islamic Car Financing

As a step towards Meezan Bank’s mission to provide a one-stop shop for
innovative value added Shariah compliant products, Meezan Bank’s Car Ijarah unit provides a
car financing, based on the principles of Ijarah and is free of the element of markup.
Car Ijarah is Pakistan’s first Markup Free car financing based on the Islamic financing
mode of Ijarah (Islamic leasing). This product is ideal for individuals looking for car financing
while avoiding a markup-based transaction.
Meezan Bank’ Car Ijarah is a car rental agreement, under which the Bank purchases
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the car and rents it out to the customer for a period of 3 to 5 years, agreed at the time of the
contract. Upon completion of the lease period the customer gets ownership of the car against
his initial security deposit.
Car Ijarah also features Used Vehicles!

In addition to leasing of new cars, Meezan Bank also provides the unique opportunity
of leasing second hand, both locally assembled and imported vehicles. This feature is
specifically designed as a highly economical option. The Used Car Ijarah facility is made
available at a minimum-security deposit as low as 20%. Financing of used cars are
subject to a selection criteria.
Shariah Compliance
Car Ijarah, designed under the supervision of Meezan Banks Shariah Supervisory
Board, is unique to car leasing facilities provided by other banks.
Key Features of Car Ijarah
• Low monthly rental
• Rental paid after delivery, not in advanced
• Fastest processing and delivery
• Tracker option available
• Minimum security deposit as low as 10%
• All new, used, local, imported and luxury vehicles can be financed
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WORKING CAPITAL FINANCE
Working Capital Finance Solutions

(For short term financing requirements)
Parts of the wide range of Shariah complaint solutions for the customers are
Murabaha and Istisna’a, designed to meet working capital requirements. For example, if you
need finance for purchasing raw materials for your industry or are trading in goods then you
could use Mudarabah or Istisna’a to meet your financial needs.
Murabaha
One of the most common modes of finance employed by Islamic Banks, Murabaha is
based on the exact requirements of each customer. It can be defined as a sales transaction
where Meezan Bank purchases the commodity and sells it after adding an agreed profit. Thus,
it is not a loan given on markup - it the sale of a commodity on a deferred price.
Hence Murabaha involves the purchase of a commodity by Meezan Bank on behalf of

a customer and the subsequent resale to the customer on cost-plus-profit basis. The cost
and profit margin to the bank is expressly disclosed to the customer.
Simply put, rather than advancing money to the customer, Meezan Bank buys the
commodity from a third party and sells it to the customer at an agreed price, which includes an
element of profit.
So what is the difference between Murabaha and a Sale?

A simple sale in Arabic is called Musawamah - a sale that does not involve disclosing
or referring to the cost of goods sold. However, when the cost price is disclosed to the client, it
is called Murabaha.
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Istisna’a
Istisna’a is a sale transaction where a commodity is transacted before it comes into

existence. It is an order to manufacture a specific commodity for the purchaser. The
manufacturer (our customer) uses its own material to manufacture the required goods. In
Istisna’a, price is fixed with the consent of all parties involved. Similarly all other necessary
specifications of the finished product are agreed beforehand.
Istisna’ as a mode of financing

Istisna Finance is used to cater for the working capital requirements of a
business involved in the manufacturing of goods. It is ideally suited for exporters and
manufacturers who have export orders in the shape of Sight/Usance Letter of Credit/ Sight
Export Contract D/P/ Usance Export Contract D/A.
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PROJECT FINANCING, EXPANSION AND BMR
Project Financing, Expansion or BMR Requirement Solutions

(For medium and long term financing requirements)
Two of the most commonly used Islamic financing solutions availed by businesses
today, Diminishing Musharakah and Ijarah are ideal for expansion of businesses,
BMR requirements or other medium to long term financing requirements.
Diminishing Musharakah
Using this financing model, Meezan Bank and the customer participate in the
joint ownership of an asset. The asset is divided into a number of units and the customer
periodically purchases these units from the bank over a specified period. Over time, the
customer purchases all units owned by the bank, making him or her sole owner of the asset
or the commercial enterprise.
Diminishing Musharakah is most commonly used for the financing of fixed assets,
projects, homes and automobiles.
Ijarah
In contrast to diminishing musharakah, this mode of financing is based on the
provision of the required tangible assets, such as property, machinery, etc, on rental for an
agreed period of time. The concept is similar to “leasing”, which is common in conventional
banking. However there are some specific prohibitions which render conventional leasing to be
forbidden under Shariah.
Ijarah is commonly used for long and medium term fixed asset financing, project
financing and for retail products such as homes and automobiles.
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ISLAMIC EXPORT REFINANCE SCHEME
Islamic Export Refinance Facility

The launch of this product made Meezan Bank the first Islamic bank in Pakistan to
offer Refinance facilities with complete compliance to Shariah. This product provides for all
the unique requirements of exporters and is available in both Part- I and Part-II as per the
original Export Refinance Scheme of the State Bank of Pakistan.
LETTER OF GUARANTEE FACILITY

A complete range of products and services for importers and exporters are available.
Based on various modes of Islamic Finance, the solutions have been designed to suit the needs
of our customers. Some of the key services offered include:
Letter of Guarantee Facility

• Products for Exporters
• Export bills for collection
• Export (Sight) bills purchase under Salam Arrangement
• Export (Usance) bills purchase under Murabaha Arrangement
• Products for Importers
• Sight Letter of Credit

• Usance Letter of Credit
ADVISORY SERVICES
Realizing the increasingly diverse needs of our customers for advisory and structured
finance transactions, a specialized unit focusing on Investment Banking has been established at
Meezan Bank. The Investment Banking department provides unique structuring capability
using complex Shariah structures for transactions so as meet customer need. Meezan Bank as
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torchbearer of Islamic Banking has made a significant contribution in the Investment Banking
industry by playing leading roles in business transactions amounting to PKR 53 billion in the
year 2007.
Key Services
• Syndication Structuring
• Privatization Mandates
• Mergers & Acquisitions
• Advisory Services
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MONEY TRANSFER
The Meezan Bank’s remittance services are simple and reliable. They are available
at your doorstep through a wide and efficient network of corresponding banks worldwide.
Only leading global financial institutions form this network of correspondent banks.
Advantages of Meezan Home Remittance:

• Quick Remittance in major currencies i.e. USD, GBP, EUR, JPY, CHF, SGD, AUD
• Extensive branch network in all major cities of Pakistan
• Instant online transfer within our branch network without any charges
• Free Internet banking facility
Easy Guidelines for Money Transfer

To remit money to Pakistan, simply give instructions to existing bank for money
transfer by providing the name of preferred Meezan Bank branch and beneficiary account
number.
DOLLAR MUDARABAH CERTIFICATE
The Riba Free Dollar Mudarabah Certificate is a flexible dollar based investment
which has been designed under the principles of Mudarabah and is strictly in conformity
with the rules of Islamic Shariah.
The Certificate works under the principles of Mudarabah and is strictly in

conformity with the rules of Islamic Shariah. Profit calculation and all banking transactions are
in strict adherence to the Islamic Shariah, monitored by Shariah Advisor and the Shariah
Supervisory Board.
Key Features
• Enjoy a range of valuable features including: High and very competitive returns
• Six monthly profit payments to current or saving account with Long-term security
27
ensured. Minimum investment amount: USD 10,000/- Available tenures of 3 months, 6
months, 1 year, and 3 years
DOLLAR SAVING ACCOUNT

Meezan Bank is pleased to offer Riba-Free Dollar Saving Account, a foreign-currency
based investment opportunity that is set up on the principles of Shariah and as a result is free
from the element of markup.
With a minimum of only $100 a Dollar Saving Account can be opened 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. Maintaining a minimum
average monthly balance of $ 500, profits that shall be disbursed every month.
Additional Features
Apart from first class service and personalized attention that our customers get when they bank
with us, the following additional conveniences to our customers are also offered:
• Personalized cheque books
• No restriction on withdrawals or number of transactions.
• Monthly profit payment
• Taking stop payment instructions
• Taking hold mail instructions
• Issuance of duplicate statement of account
28
MEEZAN BANK TREASURY
Meezan Bank’s treasury is guided by Shariah with the objective of reviewing,

streamlining, and controlling the bank’s domestic and international treasury related operations.
Treasury caters to the branches and customers for their entire foreign exchange
requirement with efficiency and professionalism. Ready/ spot as well as all forward cover
services are provided to branches/customers within Shariah guidelines. Customers are also
provided advice on a regular basis about the currency movement by our dealing room
augmented by market outlook (without any commitment & obligation)
Treasury has enhanced its market activity with increased depth and enhanced volumes,
making an impact in the inter-bank FX market. Due to its good relationship with other
treasuries, the institution has the ability to generate sufficient amount of liquidity at a time
through inter-bank market on Shariah-approved Musharaka basis.
Meezan Bank conducts Commodity Murhaba transaction to optimize its returns on its
dollar portfolio, besides participating in local/ international sukuk issues, e.g. WAPDA, Qatar,
Dubai sukuks, etc. This treasury is the only treasury in Pakistan with a mandate to provide
Shariah compliant investment opportunities in capital market that provides halal income
ultimately to shareholders
29
CREDIT ADMINISTRATION DEPARTMENT
The chairman of the Bank in his review for 2007 annual report defines the credit policy of
Bank as:
“CONSERVATIVE YET DYNAMIC CREDIT POLICY”
OBJECTIVE:
The overall objective of the department is to provide independent assurance to

branch management and head office credit monitoring division that lending activities are
properly controlled and monitored.
FUNCTIONS:
• Documentation
• Lodgment of documents and cash collateral
• Reimbursement audit certificate
• Limit input in bank smart
• Post disbursement monitoring
• Monitoring of irregular doubtful and bad debts
• Reporting
Here it is necessary that we must have an overview of at least the most important
documents that are relevant to this department.
DOCUMENTATION
• Sanction advice
• Facility offer letter
• General documentation
• Standard charge documents
• Legal document pertain to properties
30
• Cash collateral
• Charge with SECP
• Other securities
• Insurance covers
• Guarantees
Now we discuss above separately.
• Sanction advice
A type of document which is made when the senior officer of bank discuss
all the confidential terms & condition that the demanded facility should be provided or
not so we can say that it is a day of final decision that facility should be provided or not.
At that time borrower worthiness is checked according to that decision made.
• Facility offer letter

