Akash Internship Report

INTERNSHIP REPORT ON ASKARI ISLAMIC BANK OF PAKISTAN
Submitted to:Sir. Jawad Raza Sahib Submitted by:Muhammad Kashif Dhareja Roll No. 1244 MBA (Morning) Session: 2009-2011
UNIVERSITY OF EDUCATION LAHORE MULTAN CAMPUS MULTAN
DEDICATION
DEDICATED TO My PARENTS WHO ALWAYS LOVED ME & All those who have a soft corner for me in their hearts
Internship Report on Askari Islamic Bank
ACKNOWLEDGEMENT
All gratitude and thanks to almighty ALLAH the gracious, the most merciful and beneficent who gave me courage to undertake and complete this task. I am very much obliged to my ever caring and loving parents whose prayers have enabled to reach this stage. I am grateful to almighty ALLAH who made me able to complete the work presented in this report. It is due to HIS unending mercy that this work moved towards success. I am highly indebted to my course instructor Sir Jawad Raaza Sahib for providing me an opportunity to learn about the Banking system of ASKARI ISLAMIC BANK" which is vital ingredient of MBA program. I am very great full to my teacher for providing me guideline for the completion of this report. I am also very grateful to all the staff members at Askari Islamic Bank especially Ahmad Fraz Sahib and Sir Rao Tauqeer Sahib for their guidance and encouragement
Executive Summary
Being the student of Business Administration department of university of Education Lahore (Multan Campus) it is compulsory for every business student to do 6 to 8 week internship with any recognized institution. I decided to take up Askari Islamic Bank Limited for my internship because it is a competing Bank nowadays and gives a good training to the internees. So in order to learn more this was my choice. This report is about my internship that I have undergone at Askari Islamic Bank Limited Multan Branch from 15th June 2011 to 31th July 2011. During my internship I am able to learn practical aspect of business, and get good working experience. On the very first day of my internship I reported to Operation Manager Mr Arshad Ali Shamsi Sahib. He gave me small introduction of the Bank and introduced me to the staff of the Bank. Every internee is rotated among the Banks departments and so was I. This rotation is done in order to have general concept regarding Banks functions, operations and policies. In this rotation the stay in department is usually a week. I have learned more about the Basic Banking, Credits and Foreign Trade department and have given below the caption of activities I was involved in during the period of six weeks. In my report first I introduce the Askari bank and the products and services which are offered b the bank. Second I describe the Askari Islamic bank and it,s departments hierchery. Third the function of the finance department .fourth I describes different analysis(ratio analysis, vertical analysis and swot analysis) and at the end I conclude and gave some suggestion for improvement
INTRODUCTION OF ASKARI BANK LIMITED

Askari Bank, one of the leading banks of Pakistan.Askari Commercial Bank Limited was incorporated on October 09, 1991 and commenced its operations in April 1992 as a public limited company. The bank principally engaged in the banking business. It has a diverse customer base comprising of corporate, SMEs, individuals, households and farmers etc. The registered office of the Bank is situated at AWT Plaza, The Mall, and Rawalpindi. Army Welfare Trust directly and indirectly holds a significant portion of the Banks share capital. Its share price has remained approximately 12% higher than the average share price of quoted banks during the last four years. Askari Bank has expanded into a nationwide presence of 200 Branches, 199 in Pakistan and Azad Jammu and Kashmir, including 31 Islamic Banking branches, 1 sub branch and an Offshore Banking Unit in Bahrain. A shared network of over 800 online ATMs covering all major cities in Pakistan supports the delivery channels for customer service. The Mobile ATMs facility is first time started by Askari commercial bank in 2005 dedicated to serving the urban consumer market; Askari is committed to aggressively market this segment ACBL has a Correspondent Bank Network in more than 95 countries with about 167 banks. Askari Bank is the only bank with its operational head office in the twin cities of Rawalpindi-Islamabad, which have relatively limited opportunities as compared to Karachi and Lahore. Corporate banking division was established in April 1999 with the primary focus on servicing large corporate and multi-national companies. Askari Bank had set up a retail-banking group in July 2000; Askari Investment Management Limited (AIM) is the wholly owned subsidiary of the Askari Bank. The bank has an offshore banking unit in Bahrain. In 2006, the bank launched Islamic Banking under the name "Askari Islamic Banking" The strategy is to provide their customers with a basket of innovative products to meet their varying needs. 5
BUSINESS VOLUME
As at December 31, 2010, the Bank had equity of Rs. 16.0 billion and total assets of Rs. 314.7 billion, with 885,764 banking customers, serviced by our 6,442 employees.
PRODUCTS AND SERVICES

Branch Banking
Through a widespread branch network in all major cities, towns and cantonments, made up of conventional, corporate, consumer, Islamic, as well as agricultural banking service branches, we aim to provide our customers with a wide array of offerings catering to all their banking needs.
Deposit Multiplier Account

Designed for individual investors / savers who aim to invest their funds for a longer term and for relatively higher returns. This is a term deposit for a ten years tenure and offers a competitive rate of return payable on maturity. This product is ideal for investors / savers who wish to start saving for their future today
Mahana Bachat Account

Askari Mahana Bachat Account is a term deposit designed for individuals with a short to medium term investment appetite. It offers customers the option of investing for one to three years tenures and has been designed keeping in view
savings needs of customers who want profit on a monthly basis. With competitive rates of return paid monthly on the 1st of every month and the option of getting a financing facility of up to 90 percent, the Askari Mahana Bachat Account caters to your saving needs without blocking your funds for a longer duration.
Paishgi Munafa Account

Askari Paishgi Munafa Account is a unique term deposit designed to meet the immediate financial needs of individual investors / savers who want to invest their funds for a medium term. The most significant feature of this product is that the customer receives the entire profit upfront at the time of placing the deposit in a way that the investors / savers can fulfill your financial needs of today without depleting your savings.
Value Plus Deposit Account

Askari Bank Value Plus Rupee Deposit Accounts offers value and flexibility. This product promises greater financial freedom and security, in an unmatched way. Now customers can open a Value Plus Account while enjoying the flexibility of a normal checking account.
Investment Certificates
Askari Banks Investment Certificates provide the added security, investment and monthly return to the customers. These certificates are negotiable and can be transferred to third party. Investment Certificates are available for a 3 months period and profit is payable on monthly basis through preprinted tear-off coupons.
Rupee Traveler Cheques
Askari Bank offers customers a widely accepted Rupee Traveler Cheques, which eliminates all financial risks while traveling. It is a safe and secure,way to make payments nationwide.
Roshan Mustaqbil Deposit

The Askari Roshan Mustaqbil Deposit is a saving plan created for individual investors/savers who wish to invest now for a regular return at a later stage while keeping their principal intact. Customers can invest a substantial amount without having to block their entire savings like a regular term deposits. With Askari Roshan Mustaqbil Deposit customers can invest in the form of monthly deposits for a period of five years and get paid back the same monthly deposit amount every month for the next five years while receiving their principal amount in full at the end of the ten years. This way customers can double their investment in a period of ten years.
Corporate and Investment Banking

At Askari Bank, we understand the unique business requirements of our corporate and institutional clients, and accordingly the Banks dedicated Corporate and Investment Banking Group (CIBG) strives to meet their expectations through provision of customized and relationship based banking approach.
Corporate Banking
The Corporate Banking works on a long-term relationship based business model to provide a single point within the bank for meeting all business requirements of its corporate and institutional customers, including public sector enterprises, with the primary objective of enhancing customer service. Dedicated relationship
managers for each of our corporate client ensure customer satisfaction, which remains top priority. Our relationship oriented outlook focuses upon providing a complete array of tailored financing solutions, that are practical and cost effective, some of which include: Working Capital Facilities Term Loans Structured Trade Finance Facilities Letters of Guarantee Letters of Credit Fund Transfers / Remittances Bill Discounting Export Financing Receivable Discounting
Investment Banking
The Investment Banking at Askari focuses on origination and execution of a full range of financial advisory and capital raising services to corporate and institutional clients as well as actively managing the Banks proprietary investments in the local equity and debt capital markets. Whether a company is seeking to access the local or cross border syndications and debt capital markets, project financing needs, advisory services related to M&A or the local equity capital markets for raising capital, Askari Banks CIBG is well positioned to provide due assistance. We can create and tailor the right structured solutions for business needs in order to enhance shareholders wealth and market competitivenessInvestment Banking offers various and tailored financial solutions including debt syndications, project finance and advisory services, debt placements through capital markets as well as structured trade finance facilities.
Consumer Banking
9
Askari Bank's consumer finance is focused on enhancing retail portfolio through new and improved initiatives and products. Special attention is given to business opportunities involving strategic alliances to earn sustainable returns, with greater emphasis on secured form of consumer lending and an aim to increase product offerings while improving and maintaining quality of asset portfolio
Ask4Car
It is a product for vehicle financing for both new and used vehicles at affordable and competitive mark-up, easy processing without any hidden costs.
Personal Finance
With unmatched financing features in terms of loan amount, payback period and most affordable monthly installments, Askari Banks personal finance makes sure that you get the most out of your loan; the product tenure ranges from one to five years and is designed primarily for salaried individuals.
Mortgage Finance
Whether you plan to construct a house, buy a constructed house, or renovate your home, Askari mortgage finance enables you to pursue your goal without any problems. Mortgage is a premium home financing product for customers aged between 23 65 years belonging to the upper, upper middle and middle income groups, residing in the urban areas of Pakistan
Visa Debit Card

Askari Visa Debit Card enables customers access to convenient banking services; now you can manage your account, withdraw cash, make purchases and transfer your funds through Askari Visa Debit Card, which also offers the 10
convenience of a credit card without the hassle of monthly bills and interest charges. No minimum balance requirements for issuance or retention of the VISA debit card. An eligible customer may apply for any of the debit cards i.e. classic or gold.
Master Credit Card