When this is decided that loan should provided to borrower than branch made
facility offer letter that what type of facility should be provided & document are required
from borrower according to this facility.
• General documents
After facility offer letter general document are checked these document consist
of the following:-
 Complete account opening form
 Facility request letter
 BBFS
 CIB
 Credit opinion
 Search report
 Audited /unedited financial
 Borrower’s profile
 Checklist of state bank regulation
31
 Board resolution to borrow
 Memorandum and article of association
At this stage all the past records are checked & verified to ensure that past record of the
borrower matches with data provided in request letter. The most important document, which is
checked, is CIB report. In this report all the past loan of borrower are showed and their
repayment record is also mentioned. The company polices are also collected and their aim is
checked that whether the company is working in the same direction which it has mentioned.
• Standard charge document

 CF (Current finance)
 TF (Term finance)
 FAPCI (Finance against packing facility)
 FAFB (Finance against foreign)
 LBP (Local bill purchase)
 FBP (Foreign bill purchase)
 SLA (Sight letter of credit)
 ULE (Usance letter of credit)
 FIM (Finance against import)
 FATR (Finance against trust receipt)
 GUARANTEE
In this stage we see that what type of facility he or she want to take or what type
of facility he or she already have. Is the requirement according to nature of business &all
facility term & condition are change accordingly to that.
• Legal document pertain to properties

 Title deeds
 Copy of record of rights
 Copy of mutation
 NEC
 PTI
32
 AkS shajra
 Site plan
 Valuation
 Site visit report

 Power of attorney
 Agreement to create mortgage
 Token mortgage
 Pre-disbursement lawyer’s opinion

 Perfection certificate of lawyer
These all documents are taken from borrower & bank make a file of these documents.
These documents are most because when some time bank has to take legal action
against borrower then bank know that who are the owner or partner of the company what
property is for mortgage its paper are taken and these all the things are provided to bank own
lawyer which finally decided that is everything right and he make a certificate or borrower can
bring this certificate himself from the recommended lawyer of bank.
• Cash collateral
 Lien on deposits
 Lien of deposits
• Guarantees
• Personal guarantees of borrower
• Personal guarantees of mortgagors
• Counter guarantees
• Cross corporate guarantees
Guarantees are most important thing because in this document it is written that who is
responsible in case of default. Personal Guarantees are consider most important because
mention person has to pay whenever he is alive.
33
CAR IJARAH
OBJECTIVE
The main objective of the car finance department is to finance all the cars manufactured
or assembled in Pakistan at a very reasonable markup.
THE PRODUCT
I have presented the procedure of car finance department in question answer form
because in my opinion it will better explain the whole of the procedure.
Can I avail the car loan facility?

Car loan facility from Meezan Bank can be availed to purchase a brand new car if
customer is:
• Pakistani national identity card holder
• Over 20 years of age maximum 60 years in case of salaried and 62 is case of a
businessperson at the time of maturity of the loan.
• Salaried, businessman or self employed.
Which cars can I apply this loan for?

All brand new Pakistani assembled / manufactured cars (unregistered)
How much loan facility can I avail?

Minimum amount is Rs 200,000/- and maximum is Rs.2,000,000/-
What is the period of loan?

The loan can be availed from 1 year to 5 years with early adjustment facility at any
time before the maturity.
What documents are required to get a car loan sanctioned?

Representatives will discuss the documents required to submit in detail. An indicative
list is given below:
34
• Two passport size photographs
• Copy of national I.D card
• Bank statement for last six months
• Salary certificate (in English) specifying the name, date of joining, designation and
salary details (for salaried individuals)
• Business proof (for a business person)
• Current utility bill of residence in Pakistan
• Copy of the national ID card of the co-borrower (if the car is to be in the name of the
co-borrower)
How is it difficult from other financing schemes available in Pakistan?

• Easily affordable & flexible instalments
• Flexibility of adjustment at any time during the tenure
• Quick processing
• Minimum down payment
• Minimum insurance
What is the first step I need to take?

Call or visit any Meezan Bank branch in Pakistan.
This was the whole concept which is clearly defined here. Now the details of the
application form are given that what is included and what is needed to be filled in the form
under the following heads:
Personal details
• Full name Fathers/husband name Date of birth
• National ID card no National tax no marital status
• No of dependents
• Educational qualifications
• Current residential address If rented, monthly rent Residential telephone no Residential
status
• Type of accommodation
35
• Residing since
• Permanent home address Personal mobile ph no Existing car
• Make and model of current car
• Car status
Employment details (for salaried individuals)
• Name of present employer
• Address
• Current designation
• Employed since
• Business telephone no
• Fax no.
• Official mobile no
Previous employer
• Name of Employer
• Address
• Last Designation Held
• Service Tenure
• Office Telephone Number
• Fax Number
Business details (for professional and self-employed individuals )

• Name of business
• Nature of business
• Constitution of firm Address
• Established since
• Registered with National tax no
• Business telephone no
• Mobile phone no
36
Income details
• Regular monthly gross income (cost of equitation of dependents)
• Guaranteed bonus
• Other monthly income
• Source of other monthly income
• Average monthly savings
37
TREASURY AND INVESTMENT
Money Market
• Short term money market Inter-bank trading
• Active Treasury Bills trading in secondary market
• Forward – forward inter-bank money market trading
• Money market linked lending to and borrowing from corporate clients
Foreign Exchange Market

• Active trading in ready and forward USD/PKR.
• Active quotations of foreign exchange rates in fifteen major currencies
• Information in respect of prevailing rates of most of the currencies of the world for
corporate clients and individuals
• Forward – Forward foreign exchange rates of USD/PKR.
• Active swap trading in USD/PKR and other major currencies such as EUR, GBP,
JPY and CHF.
Investment
• Active Investment in treasury bills (TBs).
• Active Trading in Pakistan Investment Bonds (PIBs)
• Active investment in Certificate of Investment (COIs)
• Active investment in Terms Finance Certificates (TFCs)
Government Securities
• Efficient service for individuals and corporate clients for buying and
selling govt. securities on their appropriate requests.
Custodianship
• Investment Securities Portfolio Accounts of Customers for holding on their
38
behalf Treasury Bills, Pakistan Investment Bonds.
Financial Advisory Services

• Briefing on current information available in market in respect of
prevailing rates of USD/PKR.
• Briefing on current information available in market in respect of foreign
exchange rates of major foreign currencies.
• Future expectations and sentiments on major foreign currencies including
Pak.Rs.
39
ONLINE BANKING
Meezan Bank now offers the facility of on-line banking to its customers through its
countrywide network of branches. Customers can use the ATMs or the banking counters of
any branch for day-to-day banking needs, irrespective of branch where they maintain their
accounts.
For Corporate customers centralized Cash Management facility is also offered

through on-line banking.
PHONE BANKING
"Meezan Phone banking” is available to all customers on a countrywide basis.
Customers can dial 111-225-111 (without any city code/prefix) from their respective
cities i.e. 21 cities where Meezan Bank is present, and get prompt services from the
Centralized Phone Banking Services.
• Customers enjoy 24x7 Round the Clock Phone Banking Services.

• Meezan Bank is the first bank in Pakistan to offer Centralized UAN connectivity
from 21 cities to its Call Center with Hunting & ACD facilities.
40
HOME FINANCE
PRODUCTS OF HOME FINANCE
Buy Your Home

With this facility, no longer need to just dream about the home. Meezan Bank will
provide up to Rs: 7.50 million or 70% of the purchase price of the property (whichever is
less), so that can realize dream and enter the reality of owning a home!. Payment period
ranges from 3 to 20 years.
Build Your Home

Family! No problem. Meezan Bank will provide up to Rs: 7.50 million, or 70% of the
estimated value of constructed property to enable to say good-bye to rent forever! Even with a
plot, need finance to construct a home, which excites everyone if doesn’t have a plot, Meezan
Bank will provide up to 60% of the value of the plot that is selected to purchase! Do Meezan
Bank excite imagination? Payment period ranges from 3 to 20 years.
Renovate Your Home

Already own a home, but need extra space for a growing family. Simply apply for
financing of up to Rs: 2.50 million or 30% of the surveyed value of home (whichever is less)
and get the extra space. Stretch payments for up to 7 years
Start it Together
The crown jewel of our Home Finance Scheme, the golden opportunity for someone
starting a career to buy an already constructed housing unit so early in life! Meezan Bank
offer a moratorium of up to 3 years in Principal payments, for a financing of up to 20 years.
You service only the mark-up element initially, and principal repayment starts after the end of
monitories period. Home Start is specially designed for young people to have there own home
Transfer
Does existing instalment on a home finance leave with nothing to spend? Do not
41
worry any more because Meezan Bank have genuinely low rates and payment options that
could leave more funds with each month. With BTF, repaying home finance will be easier to
payback. Transfer up to Rs: 7.50 million or 100 % of the existing finance, whichever is less.
Stretch repayment period for up to 20 years again.
Steps To Arrange a Home

• Meezan Bank provide with all the information need about Meezan Bank Home
Finance. This can be through a face-to-face meeting with Meezan Bank Relationship
Officer, or over the telephone, or through the post.
• Give Meezan Bank some basic information about the income and the amount needed
so that Meezan Bank can give an agreement in principle.
• Once decided on the amount desired, complete an application form and pass it on to
Meezan Bank, together with the required documents.
• Meezan Bank will make some inquiries about financial circumstances.
• Meezan Bank will carryout a valuation of the property and verification of income.
• Once Meezan Bank have carried out all the initial processing, Meezan Bank will send
its offer through a “Facility Advice Letter”.
• Sign the Facility Advice Letter and return it.
• Documentation Control Center will get in touch to complete Finance & Security
documentation including legal opinion on the title, documents of the property and also
the insurances.
• Sign the Finance Agreement and Charge documents.
• Legal advisor will accompany the customer to the Registrar’s office on the appointed
date with cheque against the financing for conveyance of the property and home
finance begins.
FINANCIAL STATEMENT ANALYSIS
42
To analyse the financial position of Meezan Bank, different tools are use, which
includes Ratio Analysis, Common size Analysis of the last five years.
Introduction and Importance of Financial Analysis

Financial analysis involves the use of various financial statements. These statements do
several things. First the balance sheet and the second is income statement.
The balance sheet summarizes the assets, liabilities, and owner’s equity of a business at
a point in time, while the income statement summarizes revenues and expenses of a firm over a
particular period of time. A conceptual framework for financial analysis provides the analyst
with an interlocking means for structuring the analysis.
43
Balance Sheets of Last Five Years
2005 2006 2007 2008 2009

ASSETS Rupees in ‘000’
Cash And Balances With Treasury Banks 3,956,938 5,897,394 5,644,028 5,763,710 8,387,432
4,134,87 3,729,54
2,855,823 1,344,974 5,260,467
Balances With Other Banks 5 9
34,499,50
Due From financial institutions - 3,700,000 8,850,000 18,108,000 0
23,290,30
Investments 1,606,490 2,877,554 10,535,185 14,286,949 9
44,188,06
Financings 19,740,886 27,031,016 34,576,339 39,768,481 6
Operating Fixed Assets 305,585 531,262 1,032,963 1,880,515 2,416,375
Deferred tax asset 204,172
Other Assets 2,210,100 2,266,522 2,810,494 4,123,441 5,935,413
124,181,
30,675,822 46,438,623 67,178,559 85,276,070 734
Liabilities
Bills Payable 260,732 563,228 1,192,160 1,057,017 1,249,210
Due To Financial Institutions 2,981,714 4,285,212 2,415,606 4,008,496 8,468,425
100,333,0
Deposits And Other Accounts 22,769,262 34,449,441 54,582,353 70,233,875 51
Sub-Ordinated Loans - - - - -
Liabilities Against Assets Subject To Finance
- - - - -
Lease
Deferred Tax Liabilities 170,274 398,304 430,377 453,038 -
Other Liabilities 1,469,258 1,979,079 2,851,407 3,548,666 4,946,589
114,997,2
27,651,240 41,675,264 61,471,903 79,301,092 75
9,184,45
Net Assets 3,024,582 4,763,359 5,706,656 5,974,978 9
Represented By
Share capital 2,036,582 3,779,879 3,779,897 4,925,961 6,650,048

Reserves 407,235 528,085 720,785 845,022 1,050,092
Unappropriated profit 527,123 448,427 1,219,228 570,114 1,390,395
2,970,940 4,756,409 5,719,910 6,341,097 9,090,535
Advance Against Issue of Right Shares
Surplus / (Deficit) on Revaluation of
53,642 6,950 (13,254) (366,119) 93,924
Investments
9,184,45
3,024,582 4,763,359 5,706,656 5,974,978 9
44
HORIZONTAL ANALYSIS OF BALANCE SHEET
2005 2006 2007 2008 2009

% % % % %
ASSETS Rupees in ‘000’
Cash And Balances With Treasury Banks 100 149 143 146 212
Balances With Other Banks 100 145 131 47 148
Due From financial institutions 000 100 239 489 932
Investments 100 179 656 889 1,450
Financings 100 137 175 201 224
Operating Fixed Assets 100 174 338 615 791
Deferred tax asset 000 000 000 000 100
Other Assets 100 103 127 187 269
Liabilities
Bills Payable 100 216 457 405 479
Due To Financial Institutions 100 144 81 134 284
Deposits And Other Accounts 100 151 108 308 441
Sub-Ordinated Loans 000 000 000 000 000
000 000 000 000 000
Lease
Deferred Tax Liabilities 100 234 253 266 -
Other Liabilities 000 135 194 242 337
Net Assets 100 157 189 198 304
Represented By
Share capital 100 186 186 242 327

Reserves 100 130 177 208 258
Unappropriated profit 100 85 231 108 264
45
COMMENTS ON HORIZONTAL ANALYSIS OF BALANCE SHEET
Horizontal analysis of balance sheet shows that the cash and bank balances of Meezan
Bank Limited increased from year 2005 and then to year 2006 but in the year 2007 and year
2008 these balances remain almost stable and in year 2009 there is also some increase. So
far as balances with other banks is concerned, they gradually increased to year 2006 then they
started decreasing in year 2007 and in year 2008 they fell and there was great increase in
year 2009. It may be because in year 2009 the amounts due from financial institutions is
considerably increased as compared to that of previous years. In my opinion this is not a good
sign. It shows that the liquidity of the bank is decreased in the year 2009 and this amount is
given as a loan to other financial institutions. The profit on these funds will definitely be low
as compared to the profit that might be earned from the bank’s own customers but now this
profit would be transferred to other financial institutions.
The figure of investments also show remarkable increase from year to year which
shows that bank is trying not to keep its funds idle. The amount of financing is also increased
from the year 2005 to year 2009 continuously which is a healthy sign.
The amount of operating fixed assets is increased continuously which is the evidence
that bank is increasing its branch net work nation wide and in order to meet the infrastructure
requirements of this network, the bank has to increase its operating fixed assets.
Other assets of the bank are increased at a regular pace from year 2005 to year
2009 which shows that the bank is fully aware of the emerging requirements of its network.
The amount of bills payable is increased from year 2005 to the year 2009 which shows
that bank is entering into contracts with other businesses for earning profits. Similarly, the
amounts due to other institutions is increased up to year 2006 but in the year 2007 this amount
h a s decreased but in year 2009 this amount is increased again. Overall this situation shows
that bank is relying on its own funds rather than borrowing from other institutions.
46
The major liability of the bank i.e. deposits and other accounts is considerably
increased from year 2005 to year 2009 which shows that the customers are confident about the
stability of the bank and there is an awareness among the customers about the Islamic way
of banking.
The amount of net assets i.e. total assets less liabilities, on the whole is satisfactory
because this figure is increased from year 2005 to year 2009. In year 2008 this figure is
304% to that of year 2005 which shows that the net assets have satisfactorily increased.
During all these years, the bank arranged capital by issuing extra shares from time
to time. Increase in share capital was not because of the funds needed by the bank but it was
also because the bank has distributed in the form of stock dividend. This also shows that the
bank wanted to save the liquid reserve to earn more profits by investing these funds in its core
operations.
The situation of reserves and un-appropriated profits is also satisfactory and shows
that the bank has saved the sufficient amount of reserves to preserve its capital structure.
47
VERTICAL ANALYSIS OF BALANCE SHEET
2005 2006 2007 2008 2009

% % % % %
ASSETS
Cash And Balances With Treasury Banks 12.90 12.70 8.40 6.76 6.75
Balances With Other Banks 9.31 8.90 5.55 1.58 4.24
Due From financial institutions 0 7.97 13.17 21.23 27.78
Investments 5.24 6.20 15.68 16.75 18.76
Financings 64.5 58.21 51.47 46.63 35.58
Operating Fixed Assets 1.00 1.14 1.54 2.21 1.95
Deferred tax asset 0 0 0 0 0.16
Other Assets 7.20 4.88 4.18 4.84 4.78
Liabilities
Bills Payable 0.94 1.35 1.94 1.33 1.09
Due To Financial Institutions 10.78 10.28 3.93 4.05 7.36
Deposits And Other Accounts 82.34 82.66 88.79 88.57 87.25
Sub-Ordinated Loans 0 0 0 0 0
0 0 0 0 0
Lease
Deferred Tax Liabilities 0.62 0.96 0.70 0.57
Other Liabilities 5.31 4.75 4.64 4.47 4.30
Net Assets 9.86 1026 8.49 7.01 7.40
Represented By
Share capital 6.64 8.14 5.63 5.78 5.36