Askari Bank offers a competitive suite of silver, gold and platinum Master Credit cards focusing on providing superior services, travel privileges, and shopping pleasures. It also offers reward points and transactional alerts through SMS as enhanced security feature
Agricultural Banking
Agricultural banking products and services are specifically designed for Pakistans crop farming, other farming and rural business segment. Such products and services, some of which are listed below, offer improved and efficient delivery and control mechanism for meeting increased demand for credit by the farmers in easy, accessible and affordable manner. Kissan Ever Green Finance Kissan Tractor Finance Kissan Livestock Development Finance Kissan Farm Mechanization Finance Kissan Aabpashi Finance
Islamic Banking
11
With the help of Shariah advisor and professional bankers, Askari Islamic banking provides Riba free and Shariaa Compliant solutions to various customer segments through a modest branch network in major cities of Pakistan. It offers following main products:
Ijarah Vehicle Finance

Ijarah is a rental agreement, under which the usufructs of an asset is transferred to the client on agreed terms and conditions. It is a Shariaa compliant mode of finance, adopted by Askari Islamic Banking to meet the vehicle financing needs of its Islamic customers.
Home Musharkah
Askari Islamic Banking offers Shariaa compliant home financing to purchase, construct, improve and transfer of the property under the concept of Diminishing Musharakah. This means being able to cope with other financial commitment, while still having money left over for extras and unexpected expenses
Alternate Delivery Channels

Internet (I-NET) Banking
Our I-Net banking assures convenient banking from the comfort of your home. Now, customers are no longer required to wait in long and worrisome queues to request a financial transaction, 24/7 balance inquiry, statement of accounts, fund transfer, utility bill payment etc.
12
Call Center
The Banks Call Center provides a single point of contact for all of its customers, yet offer unique and individualized services on real time information for its timeconscious customers; it is operated 24/7 and service customers for providing information of products & services, handling inquiries, attending requests.
Auto Teller Machine (ATM)

Askari Bank is a member of two electronic ATM inter-bank connectivity platforms i.e., MNET and 1-link. Through this shared network of online 4,401 ATMs including Askari Banks 233 dedicated ATMs covering all major cities in Pakistan supports the delivery channels for customer service. It provides services of ebanking and payment system products.
COMPETITORS
There are several competitors of Askari bank some of major competitors are given below
National Bank Of Pakistan Meezan Bank Limited Allied Bank Limited Mcb Bank Limited Alfallah Bank Limited
VISION
To be the bank of first choice in the region
MISSION
Internship Report on Askari Islamic Bank 13
To be the leading private sector bank in Pakistan with an international presence, delivering quality service through innovative technology and effective human resource management in a modern and progressive organizational culture of meritocracy, maintaining high ethical and professional standards, while providing enhanced value to all our stakeholders, and contributing to society
THINKING
Consolidation and creating opportunities with innovation
VALUES
Integrity is the most valued standard in whatever we do. We understand that our commitment to satisfy customers needs must be fulfilled within a professional and ethical framework. We subscribe to a culture of high ethical standards, based on the development of right attitudes. The intrinsic values, which are the corner stones of our corporate behavior, are:
Commitment Integrity Fairness Teamwork Service
CUSTOMERS
Knowing our customers and their needs is the key to our business success. Our products and services are as diverse as our market segments. Our client relationship managers are well equipped and well trained to provide the most efficient and personalized service to the customers. Askari Bank is proud of its pioneering role in providing the most modern and technologically advanced services to its 816,629 relationships.
INVESTORS
We believe that the bottom line of any business is creating shareholder value. To gain their trust and confidence, we believe in providing our investors timely, regular and reliable information on our activities, structure, financial situation and performance.
REGULATORS
We firmly believe in regulatory discipline and harmony of our corporate objectives with regulatory framework. Our business methodologies are designed to ensure compliance with the directives of all our regulators.
EMPLOYEES
We strongly believe that the interests of the Bank and the employees are inseparable. At Askari we try to create a we culture where there is mutual trust and respect for each other. We encourage ownership behavior so that everyone feels responsible for the performance and reputation of the Bank. We are committed to develop and enhance each employees skills and capabilities through extensive inhouse and external training programs and job rotations.
15
COMMUNITIES
We fully recognize our corporate social responsibility and our contributions to different areas of the social sector are aimed to help improve the quality of life in our country.
CORPORATE OBJECTIVES
To achieve sustained growth and profitability in all areas of business. To build and sustain a high performance culture, with a continuous improvement focus. To develop a customerservice oriented culture with special emphasis on customer care and convenience. To build an enabling environment, where employees are motivated to contribute to their full potential. To effectively manage and mitigate all kinds of risks inherent in the banking business. To maximize use of technology to ensure costeffective operations, efficient management information system, enhanced delivery capability and high service standards. To manage the Banks portfolio of businesses to achieve strong and sustainable shareholder returns and to continuously build shareholder value. To deliver timely solutions that best meets the customers financial needs.
16
To explore new avenues for growth and profitability.
STRATEGIC PLANNING
To comprehensively plan for the future to ensure sustained growth and profitability. To facilitate alignment of the Vision, Mission, Corporate Objectives and with the business goals and objectives. To provide strategic initiatives and solutions for projects, products, policies and procedures. To provide strategic solutions to mitigate weak areas and to counter threats to profits.
To identify strategic initiatives and opportunities for profit.
17
CORPORATE INFORMATION
18
Board of Directors
Chairman
Lt. Gen. Nadeem Taj
Executive Director
19
Lt. Gen. (R) Imtiaz Hussain
Executive Director
Maj. Gen. (R) Saeed Ahmed Khan
Executive Director
Mr. Zafar Alam Khan Sumbal
Executive Director
Mr. Muhammad Riyazul Haque
Non-Executive Independent Director

Mr. Shahid Mahmud

Mr. Ali Noormahomed Rattansey, FCA

Dr. Bashir Ahmad Khan

Mr. Wazir Ali Khoja (NIT Nominee)

Mr. M. R. Mehkari
President & Chief ExecutiveAudit Committee

Dr. Bashir Ahmad Khan
Chairman
Mr. Ali Noormahomed Rattansey, FCA Mr. Wazir Ali Khoja
Company Secretary
Mr. M. A. Ghazali Marghoob, FCA
Chief Financial Officer

Mr. Saleem Anwar, FCA
Auditors KPMG Taseer Hadi & Co Chartered Accountants Legal Advisors Rizvi, Isa, Afridi & Angell Shariah Advisor Dr. Muhammad Tahir Mansoori
HISTORY OF ISLAMIC BANKNG
21
Islamic banking as a concept was developed as a result of the religious prohibition of the payment or receipt of interest. Islamic scholars as a type usury considered the conventional banking system with the receiving and paying of interest. The Islamic banking starts with the commencement of Egypts Mt Ghamr Saving Bank in 1963.however it faces many problems due to social and economical conditions in the country but it surely indicated that the idea and method of Islamic Banking was practical and can be put into practice. DIFFERENCE BETWEEN ISLAMIC BANKING & CONVENTIONAL BANKING One must refrain from making a direct comparison between Islamic banking and conventional banking (apple to apple comparison). This is because they are extremely different in many ways.
Conventional Banks
Islamic Banks Islamic
1. Conventional Banks work on man made 1.Islamic banking work on the basis of principles. 2. Predetermined rate of interest. Shariah.
2. In Islamic banks there is risk sharing between provider of capital (investor) and the user of funds (entrepreneur).
3. maximizing profit with out any restriction 4. It does not deal with Zakat Properly.
3. but in IB profit subject to Shariah restrictions. 4. In Islamic banking system, it has become one of the service-oriented functions of the Islamic banks to be a Zakat Collection Centre and they also pay out their Zakat.
5. Profit from lending money is the core 5. Partnership business is the fundamental function business of conventional banks. of the Islamic banks. So we have to understand our
22
customers business very well. 6. It charge additional money (penalty and 6. The Islamic banks have no provision to charge compounded interest) in case of defaulters for it any extra money from the defaulters. If penalty is self. charged will go to charity account it will not become Banks profite 7. For interest-based commercial banks, 7. For the Islamic banks, it must be based on a
borrowing from the money market is relatively Shariah approved underlying transaction. easier. 8. Since income from the advances is fixed, it 8. Since it shares profit and loss, the Islamic banks gives little importance to developing expertise pay greater attention to developing project appraisal in project appraisal and evaluations. 9. The conventional and evaluations.
banks give greater 9. The Islamic banks, on the other hand, give greater emphasis on the viability of the projects.
emphasis on credit-worthiness of the clients.
10. The status of a conventional bank, in 10. The status of Islamic bank in relation to its relation to its clients, is that of creditor and clients is that of partners, investors and trader, buyer debtors. and seller.
11. A conventional bank has to guarantee all its 11. Islamic bank can only guarantee deposits for deposits. current account, which is based on the principle of al-wadiah or QARD, thus the depositors are guaranteed repayment of their funds, however if the account is based on the mudarabah concept, client share in a profit and loss.
SHARIAH
Shariah lexically means a way or path. In Islam shariah refers to the divine guidance & laws as given by the Holy Quran, the Hadith (sayings), the Sunnah of the Prophet Muhammad (Peace Be upon Him) and supplemented by Internship Report on Askari Islamic Bank 23
the juristic interpretations of Islamic scholars. Shariah embodies all aspects of Islamic faith, including beliefs and practices. Most of the people believe that Sharia and Islamic Laws are similar; this can be miss leading as Sharia is far more comprehensive. Sharia explains and takes care of all aspects of spiritual, political, social, domestic and private life of an individual. Sharia is in principle meant for all Muslims, but also applies to a certain extent to people living inside a Muslim society.
The regulations of Sharia can be divided into two groups; Regulations on worship and ritual duties. Regulations of judicial and political nature, which also include economic activities.
SOURCES OF SHARIAH
Holy Quran Sunnah Ijma`a Qiyas Fiqah
THE HOLY QURAN