Reserves 1.33 1.14 1.70 0.99 0.85
Unappropriated profit 1.71 0.97 1.81 0.67 1.12
48
COMMENTS ON VERTICAL ANALYSIS OF BALANCE SHEET
In the year 2005, the cash and bank balances were 12.90 percent of the total assets
whereas the balances with other banks were 9.31 percent. However the amounts due from
other financial institutions were zero percent. This shows that in this year which was
actually the third year of the bank’s operations, the scope of its operations was very limited.
Similarly the amount of investments was 5.24 percent, operating fixed assets were 1.00
percent and the other assets were only 7.20 percent. However the percentage of Financing was
64.35 percent of the total assets which shows that the bank was able to extend 64.35 percent of
its total funding as loans in the form of Islamic financing.
Bills payable is the year 2005 were only 0.94 percent, the balance due to other
institutions was 10.78 percent and the deferred tax liability was 0 .62 percent. However the
largest amount of liability was deposits and other accounts which were up to 82 percent of
total Liabilities. This shows that the bank was not so much efficient in managing its funds
because the amount extended to customers was about 64 percent but the deposits received by
the bank from the customers were about 82 percent.
The total amount of shareholders’ funds was about 9 percent which shows that the
bank was able, from its very beginning, to operate on an optimal capital structure.
The situation goes downward in the year 2006 when the percentage of deposits and
other accounts to total assets was 82 percent but the percentage of financing to total assets was
only 58.22 percent. This shows that the customers trusted on the bank and increased the
amount of deposits in Islamic banking but the bank, on the other hand, could not be equally
efficient.
The situation remained continued in the year 2007 and the year 2008 where the
percentage of deposits increased to 88 percent whereas the percentage of financing decreased
to 47 percent. However the bank also realized the situation and started utilizing the funds in
49
other investments and lending to other financial institutions. This move of the bank tried to
balance the situation which was created by under utilization of the funds collected from the
customers.
The situation in year 2009 was similar to year 2008. Only main changes were the
percentage of deposits decreased to 87 percent and percentage of financing also decreased to
35 percent. But the bank continued utilizing funds in other investments and lending to other
financial institutions.
50
Income Statement of Last Five Years
Description 2005 2006 2007 2008 2009

Rupees in ‘000’
Profit / return earned on financings, 10,102,06
investments and placements 1,459,229 2,704,280 4,573,752 6,803,213 0
Return on deposits and other dues expensed 690,418 1,464,173 2,451,968 3,088,334 4,969,916
Net spread income 768,811 1,240,107 2,121,784 3,714,879 5,132,144
Provision against non-performing financings

(net) 68,811 121,581 435,018 428,436 1,430,536
Provision / (reversal) for diminution in the
value of investments (29,831) 1,297 878 288,884 88,640
Bad debts written off directly - - - - -
38,980 122,878 435,896 717,320 1,519,176
1,685,88 2,997,55 3,612,96
Net spread after provisions 729,831 1,117,229 8 9 8
OTHER INCOME
Fee, commission and brokerage income 174,750 216,216 321,685 431,725 529,260
Dividend income 92,569 165,228 104,345 243,585 189,973
Income from dealing in foreign currencies 77,961 201,519 392,319 304,692 752,904
Capital gain on sale of securities 209,402 116,993 533,093 47,001 76,160
Unrealized (loss) / gain on revaluation of
Investments classified as ‘held for trading’ 57,792 (32,455) (31,453) (23,014)
Impairment on reclassification of
securities from held for trading to
available for sale securities (362,751)
Other income 9,677 23,060 27,904 66,670 49,507
Total other income 622,151 690,561 1,347,893 707,908 1,597,804
3,033,78 3,705,46 5,210,77
1,351,982 1,807,790 1 7 2
OTHER EXPENSES
Administrative expenses 718,384 1,022,991 1,755,761 2,626,606 3,530,161
Other provisions / write offs - 5,948 86,263 (60,859)
Other charges 482 4,776 2,884 287 1,747
Total other expenses 718,866 1,027,767 1,764,593 2,713,156 3,471,049
Extraordinary / unusual items -
1,269,18 1,739,72
PROFIT BEFORE TAXATION 633,116 780,023 8 992,311 3
Taxation - current - for the year 4,671 8,314 271,452 314,790 1,440,374
- Prior years 39,002 (60,572) - -
- Deferred 169,988 228,030 34,235 56,334 (726,002)
213,661 175,772 305,687 371,124 714,372
PROFIT AFTER TAXATION 419,455 604,251 963,501 621,187 1,025,351
Unappropriated profit brought forward 191,559 527,123 448,427 1,219,228 570,114
1,411,92 1,840,41 1,595,46
Profit before appropriations 611,014 1,131,374 8 5 5
51
Basic earnings per share (Rupees) 1.46 1.88 1.96 1.26 1.71
HORIZONTAL ANALYSIS OF INCOME STATEMENT

Description 2005 2006 2007 2008 2009
Rupees in ‘000’
Profit / return earned on financings,
100 % 185 % 313 % 466 % 692 %
investments and placements
Return on deposits and other dues expensed 100 % 212 % 355 % 447 % 720 %
Net spread income 100 % 161 % 276 % 483 % 668 %

100 % 177 % 632 % 623 % 2079 %
(net)
100 % -4 % -3 % -968 % -297 %
value of investments
Net spread after provisions 100 % 153 % 231 % 411 % 495 %
OTHER INCOME
Fee, commission and brokerage income 100 % 124 % 184 % 247 % 303 %
Dividend income 100 % 178 % 113 % 263 % 205 %
Income from dealing in foreign currencies 100 % 258 % 503 % 391 % 966 %
Capital gain on sale of securities 100 % 56 % 255 % 22 % 36 %
100 % -56 % -54 % -40 % 0%
Investments classified as ‘held for trading’
securities from held for trading to - - - - -
available for sale securities
Other income 100 % 238 % 288 % 689 % 512 %
Total other income 100 % 111 % 217 % 114 % 257 %
100 % 134 % 224 % 274 % 385 %
OTHER EXPENSES
Administrative expenses 100 % 142 % 244 % 366 % 491 %
Other provisions / write offs - - - - -
Other charges 100 % 991 % 598 % 60 % 362 %
Total other expenses 100 % 143 % 245 % 377 % 483 %
Extraordinary / unusual items - - - - -
PROFIT BEFORE TAXATION 100 % 123 % 200 % 157 % 275 %
Taxation - current - for the year 100 % 178 % 5811 % 6739 % 30837 %
- Prior years 100 % -155 % 0% 0% 0%
- Deferred 100 % 134 % 20 % 33 % -427 %
PROFIT AFTER TAXATION 100 % 144 % 230 % 148 % 244 %

Un-appropriated profit brought forward 100 % 275 % 234 % 636 % 298 %
Profit before appropriations 100 % 185 % 231 % 301 % 261 %
Year 2005 is taken as a base year
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COMMENTS ON HORIZONTAL ANALYSIS OF INCOME TATEMENT
Horizontal analysis of income statement shows that the profit earned on financing,
investments and placements has considerably increased over the years. Similarly the
return on deposits and other dues expensed was also increased with the same pace. The
situation depicts that the bank has been beneficial on the whole.
The most crucial situation that is obvious from the bank’s income statement is the
amount of provision against the non performing financings. This amount has increased over
the years at an alarming rate. It shows the bank’s inefficiency in the formulation and
implementation of credit and collection policy.
Another item on the income statement that has decreased the bank’s net income to a
large extent is the provision fore diminution in value of investments and impairment. The bank
should seriously consider that the investment must be made carefully so that there may not be
such a huge decline in their value.
The other income of the bank has not played a considerable role in the income
statement however, the amount of other expenses are increased to a large extent as compared
to that of year 2005. We shall analyze later in the vertical analysis that what is the percentage
of these two items with respect to the total revenue.
Lastly, the figure of profit after tax shows an increase of 244 % from that of the
year 2005. The analysis shows that the profit continuously increased from the year 2005 to
2007 but in the year 2008 this ratio decline to a large extent but it increased in year 2009.
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VERTICAL ANALYSIS OF INCOME STSTEMENT
Description 2005 2006 2007 2008 2009

Rupees in ‘000’
Profit / return earned on financings,
100 % 100 % 100 % 100 % 100 %
investments and placements
Return on deposits and other dues expensed 47 % 54 % 54 % 45 % 49 %
5% 4% 10 % 6% 14 %
(net)
-2 % 0% 0% 4% 1%
value of investments
Net spread after provisions 50 % 41 % 37 % 44 % 36 %
OTHER INCOME
Fee, commission and brokerage income 28 % 31 % 24 % 61 % 33 %
Dividend income 15 % 24 % 8% 34 % 12 %
Income from dealing in foreign currencies 13 % 29 % 29 % 43 % 47 %
Capital gain on sale of securities 34 % 17 % 40 % 7% 5%
9% -5 % -2 % -3 % 0%
Investments classified as ‘held for trading’
securities from held for trading to - - - -51 % -
available for sale securities
Other income 2% 3% 2% 9% 3%
Total Other income 100 % 100 % 100 % 100 % 100 %
OTHER EXPENSES
Administrative expenses 99.93 % 99.54 % 99.5 % 96.81 % 101.7 %
Other provisions / write offs 0% 0% 0.34 % 3.18 % -1.75 %
Other charges 0.07 % 0.46 % 0.16 % 0.01 % 0.05 %
Total other expenses 100 % 100 % 100 % 100 % 100 %
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COMMENTS ON VERTICAL ANALYSIS OF INCOME STATEMENT
The vertical analysis of the year 2005, the t hi r d year of the bank’s operations,
shows that the return by the bank to its deposit holders is about 47 %. Ultimately the gross
profit earned by the bank on the financing was 53 Percent. Provisions for non performing
financing kept by the bank was about 5 percent and provision for diminution in the value of
investments and impairment was about 2 percent in negative. The other income of the bank
was about 50 percent.
The vertical analysis of the year 2006 shows that the return by the bank to its deposit
holders is about 54 %. Ultimately the gross profit earned by the bank on the financing was 46
Percent. Provisions for non performing financing kept by the bank was about 4 percent and
provision for diminution in the value of investments and impairment was reduced to zero. The
other income of the bank was about 50 percent. The Other expenses have gradually increased
in this year.
In the year 2007 the return paid by the bank was increased to 54 percent leaving a net
spread of 46 percent for the bank. The other income of the bank was decreased again to an
extent of 25.52 percent and the other expenses were 38 percent of the gross revenue. In this
year the net income of the bank was decreased further to 22.34 percent.
The year 2008 has not been proved a good year in the history of the bank. Although
in this year the net spread earned by the bank was 55 % but the percentage of other income of
the bank was decreased with an alarming rate. In this year the percentage of other income was
only 10 % but the percentage of other expenses was about 40 percent. This fact has worsened
the situation on the whole and the bank’s net income decreased to the maximum of only 9.13
percent which is the lowest of all the previous years.
The year 2009 is similar to the year 2008 the net spread earned by the bank was 51%
and the other income i.e. dividends and fee, commission and brokerage has decreased heavily.
The other income has slumped down more this year upto 3%.
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RATIO ANALYSIS
1) RETURN ON EQUITY
Return on Equity = Net Profit after Tax / Stockholders’ Equity
2009 = (1,025,351 / 9,090,535) x 100 = 11.28 %
2008 = (621,187 / 6,341,097) x 100 = 9.80 %
2007 = (963,501 / 5,719,910) x 100 = 16.84 %
2006 = (604,251 / 4,756,409) x 100 = 12.70 %
2005 = (419,455 / 2,970,940) x 100 = 14.12 %
This ratio shows the profit earned by the company as a percentage of the amount
of equity capital invested by the company in the business. In the year 2005, this ratio is 14
percent but in the year 2006 it is declined to about 12 percent. This is because the company
has increased the amount of capital in 2006 but the net profit after tax could not be increased
according to that ratio. However in the year 2007 the ratio was increased to the maximum of
all the previous years in spite of an increase in the stockholders’ equity. This is because the
net profit was increased proportionately to that. However in the year 2008, the situation is not
so good because in this year, the amount of profit declined and the company again has issued
the equity capital in the form of bonus shares. In the year 2009 the ratio has increased slightly
to 11%. This is because the bank has generated more profits this year.
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2) RETURN ON ASSETS
Return on Assets = Net Profit after Tax / Total Assets
2009 = (1,025,351 / 124,181,734) x 100 = 0.83 %
2008 = (621,187 / 85,276,070) x 100 = 0.73 %
2007 = (963,501 / 67,178,559) x 100 = 1.43 %
2006 = (604,251 / 46,438,623) x 100 = 1.30 %
2005 = (419,455 / 30,675,822) x 100 = 1.37 %
2004 = (224,358 / 19,697,390) x 100 = 1.14 %
Return on assets is the ratio that shows the percentage of net profit after tax to
total assets. This ratio is also called the return on investments because investment by the
company in the business is always in the form of different types of assets. This ratio of
Meezan Bank Limited shows that the return earned by the bank on its total investments is
decreasing from year to year. This is because the bank has continuously increasing its
investments in the total assets but against that investment the bank is not earning
sufficient amount of profits. The situation is somewhat better in the year 2007 where because
of highest of all the years’ profits, the return percentage is 1.43. The bank should consider the
situation and should try to rectify this.
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3) NET SPREAD MARGIN
Net Spread Margin = Net return on Loans and Advances / Total Assets
2009 = (3,612,968 / 12,4181,734) x 100 = 2.91 %
2008 = (2,997,559 / 85,276,070) x 100 = 3.52 %
2007 = (1,685,888 / 67,178,559) x 100 = 1.98 %
2006 = (1,117,229 / 46,438,623) x 100 = 1.66 %
2005 = (729,831 / 30,675,822) x 100 = 2.38 %
This ratio shows the gross earnings on financing less the return paid to the
deposit holders as a percentage of total assets. This is some sort of gross profit ratio because
the earning on financing is the main revenue of the bank where the return paid to deposit
holders is the cost of those funds. Here this ratio shows that the situation was better in the year
2005 but in the year 2006 it is again declined. Then in the year 2007 it again became better
while in the year 2008 surprisingly this ratio is the highest. Although the net profit after tax in
this year is lesser than that of the previous years but this ratio shows that the bank has become
efficient in its core operations and the problem lies with its other income and other
expenses as we have already seen in the vertical analysis of the income statement for the year
2008. But the ratio has declined in the year 2009 again slightly.
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4) NET OTHER INCOME MARGIN
Net Other Income Margin = Net Other Income / Total Assets
2009 = (1,597,804 / 124,181,734) x 100 = 1.29 %
2008 = (707,908 / 85,276,070) x 100 = 0.83 %
2007 = (1,347,893 / 67,178,559) x 100 = 2.01 %
2006 = (690,561 / 46,438,623) x 100 = 1.49 %
2005 = (622,151 / 30,675,822) x 100 = 2.03%
Net other income margin is the percentage that shows the return earned by the bank
from the sources other than its core operations. Keeping in view the intense competition among
the banks today, a bank must seriously concentrate on the other sources because in this sheer
competition a bank is not in a position to earn premium revenue on the finances provided. For
Meezan Bank, this ratio shows that there have been the fluctuations in other income from
year to year but the situation is very bad in the year 2008 where this ratio is the minimum of
all the previous years. This is the reason that the overall performance of the bank declined in
this year. The ratio has increased in the following year.
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5) EARNINGS PER SHARE
Earnings per Share = Net Profit after Tax / Number of Shares Issued
2009 = (1,025,351 / 665,004.8) = Rs.1.54 Per Share
2008 = (621,187 / 492,596.1) = Rs.1.26 Per Share
2007 = (963,501 / 377,989.7) = Rs.1.96 Per Share
2006 = (604,251 / 377,989.7) = Rs.1.88 Per Share
2005 = (419,455 / 203,658.2) = Rs.1.46 Per Share
EPS is the ratio that measures how many rupees the company has earned against one
ordinary share issued to the shareholders. The greater is the ratio, the better it would be. It is
because the company will have the greater amount of profits per share to pay as dividend to
the shareholders. This ratio is the most important ratio from the shareholders’ point of view
because they also want to know that how much the company is going to pay them against
the number of shares they are having. For Meezan Bank, this ratio improved from the year
2005 to the year 2008 with a little exception in 2005 but in the year 2008 this ratio fell to the
minimum of Rs.1.26 per share which is because the company has issued bonus shares to its
shareholders as a stock dividend. In the year 2009 the EPS has once again increased.
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6) STOCK DIVIDEND PERCENTAGE
2009 = 5.0 %
2008 = 8.6 %
2007 = 20 %
2006 = 10 %
2005 = 16 %
Over the years from 2005 to 2009, the bank has been paying the stock dividend instead
of cash dividend. Although this is not a good sign but we can say that since this is because of
the consent of the shareholders that’s why it is compromisable. This ratio shows that the
bank has been paying sufficient amount of dividend to the shareholders from the year 2005 to
the year 2007 but in the year 2008 and 2009 this ratio has declined. This was because in the
year 2008, the bank had not earned a handsome amount of profits to justify the larger stock
dividends. Anyways, in my opinion, the bank should consider the situation and try to declare
dividend in the form of cash also.
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7) MARKET PRICE PER SHARE
2009 = Rs.15.74 per Share
The market price per share has been fluctuating from year to year but the overall
impact on the market price is encouraging. However we suggest that the bank should stop
paying stock dividends as this increases the number of shares in circulation and the
ultimate result will be the decline in the market price.
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8) PRICE EARNING RATIO
Price Earning Ratio = Market Price per Share / Earnings per Share
2009 = 15.74 / 1.71 = 09.20
2008 = 21.48 / 1.26 = 17.03
2007 = 38.55 / 1.96 = 15.12
2006 = 19.50 / 1.88 = 10.51
2005 = 23.25 / 1.46 = 15.92
The price earnings ratio is commonly used to assess the owner’s appraisal of share
value. This ratio measures the amount that investors are willing to pay for each rupee of
company’s earnings. The level of this ratio indicates the degree of confidence that
investors have in the firm’s future performance. The highest the P/E ratio, the greater the
investor confidence in the company. The figures calculated above show that the investors’
confidence in the company is increasing year by year as this ratio is increasing from
earlier years to the later years. In the year 2006, this ratio was decreased but soon after that
this ratio was improved in 2007 and became even better in 2008 but it declined significantly in
year 2009.
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9) Net Profit before Tax Margin
2009 = 14.87 %
2008 = 13.21 %
2007 = 21.43 %
2006 = 22.98 %
2005 = 30.42 %
Net profit before tax margin represents the profit earned before tax as a percentage of
gross revenue. The need to calculate this ratio is that the actual performance of the bank is
measured before tax and not after tax. So this ratio shows that the profit earned by the bank
increased in the year 2005 but in the later years this ratio continued to decline and in the year
2009 this ratio was only 14.87 percent as compared to that of year 2005 where it was 30.42
percent.
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10) Net Profit after Tax Margin
2009 = 08.76 %
2008 = 08.27 %
2007 = 16.27 %
2006 = 17.80 %
2005 = 20.15 %
Net profit after tax margin was about 18 percent in the year 2005 whereas it started
decreasing gradually in the subsequent years. The main reason for this decrease in the net
profit was increase in the other expenses and also because of an increase in the amount of
taxation. Although the better measure for the efficiency of the management is the net
profit before tax margin but since that profit is not on the disposal of the management so it is
better to calculate the net profit after tax margin so that the disposable income of the
organization should be measured. And this ratio shows that the efficiency of the organization
is going decreasing year by year.
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11) OPERATING EXPENSES TO INCOME
2009 = 72.15 %
2008 = 77.24%
2007 = 71.21 %
2006 = 73.40 %
2005 = 67.71 %
The operating expense to income ratio shows that the organization has been able
to control its operating expenses over the year from 2005 to 2009. This ratio was 67.71
percent in the year 2005 and in the year 2009 it is ended at 72.15 percent. In spite of the
stability of this ratio the net profit margin of the bank declined to a considerable extent. This
was because of an increase in the other expenses of the organization. So the bank should focus
to decrease its operating expenses so that its net profit should be improved.
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12) Financing to Deposit Ratio
2009 = 44.04 %
2008 = 51.62 %
2007 = 56.90 %
2006 = 65.68 %
2005 = 73.86 %
Financing to deposit ratio is perhaps the most critical ratio for a commercial bank. This
ratio represents the amount extended as a loan by a bank to its clients compared to
deposits that the bank receives from its deposit holders. As per the definition of a commercial
bank, the bank is an institution that receives money from those who have it spare and lends it
to those who are in need of them. This ratio of Meezan Bank has been declining from the year
2005 to the year 2009. The bank should seriously consider this ratio because these are the core
operations of the bank. If the bank could not fully utilize the funds received from the deposit
holders it would have to suffer a loss of its net income.
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13) BOOK VALUE PER SHARE
Book Value per Share = Stockholders’ Equity / No. of Common Shares Issued
2009 = 9184 M / 6650 M = Rs.1.38 per Share
2008 = 5974 M / 4925 M = Rs.1.21 per Share
2007 = 5706 M / 3779 M = Rs.1.51 per Share
2006 = 4763 M / 3779M = Rs.1.26 per Share
2005 = 3025 M / 2036 M = Rs.1.49 per Share
Book value per share is the ratio that shows that how much value of assets the bank has
to pay to its shareholders in the event of its winding up. If we compare the book value per
share with the market value per share we see that although the book value per share is
much lesser than the market value even then the shareholders are willing to pay much higher
price for the share of the bank. It shows that the shareholders have confidence in the company
that the company will the prosperous in the future. However since the market price has
declined recently, therefore the company should take corrective actions so that the confidence
of the shareholders should be maintained.
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14) PROPRIETORY RATIO
Proprietary Ratio = Shareholders’ Funds / Total Assets
2009 = 6,650,048+1,050,092+1,390,395/124,181,734 = 7.32%
2008 = 4,925,961+485,022+570114 / 85,276,070 = 7.01%
2007 = 3,779,897+720,875+1,219,228 / 67,178,559 = 8.51%
2006 = 3,779,879+528,085+448,427 / 46,438,623 = 10.24%
2005 = 2,036,582+407,235+527,123 / 30,675,822 = 9.68%
This ratio throws light on the general financial strength of the company. It is also regarded as a
test of the soundness of the capital structure. Higher the ratio or the share of shareholders in the
total capital of the Bank, better is the long-term solvency position of the Bank. A low
proprietary ratio will include greater risk to the creditors. As the Ratio is going down wards, it
is better to structure the measures to control the down slop and try to get it back on track for
smooth running of the Bank.
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15) Fixed Assets to Current Assets Ratio
Fixed Assets to Current Assets Ratio = Fixed Assets / Current Assets
2009 = 34,499,500+23,290,309+44,188,066+2,416,375 = 5.33 : 1