The glorious book of Allah, who have promised us to safe guard against moving to the wrong path. It gives main beliefs, principles and wide ranging directives of Allah. It is incumbent on each and every person who seeks the dignity of this world and the bliss of the hereafter, to regulate his life according to it. Its contents
24
are not confined to a particular theme or style, but contains the basis of an entire system of life, encompassing a whole spectrum of issues that range from specific articles of faith and commandments to general moral teachings, rights and obligations, crime and punishments, personal and publics laws, and a host of other private, social and economical concerns discussed in different ways like direct stipulations, reminders of Allahs favours on His creations, adominations and rebukes.
SUNNAH
The Quran is the word of Allah, which was revealed by Prophet Muhammad (PBUH) and preserved by his companions the Sahabha Ikram. Ahadith act for Quranic teachings and directives as Interpreter, Explainer and Elaborator. Ahadith also stand for further explaining the teachings of Holy Quran or what the Holy Prophet said on matters that are not elaborated in the Holy Quran.
IJMAA
Ijmah has been technically defined consensus of the jurists of certain period of time over a religious matter. It in fact signifies the importance of delegation to the Muslims community. Ijmah is considered a sufficient evidence for action because the Prophet of Islam said, Muslim (Majority) will never agree on a wrong mailer.
QIYAS
The fourth important source of Islamic law. It is exercised when there is no specific or clear provision in the Quran or the Sunnah of the Prophet. The
25
scholars have derived laws and principles through analogical deduction on the basis of the provisions of the Quran And the Sunnah on the similar situation.
FIQAH
Fiqah is the utilization of both primary and derived sources of Shariah to get to a decision. It covers every aspect of life giving the final and binding rulings on any matter arising out of our daily lives. It means `understanding of details` and refers to the inferences drawn by scholars. It also has certain laws that are extracted based on principles established by Islamic jurists (Mujtahidun).
FRAME WORK OF ISLAM

ISLAM
AQIDAH Faith& Believe
SHARIAH Practices& Activities
AKHLAQ Moralities & Ethics
IBADAT Man to God activities
MUAMALAT Man to Man activities
POLITICAL activities
SOCIAL activities
ECONOMIC activities
RIBA
27
Riba literally means increase, addition, expansion or growth. It is however, not every increase, or growth, which has been prohibited by Islam. In shariah Riba technically refers to the premium that must be paid without any consideration.
QURANIC VERSES RELATED TO RIBA

firsst Revelation(surah al-Rum, verse 39)
"That which you give as interest to increase the people's wealth increase not with God; but that which you give in charity, seeking the goodwill of God, multiplies manifold"
Second Revelation(surah al-Nisa, verse 161)

"And for their taking interest even though it was forbidden for them, and their wrongful appropriation of other people's property. We have prepared for those among them who reject faith a grievous punishment"
Third Revelation(surah al-Imran, verse 130-2)

"O believers, take not doubled and redoubled interest, and fear God so that you may prosper. Fear the fire which has been prepared for those who reject faith, and obey God and the Prophet so that you may receive mercy"
Fourth Revelation(surah al-Baqarah, verse 275-81)
28
"Those who benefit from interest shall be raised like those who have been driven to madness by the touch of the Devil; this is because they say, "Trade is like interest" while God has permitted trade and forbidden interest. Hence those who have received the admonition from their Lord and desist may keep their previous gains their case being entrusted to God; but those who revert shall be the inhabitants of the fire and abide therein for ever" "God deprives interest of all blessing but blesses charity; He loves not the ungrateful sinner" Those who believe, perform good deeds, establish prayer and pay the Zakat, their reward is with their Lord; neither should they have any fear, nor shall they grieve".
RIBA AND ITS PROHIBITION IN ISLAM