8,387,432+5,260,467+5,935,413
2008 = 18,108,000+14,286,949+39,768,481+1,880,515 = 6.59 : 1

5,763,710+1,344,974+4,123,441
2007 = 88,500,000+10,535,185+34,576,339+1,032,963 = 4.51 : 1

5,644,028+3,729,549+2,810,494
2006 = 3,700,000+2,877,554+2,7031,016+531,262____ = 2.70 : 1

5,897,394+4,134,875+2,266,522
2005 = 1,606,490+19,740,886+305,585_____________ = 2.30 : 1

2,623,588+1,751,083+204,737
Fixed assets turnover ratio is also known as sales to fixed assets ratio. This ratio
measures the efficiency and profit earning capacity of the concern. Higher the ratio, greater is
the intensive utilization of fixed assets. Lower ratio means under-utilization of fixed assets.
As the Ratio is increasing year by year so it shows that the management is using the
Assets fruitfully. The more the asset utilization more the bank will earn.
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16) Debt Equity Ratio
Debt Equity Ratio = Long Term Debts / Shareholder’s Funds + Lond Term Debts
2009 = 8,468,425+100,333,051___________________________
(6,650,048+1,050,092+1,390,395) + (8,468,425+100,333,051)
2009 = 92.29%
2008 = 40,08,496+70,233,875+453,038___________________________
(4,925,961+485,022+570,114) + (40,08,496+70,233,875+453,038)
2008 = 92.18%
2007 = 2,415,606+24,582,353+430,377___________________________
(3,779,879+720,785+1,219,228) + (2,415,606+24,582,353+430,377)
2007 = 82.7%
2006 = 4,285,212+34,449,441+398,304___________________________
(3,779,879+528,085+448,427) + (4,285,212+34,449,441+398,304)
2006 = 89%
2005 = 2,981,714+22,769,262+170,274___________________________
(2,036,582+407,235+527,123) + (2,981,714+22,769,262+170,274)
2005 = 89.7%
Indicates what proportion of equity and debt that the company is using to finance its
assets. Sometimes investors only use long term debt instead of total liabilities for a more
stringent test. If ratio is greater than one means assets are mainly financed with debt. If ratio is
less than one, it means equity provides a majority of the financing. If the ratio is high (financed
more with debt) then the company is in a risky position - especially if interest rates are on the
rise.
Meezan bank is doing well in this scenario as well because the ratio is always under the
1 mark, which is good sign for the investors. But it will yarn more investor and faith if bank
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can reduce it a bit further.
INTERNSHIP EXPERIENCES
One of the most important aims of the student life is to express himself correctly and
adequately. This was the belief in my mind when I first decided to go to Meezan Bank Limited
to complete my internship program.
Determined, Confident and Persistent in the pursuit of knowledge and learning, I was
on my way to Meezan Bank Limited, Bahria Town Branch in the early morning of July 1,
2009.
FIRST WEEK
I started my internship from "General Banking" in the first week. The General banking
is basically divided into the following sub departments, which are as follows:
• Account opening
• Bills and remittances
• Clearing
• Term deposit
• Cash department
The first day of exposure to the practical field was at the (sub department) Account
opening. The relationship of customer starts with this department every one is not allowed to
come and open an account in the bank, for this purpose there should be an introducer who
himself is the account holder in the same branch. He has to introduce the new client by signing
the opening account form and then his signatures are verified.
Applicant's fills the account opening form and provides it to the bank with photocopy
of I.D. card and signatures card.
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Then the banker inquires the about the option of opening a joint account or individual.
If the customer wants to open joint account then either it is "either or survivor" (i.e. only one
persons signature is sufficient) or jointly (i.e. both should sign the cheque).
Account opening:
Although the procedure of opening an account in a bank is a quite complicated job but I
am going to tell you only the basic necessities for opening the account, which are as follows:
• Introduction
• National I.D. card
• Personal data
• Details of dealing with other banks.
These are some of the basic requirements for opening the account.
Issuance of chequebook
Once the account is opened, MBL issues the chequebooks to the customer so that they
could withdraw their money whenever they like. The producer of issuance of the chequebook
is as follows:
For the customer who already has an account with the bank, the lastly consumed
chequebook requisition slip with the help of which a new chequebook is issued. And the
person who is going to open a new account for the first time gets the chequebook free without
any requisition slip.
For the new depositors the cheque book is not issued at the time of opening of account,
rather it is issued after three days but, as the most of the customers are from the armed forces
so the usually get the cheque earlier. MBL issues the chequebooks for both the local and
foreign currency accounts.
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I remained there in the account-opening department for one week and daily I learnt a
new thing I come to know about the details of the account opened by the banks, which I have
explained in previous portion of "Departments".
In the start I have stated the account opening procedure and issuance of cheque book in
a very comprehensive way, now let me tell the further related detail of account opening
• First of all a customer come and gets the information regarding the opening of account.
After getting the proper information he gets an introducer and goes for opening an
account of any kind whatever he wants
• He fills the form regarding the opening of account which is in fact a request.
• S.S card is filled which contains the signature that will be used in future in order to
identify that the same particular person who perfectly eligible for receiving the benefits.
• The S.S card and the application form are verified and the verification stamp is
imposed on it.
• After verification the application forms are pasted in the file with the serial, no which is
actually the account no. Allocated to the respective customers.
• The chequebook is issued to the customer after three days.
• A letter of thanks is posted to the customer as well as the introducer. The introducer is
thanked for the two perspectives. First he should be thanked that because of him the
bank get another customer and the second reason behind sending the letter to him is
that if the customer had fraudulently get the signature of that person as an introducer
then he should come to know that some one has used his name as well as signature for
his personal benefit and without the consent of him (introducer).
• The procedure for opening the account comes to an end after sending the letter of
thanks.
Active and inactive Account
The account becomes Inactive if there is no debit transaction. Account becomes active
if there is credit transaction.
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SECOND WEEK
In the second week I was shifted to the TDR (Term Depots Receipts) department. It
was again a good experience to work with the officer here. First of all he told me about the
basics of the TDR.
Deposit is lifeblood of a commercial bank. The main function of a commercial bank is

to channelize the saving from the savers to the ultimate users of the funds. This process of
collecting saving is called "deposit mobilization".
Deposits are of two types one is the demand deposit and the other one is time deposit
(these have been explained in detail in the "department" portion). As the name signifies the
demand deposit is payable on demand so no interest or benefit is given on such deposits but the
time deposit is a kind of deposit, which gives you a benefit in terms of cash. Most of the people
who have surplus money with them especially the landlords deposit their money in such
accounts.
Term deposits are payable on demand with certain maturity. Different percentages of
profit are given in the time deposit (the detail is given in the Marketing Mix)
These are called fixed deposit because they are fixed and no transaction is allowed till
maturity. In fix deposit you can open an A/c of the same title only than A/c number will be
changed. While in other accounts the A/c can't be opened under the same title even in other
branch of the same Bank.
Profit calculation
The Head office determines the provisional rates of the Profit. Every bank has its own interest
rate; usually established banks have low interest rates then the non-established banks as the
have to attract the Customers.
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There are different types of accounts, which are shown in provisional rates of profit on
“PLS deposit” and rate of return minimum balance, and maturity is also shown in it. After
every six months the rates are revised on PLS deposit
On fixed deposit the interest is given on the Principle amount only while on other profit
and loss deposits the interest is given on profit an principle amount (provided that the interest
has not been received in the given time). On fixed deposits the month is started from the day
from which you deposit the amount.
As the interest rates vary frequently, so the interest is calculated on the rate which is
applicable during that particular duration. It happens that sometimes the interest rate remains
the same. But during the year 2005 the interest rates were changed two times within six
months. First of all the interest rates were changed at the start of the year and then these rates
were changed again in the month of the February i.e. these were changed twice in the six
months. The changing in the interest rate depends upon the will of the Head office, which has
the power to change them at any time.
Zakat is deducted on the first of Ramdan. However, the Bank can't deduct the Zakat if
you have given Affidavit (declaration regarding not to deduct Zakat on Stamp paper).
Tax is deducted which is known as withholding tax only at the time of deposit e.g.
When you will deposit Rs.100,000 you will have to give additional money of Rs. 300/- as the
withholding tax. (The rate of withholding tax is 0.3%). If you have National Tax Number NTN
then 0.3% withholding tax is exempt.
The rate of withholding tax on profit is 10% i.e. if you are going to get a benefit of Rs.
10,000 then you will receive the cash of Rs. 9,000 as the remaining amount will be deducted as
the tax.
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For non-residents the tax and Zakat is exempt (visa is required as the proof that the
particular person is really a non-resident).similarly Christians has not to pay the tax, they have
to pay the tax only.
Record keeping
The record of the TDR is although feed in the computer but there is also a hard copy of
the record. The verified TDR forms are pasted with serial number of receipt given to the
customer (the receipt of the form regarding the deposit of the amount).
THIRD WEEK
In the third week of my internship I was shifted to the Clearing section and Bills for
collection section as well. Three days I worked with the "Clearing" and then with the "Bills for
collection" section.
CLEARING
This is a "Inter-city clearing" i.e the cheques of Lahore city from different banks like
National Bank of Pakistan, Standard Chartered Bank, Muslim Commercial Bank are deposited
here. The deposited cheque is received carefully by checking the title of cheque, date, amount,
and signature on the cheque. All the cheques go to the State Bank of Pakistan. Everyday NIFT
receives all cheques and arranges them. By establishment of NIFT a lot of time, cost and labor
is saved. The cheques are stamped carefully. Two stamps are required on the cheques
• Clearing stamp
• Payee's account will be credited
If any stamp is missed or unclear, SBP returned one the cheque with reason.
When the cheques are deposited they enter all the cheques on the computer with account
number and these figures go to SBP.
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There are four types of Balances in the computer
• Available balance
• Float amount
• Block amount
• Ledger balance
NIFT collects all the cheques at 2:00 pm. After that the computer department give clearing
sheet that is checked in clearing.
Same day clearing
All the cheques are cleared in coming day. But same day cheques are cleared other
same day when it is deposited. The same day cheque amount is 50,000 below this amount the
cheque, can't be cleared in the same day.
Clearing house
t is a p[lace where representatives of all scheduled banks sit together and interchange
their claim against cash other with the help of controlling staff of "state Bank of Pakistan"
where there is no branch of State Bank of Pakistan, the designated branch of State of Pakistan.
So, system by which banks exchange cheques and other negotiable instruments drawn on each
other within specific area and there by secure payment for their clients through the clearing
house at specific time in an efficient way.
Bills for Collection
Two types of cheques are deposited here
• Outstation cheques
• Meezan other branch cheques (local)
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Outstation cheques mean different cities cheques are deposited and Local means
Meezan's other Branches are deposited. All cheques account numbers on the computer and
these figures go to SBP.
The cheques are cleared in 5-6 days. Because "NIFT" receives and delivered to SBP
where these cheques are cleared in 3 days and deliver to the banks, which mention on the
cheques.
The cheques require three stamps
• Meezan crossing stamp

• OBC number
• Payee's account will be credited.
If the cheques are returned due to some reasons, a returned memo Random is filled and entries
are recorded on the register.
FOURTH WEEK
In the fourth week of internship I was transferred to the "Remittances department". I

met there with a quite sophisticated personality, she tells me about the issuance, procedure and
the entries of the demand drafts and pay orders.
Demand Draft
It is an instrument payable on demand for which value has been received, issued by the
branch of the bank drawn. Demand draft is payable at some other branches of the same bank.
The person deposit cash and get demand draft. It is used for outstation payment.
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Issuance of demand draft
On the application form following particulars are given:
• Name of beneficiary
• Amount
• Mode of payment
• The place where DD is drawn
• Signature
• Name and address of the beneficiary
Request shall be made on standard application form. The customer writes his name,
address, I.D number, and phone number on the backside of the application form. Commission
is charged as per schedule of charges. The issuance of DD is computerized and the amount is
automatically protecting graphed drawing printing for the avoidance of forgery.
The withholding tax and excise duty is deducted as per schedule. when the customer
depots cash in the cash department, he got voucher from the cash department and gave it to the
person who makes the DD.
Payment of DD
When a person brings DD, Bank will check it from DD payable record and ask the customer to
sign twice at the back of the DD so that it could be confirmed that the eligible person for
receiving the benefit, along with this bank obtain the ID of that person verify it and then make
the payment. After making the payment entry is made in the register that this DD has been
paid.
DD payable register
Every day you receive an IBCA from different banks and it contains a list of DDs, which have
been drawn on you. Banker records it in DD payable register. These DD are those, which other
branches have drawn on your bank.
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Payment of DD from Suspense A/c
The payment of DD is made from the suspense account in the following cases:
• The amount of DD is paid from suspense a/c if advice is not received yet.
• If a DD is to be cancelled on the wish of the customer, in such a case the payment will
be made from suspense A/c.
Cancellation of DD
Following procedure is followed for the cancellation of the DD.
• Obtain the application in writing for the cancellation of DD along with the original DD.
• Verify the signature of the applicant, which should tally, with the signature on the
application form (for opening the DD).
• Mark caution on DD issued register or on computerized entry.
• Make the payment from suspense account.
• Inform the Drawee bank regarding the cancellation and ask for IBCA. Inter Branch
Credit Advice is the advice regarding the payment (refund) of the amount which
Drawer bank have sent to them (which was deposited by the customer against the
demand draft).
• When a demand draft is made, an IBCA is sent to the Drawee bank regarding the
payment.
Types of DD
DD’s are of the following types:
• Crossed DD: In the case of crossed DD the amount is deposited to the A/c of the
benificiary.
• Open DD: Incase of open DD the amount is handed over to the benificiary at the cash
counter.
Telegraph Transfer
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The transfer of funds from one branch to another branch of the same bank is called
telegraphic transfer. The bank apply test on telegraphic transfer. The applicant receives
Commission and charges, if the Applicant’s account is in MBL, he pays no charge above Rs.
100,000/- If he has no account in the MBL then he has to pay charges according to the amount
e.g. for Rs. 100,000/- the charges are Rs. 250/- If the account of beneficiary is in another bank,
his bank will present The TT to MBL through for payment.
Pay Order
Pay order issued from one branch can only be payable from the same branch. Pay order
is used for same city payment. E.g. If MBL (Main Branch) issued pay order it is only payable
for Main Branch of MBL.
Procedure
• Applicant fill the application