Accourding to Quranic Verses
God would be justified in not allowing four persons to inter paradise to taste its blessings: he who drinks habitually, he who takes riba, he who usurps an orphens property without right, and he who is undutiful to his parents(Mustadrak al-Hakim, Kitab al-Buyu).
Riba has seventy segments, the least serious being equivalent to a man commiting adultery with his own mother.(Ibn Majah)
HISTORY OF ISLAMIC BANKING IN PAKISTAN
29
In Pakistan Islamic banking starts with the establishment of Council of Islamic Ideology (CII) in 1962 that was followed by the conception of the second constitution of Pakistan. In 1985 Commercial banks transformed their nomenclature stating all Rupee Saving accounts as interest free. However, foreign currency deposits in Pakistan on lending of foreign loans. But the Federal Shariat Court (FSC) declared the procedure adopted by banks in 1985 is unislamic in 1991. The Govt. and some banks / DFIs made appeals to the Shariat Appellate Bench (SAB) of the Supreme Court of Pakistan The inception of Pakistan as the first Islamic Republic created in 1947 the name of Islam. Council of Islamic Ideology (CII) presents report in 1980 on the elimination of Interest, genuinely considered to be the first major comprehensive work in the world undertaken on Islamic banking and finance. In 1985 Commercial banks transformed their nomenclature stating all Rupee saving accounts as interestfree. However, foreign currency deposits in Pakistan and foreign loans continued as before.
ASKARI ISLAMIC BANKING:
30
Askari Bank Limited - Islamic Banking opens the doors for Halal banking solutions. Our objective is to put in place an efficient banking system supportive to economic justice and welfare of society in line with Shariah standards. The Bank has expanded its Islamic Banking network to 29 branches and 02 subbranches in the major cities of Pakistan.All Islamic Banking Products are approved by the Shariah Advisor of the Bank. As per Shariah requirements, funds and products of Islamic Banking are managed separately from the Conventional banking side. All funds obtained, invested and shared in Halal Modes & Investments, under the supervision of Shariah Advisor. in order to meet customer's demand of Shariah Compliant Banking, in the following areas: Islamic Corporate Banking Islamic Investment Banking Islamic Trade Finance Islamic General Banking Islamic Consumer Banking Islamic Banking products have been approved by the Bank's Shariah Advisor. As per Shariah requirements, funds and products of Islamic Banking are managed separately from the Conventional Banking side. All funds obtained, invested and shared in Halal modes & investments, under supervision of the Shariah Advisor.
Introduction to Askari Islamic Bank Abdali Road branch

To provide the banking facility to people of Multan the Askari Islamic Bank Abdali Road Branch was established in 2006. Mr. Rao Tauqeer is the manager of branch. Askari Islamic Bank branch started its operations smoothly and profitable and with the passage of time, management improved its efficiency and reputation. The structure of Askari Islamic Bank consists of a branch manager, remittances, clearing and verification, bills department and cash department. Branch Details
Branch Name Branch Code Address Phone Fax District Province SWIFT Code Status Email
ASKARI ISLAMIC BANK 0013 Abdali Road 061-9201388 061-9201395 Multan PUNJAB --online Om0013@askaribank.com
Departmentalization
The Askari Islamic Bank has number of interrelated departments that works together to achieve the specific goals and objectives of the organization. The Askari Islamic Bank has built a hierarchical system that includes the sub departments. Internship Report on Askari Islamic Bank 32
The AIBs exiting system includes following departments Cash department Deposits department Clearing department Advances department Remittances department
Number of Employees
Total no of employees that are working in Askari Islamic branch is 15.
Askari Bank Limited
Operation Department
Trade Department
Credit Management Department
Consumer financing Department
Car Ijarah Account Opening Deptt Online Transaction Deptt Home Musharaka
ASKARI ISLAMIC BANKING SERVICE DIVISION DEPARTMENT HIERARCHY IT &

Remittances Deptt
Clearing Deptt
33
BRANCH HIERARCHY
Branch Manager Mr. Rao Tauqeer
34
Manager Credit and Manager Trade Mr.Abid Basheer
Operation Manager Mr. Syed Arshad Ali Shamsi
Cash Officer Mr.Irfan khan
CD Incharge Mr.Ahmad Fraz
Remittance Incharge Mr.Umair
Marketing Incharge Mr.Furqan Shafi
A/COpening Officer Mr.Khizer Imran
Trade Officer and Relationship Officer Mr. Ali Khan
Tasks which I have performed in the bank

I have performed different tasks in the Askari Islamic bank, first week I spent in the cash department in this department I learn how to pay
35
the cash to the customer and how to receive deposits from the depositors and also the process of online transactions. and second week I went to the clearing department in this department I perform the clearing process. There are several types of clearing (same day, inward, outward and intercity clearing) and in third week I went to remittances department Remittances generally means in flow and out flow of funds. The main function of the remittance department is to transmit money from one place to another. Fourth week I have spent in account opening department and I opened different types of accounts including individual and partnership account and I learn how to issue cheque book and atm card and fifth and sixth week I spent in the trade department in which import and export of commodities are traded. The detail of these department are given below one by one.
ROTATION IN DIFFERENT DEPARTMENTS
OPERATION DEPARTMENTS
36
This department is usually the front office of the bank. This department is directly connected to the general customers. All the image building is depending on this department. The operations conducted in this department are: Account Opning Department Remittances Department Clearing Department Cash Department
RIBA FREE CURRENT ACCOUNT

Askari Islamic Bank has brought Money protection along with Shariah complaint banking under one roof. The bank code used for this account is 020.
Its key features are:

Access to all online branches Free online services throughout the country. No restriction on withdrawals or number of transactions. Bank balance certificates and duplicate statement of account. Stop payment and hold mail instruction. call centre with complete banking services free ATM and Debit Card services.
The current accounts can be in these options as well:

Individual Minor Limited companies accounts Internship Report on Askari Islamic Bank 37
Sole Proprietorship Club/ Societies / Associations Joint Partnership Photo Account
Individual Account
People who are interested in operating their account individually are categorized under this category. The requirements for opening this account are: Copy of CNIC Job / Business Proof.
Minor Account:
A child who is under the age of 18 is called Minor. Askari Bank is providing the account opening facility to minor as well. The major requirement in a minor account is Guardian who will operate the account. The requirements for the account are: Birth Certificate Copy of B-Form Copy of CNIC of Guardian
Limited Companies Account