• After paying charges he gets voucher and pay order is issued
• All pay orders shall be crossed "payee's A/c only".
Cancellation
• The applicant give application for cancellation

• Charges are recovered from the applicant.
FIFTH WEEK
In the second last week of my internship I worked for two days in the "ATM section"
and then in the "Accounts section".
Account Section
I worked three days in accounts department but as it is a confidential department so

they did not give me enough in formation regarding their working. First day I sorted out the
cheques of MBL with the help of the serial number and the nature of the account and arrange
them in sequence. After that i checked the activity which contains the title of the cheque,
82
amount, date etc. Accounts department maintains the record of expenses of all the departments,
it also maintain the record of all the employees regarding their basic salary, increment, benefits
etc. It is the backbone of MBL
On the next day is worked in the mail dispatch section, the person appointed here asked
me to arrange the letters and to write the mailing address on the envelopes and then to put the
letters into envelops. It was an interesting job but, the single thing which I learned from here
was that, I learnt by heart the addresses of many branches of the MBL, which helped me to
complete the Marketing Mix portion of the same report where I have given the detail of the
Place of the MBL. On the following day I repeated the same job and did nothing else.
ATM Section
I worked two days in ATM department. The Bank have countrywide network of
automated teller machine. The branch network is corrected on-line real time and its customers
have access to off-sites as well as on-site atms all over Pakistan.
For ATM cards first the customer open account in the bank after that he/ she fills the
application form for the ATM. the Head office send a ATM cards in a ATM department but
pin codes are sent in other department. So in this way the customer gates his/ her ATM cards.
ATM means "24 hours services" the customers get money at any time at any place but
during my period the function of ATM were held by the Head office for three days. The branch
has no authority to hold the machine, if it is not working; the Head office knows the reason for
it.
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SIXTH WEEK
In the last week I was shifted to the "foreign exchange" department. For the first three days I
worked there but in the last three days I was shifted again to the account-opening department
due to the absence of one of the Account opening officer. Therefore I was sent back to the
Account-opening department.
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WEAKNESSES
Till the last year, MBL had a totally different perspective. The management was of
the view that the customer should come to them and they don’t need to go to the customer.
But in this era of mass marketing and advertising, it is not possible to stay in competition
without these took. The bank has now changed its perception arid has started an effective
marketing and advertising strategy. But the previous gaps are still there and there is lack of
awareness in the people about the bank and its products. The bank needs to improve on its
marketing and advertising areas.
It was observed in the bank that the degree of satisfaction of the employees was quite
low. First of all, 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 any other 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.
Due to the dissatisfaction of staff, there is high turnover among them. People who find
other alternatives do not stay with the bank. Therefore, the bank incurs loss on their training
and development. The bank should provide incentives to its employees so that they show more
loyalty. For example, there is no commission provided to the sales personnel which
otherwise is a general rule all over the world.
There are no sorts of training programmes for the employees. The employees who are
newly appointed are straight away placed at their positions with no prior orientation. This
creates problem for new personnel because they find difficult to understand the environment
and culture of the organization.
The decision-making is carried out the upper management level and the subordinates
are not included in this process. This creates a sense of insecurity in the lower managers and
85
that is why there is a lack of loyalty among the personnel. Although the upper management is
very friendly with the lower managers but that is only to the extent of cordial relationships.
RECOMMENDATIONS
Meezan Bank is renowned for being first in Islamic banking. With such competitive
edge in the banking industry, it holds a very strong position among its competitors. Its
continuous innovation and adaptation to its changing environment has allowed it to stand
amongst the best of the lot. But I would like to give certain recommendations in this
perspective.
First of all, I would I like to suggest that the bank must pursue a very aggressive
marketing and advertising strategy so that it can create awareness in the general public about
its Islamic products and services.
Secondly, there is a need for creating satisfaction among employees. They do not feel
any attachment to the organization. There is a requirement for building up their loyalties so
that the bank can curtail the dissatisfaction and turnover among employees.
The personnel in the bank should not be overstressed with workload. The
workload is of a destructive level. At that level of load the employees loose all the comfort in
their work and remain tense and frustrated.
There is need of a new branch in the Lahore Main area. In our marketing research,
many traders told us that they really wanted such a good bank to open a branch in that area.
These traders have transactions of millions in a day that is why it is not easy for them to carry
that amount of cash. If MBL opens a branch in that area, it can take hold of all those big
accounts with a lot of daily transactions.
Job training is a very important aspect that Meezan Bank Limited is lacking in. New
employees are recruited directly without any prior training or orientation. The result is that
86
they do not understand the organizational structure and culture and become frustrated in their
start. This reduces their productivity and efficiency. If such a training programmed is started,
then the new employees would feel more comfortable and adapt easily to the environment.
87
Reference& sources:
I used following references to prepare my reports:
• Manager of the branch

• I collected information from Branch Manager in the form of interviews
• Operation manger
• Employees of the branch
• I collect information from other staff members of the branch in the form of interviews.
• 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.
• The very important source where I collect data about the Meezan bank is the internet. I
visited site of the Meezan bank and AL-Meezan investment group.
Following are both the websites are.

www.meezanbank.ank.com.pk
www.almeezan.com.pk
Annual Reports 2005, 2006, 2007, 2008, 2009
88

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Executive Sumamry

Internship is an integral part of MBA program. It provided me the opportunity to

Assessment of the needs and wants of the customers is an ongoing process at

Brief History of the Organization

STRUCTURE AND FUNCTIONS

Three main functions of accounts department are as follow:

2) REPORTING AND EXPENSE:

a) Sole proprietor accounts

Introducer of account who is already account holder of the bank

c) Limited company accounts

Introducer of account who is already account holder of the bank

3) Club Society Account

Accounts On the Basis Of Currency

1. Local Currency account:

2.) Foreign Currency Account:

RUPEE CURRENT ACCOUNT

The Meezan Bank Current Account is a comprehensive Halal method of acquiring a

RUPEE SAVING ACCOUNT

• Minimum amount required to open account = Rs.10,000

DOLLAR SAVING ACCOUNT

KAROBARY MUNAFA ACCOUNT

MEEZAN BACHAT ACCOUNT

Riba-Free Certificate of Islamic Investment (COII) works under the principles of

Invest in Certificate of Islamic Investment

MEEZAN AMDAN CERTIFICATE

MONTHLY MUDARBA CERTIFICATE

• A 100% halal investment in strict compliance with Shariah

Meezan Providence Certificate is a long-term investment certificate specially designed

DOLLAR MUDARABAH CERTIFICATE

The Certificate works under the principles of Mudarabah and is strictly in

Enjoy a range of valuable features including:

• High and very competitive returns

CAR IJARAH-AUTO FINANCE

Car Ijarah, Pakistan’s First Islamic Car Financing

Car Ijarah also features Used Vehicles!

Working Capital Finance Solutions

Hence Murabaha involves the purchase of a commodity by Meezan Bank on behalf of

So what is the difference between Murabaha and a Sale?

Istisna’a is a sale transaction where a commodity is transacted before it comes into

Istisna’ as a mode of financing

Project Financing, Expansion or BMR Requirement Solutions

Islamic Export Refinance Facility

LETTER OF GUARANTEE FACILITY

Letter of Guarantee Facility

• Products for Importers

• Sight Letter of Credit

Advantages of Meezan Home Remittance:

Easy Guidelines for Money Transfer

DOLLAR MUDARABAH CERTIFICATE

The Certificate works under the principles of Mudarabah and is strictly in

DOLLAR SAVING ACCOUNT

Meezan Bank’s treasury is guided by Shariah with the objective of reviewing,

“CONSERVATIVE YET DYNAMIC CREDIT POLICY”

The overall objective of the department is to provide independent assurance to

Now we discuss above separately.

• Facility offer letter

• Standard charge document

• Legal document pertain to properties

 Site visit report

 Pre-disbursement lawyer’s opinion

Can I avail the car loan facility?

Which cars can I apply this loan for?

How much loan facility can I avail?