Limited companies can be of two types:
38
Private limited companies Public limited companies
Private limited companies

Private limited companies are those companies who cannot issue their shares in the general public, their share are being traded within their families.
Public limited companies

Public limited companies are those companies who can issue their shares in the general public and their shares are being traded in the stock exchange as they are listed in KSE. The requirements for opening these accounts are: Copy of Certificate of Incorporation of Business List of Directors on companys letterhead Memorandum and Article of Association Board Resolution Copy of Certificate of commencement of Business (for Public Ltd
companies only) Copy of CNIC of All Directors Latest Copy of certified Form-29
Sole Proprietorship
39
Those people who are the sole owner of their business are categorized to open their accounts under this category. The requirements are: Copy of CNIC Copy of NTN Certificate Account opening request on letterhead Declaration of Proprietorship
Club / Societies / Associations

These organizations are basically non-profit based organizations. The
requirements for opening their accounts are: Copy of Rules and by-laws. List of executive members/management/Committee/Management Board etc. Certified copy of Registration Certified copy of Resolution Copy of CNIC of all Members.
Joint Account
When customers are interested in opening an account in which their account can be operated by some other person as well, they fall under this category. There is Internship Report on Askari Islamic Bank 40
an option in this account to operate the account jointly or severely on the discretion of the account holder. Requirements are: Copy of CNIC Job Proof / Business Proof
Partnership Account
When businesses are running under more than one owner and they are sharing the profits of the business such businesses are called Partnership. The requirements for such accounts are: Partnership Deed(Certified Copy) Letter of Authority & Mandate Copy of CNIC of all partners Account opening Request on letterhead
Photo Account:
This account facility is for illiterate customers. Such customers which are unable to sign their SSC fall under this category. In this type of account passport size photograph is attached to the SSC and "Personal withdrawal" is written on to the SS card due to which the account holder has to come personally to transact in his account. The requirements for this account are: Copy of CNIC 2 Passport size Photograph Job/business proof.
RIBA FREE SAVING ACCOUNT

Features
A bank account that offers the opportunity to earn Halal profits, while enjoying a range of added benefits.The profit on this account is calculated and paid on a monthly basis, and comes with a variety of free benefits including personalized check books, no restrictions on transactions, priority banking and so on. The bank code for this account is 036.
Working of Saving Account:

Riba-Free Rupee Saving Account works under the principles of Mudarabah and is strictly in conformity with the rules of Islamic Shariah. On agreeing to become an account holder, the customer enters into a relationship based on Mudarabah with Askari Islamic Bank. Under this relationship, the customer is an Investor (Rab ul Mal), and the bank is the Manager (Mudarib) of the funds deposited by the customers. The bank calculates the profit of the deposit pool every month. The Banks profit distributed after deducting costs and expenses directly incurred in deriving that Income. All banking transactions at Askari Islamic Bank Limited are in strict adherence to the Islamic Sharia.
Riba Free Dollar Saving Account

It is a US Dollar based foreign currency account checking account with free online banking, no restriction on withdrawals and at the same time option availing the monthly-decided profit. The profit is earned if the client maintains minimum balance of US$ 100. Moreover cheque book and balance certificate is also provided to the account holder.
ISSUANCE OF CHEQUE BOOK
42
When the account is opened, then the customer is given a chequebook to sign upon and withdraw money.State Bank policy todiliver the letter of thanks to customer (if delivered than issue cheque book ). It proceeded as under.
PROCEDURE
After the completion of all the requirement the bank issue the cheque book to the customer . Particulars of the chequebook requisition should be title of account, account number type of currency number of leaves signature of the customer Date of issuance Chequebook is taken out from the safe . It is assured that series of the chequebook. Particulars are entered in the chequebook issuance register. Account number is stamped on very leave of the chequebook and those leaves are counted. Bank code of account is written on the cover of the chequebook and on every leaf of the cheque book. And requisition on the chequebook for further issuance is properly filled, stamped and signed by officer of the bank. Chequebook is delivered to the customer and his signature on the chequebook issuance register. Chequebook serial number entered. In the system, Stock of chequebook are balanced at the end of each day and kept under safe custody.
Askari Islamic bank limited issues the following chequebooks.

Saving account-25 leaves Saving account-50 leaves Saving account-100 leaves Current account 50 leaves. Current account 25 leaves Current account 100 leaves Foreign currency $ 10 leaves
STOP PAYMENT
The Bank may stop the payment of a customers cheque on the request of customer. In case of stale, thieft or wrong issuing of a cheque the customer inform the bank and request the bank to stop the payment of cheque. After receiving the request of customer the bank will stop the payment of a customer. The request letter is given below
SS
44
__________________________ __________________________ __________________________ __________________________ Dear Sir/Madam, Account Number
Date: - _________________
0000-__________________________________________
Cheque Number_________________________________________________
Cheque Book First Cheque __________ Plus _________ Leaves __________ Amount : _________________________________________________________ Payable to: ______________________________________________________ We acknowledge receipt of your instructions received on _________ at ________ hours to make stop payment of the above Cheque(s) or Cheque Book and confirm that these instructions have been noted in our records. If the Cheque(s)/Cheque Book(s) are recovered or destroyed the fact must be notified in writing to the Bank here with. Yours faithfully
______________________ Authorized Signature
DORMANT ACCOUNT
45
It is the policy of state bank for current account that system will mark the account as dormant account if no transaction done in within 180days(6months).After that time period debit and credit transaction is not allowed until to reactivate the account. It is the policy of state bank for Saving account that system will mark the account as dormant account if no transaction done in within 365days(one year).After that time period debit and credit transaction is not allowed until to reactivate the account.
REQUEST FOR REACTIVATION OF DORMANT/INACTIVE ACCOUNT
46
Date: ___________ The Manager, Askari Bank Limited, . Dear Sir, Account No. Title of Account: . Captioned account is being maintained with you by me/us, which is inoperative since long due to the reason mentioned hereunder. You are requested to kindly reactivate my said account and allow me to start operation in my account and oblige. Reason: ________________________________________________________________ ________________________________________________________________ _____________________________________________________________ Regards, Signatures: . Name: . Contact No.
CLOSING OF AN ACCOUNT
When a customer wants to close an account he has to fullfil the following requirements A hand written application to the head of the operations department to close his account. Return remaining leaves of Chequebook. The manager first verifies the sign of account holder, and then closing is done from the registers on the computer where the account was opened. In the file of the account holder his account opening form is crossed. For closing the account the bank charge a service fee.
REQUEST FOR CLOSING AN ACCOUNT
48
Dated: ____________ The Manager Askari Bank Ltd. Beverly Centre, Blue Area, Islamabad.
Subject: Closing of Account no _________________. Dear Sir, I am maintaining account no________________, with your branch. Now I want to close the said account. You are requested to close the account and: 1. Cash 2. Transfer 3. Pay Order/Demand Draft This is for your information and necessary action. With Regards, Name: Specimen Signature: ______________ Account no:
TDR (TERM DEPOSIT CERTIFICATE)

There are five types of TDR which are allowed to there customers
Askari Islamic Investment Account (AIIC) Askari Khas Islamic Deposit Account (AKIDA) Askari Islamic Term Quality Deposit Account (AITQAD) Askari Hala Certificate of Assan Monthly Mudarbah (AHCAMM)
TDR (TERM DEPOSIT CERTIFICATE)

PRODUCTS OF ASKARI ISLAMIC AIIC AKIDA AITQAD AHCAMM TENURE INVESTMENT 3,6Months, 1,3,5years 3,6Months, 1,2,years 3,4,5,7years 1Months OF MINIMUM INVESTMENT 50,000-/ 200,000-/ 500,000-/ 50,000-/ PROFIT OPTION Monthly, quarterly, maturity At Maturity Half yearly, At maturity Monthly
LOCKERS SERVICES
50
Lockers services are offered at selected branches. Lockers are available in three different sizes .
SMALL MEDIUM LARGE
ANNUAL CHARGES OF LOCKERS

SMALL MEDIUM LARGE 1500-/ 2000-/ 3000-/
Each locker holder paid 2000 security charges to operate the locker
INSURANCE OF LOCKERS
Lockers are insured at the cost of bank expense, however, the Bank will not assume any obligation or responsibility in the event of any loss as a consequence of damage caused to any article, documents, securities or valuables in the lockers, except where it is caused by Fire, Dacoit, Burglary and Housebreaking which are covered through the insurance of
51
Different categories of lockers as under
TYPE OF LOCKER SMALL MEDIUM LARGE
PRESENT LIMIT OF INSURANCE 500,000/1500,000/2000,000/-
REMITTANCES DEPARTMENT REMITTANCES

Remittances generally means in flow and out flow of funds. The main function of the remittance department is to transmit money from one place to another. By providing this service to the customer, bank charge a service fee , Also customer is able to meet its day-to-day financial requirements.
Demand Draft (out side city)

It is an negotiable instrument payable on demand for which value has been received, issued by the branch of the one bank drawn i.e. payable at some other place (branch). If two banks are involved then the DD is sent to other bank but in other case it is handed over to the applicant.
Issuance Procedure
A demand draft application is given to the customer; he fills it and signs it. The officer checks the application form. The bank charges such as commission, excise duty is charged as per prescribed schedule.
52
Then the officer of remittance department signs it and operation manager counter signs it. The entry is made in the DD issuing register; DD is given to the customer. Vouchers are prepared and posted. DD advises are printed and mailed to the respective branch.
Payment Procedure
The bank receives DD. The DD credit advice is received through mail. The numbers are checked and signatures are verified. An entry is made on the DD payable register and the vouchers are made. DD credit is attached with the vouchers and given for posting to the computer. When DD is received the test numbers are checked and the payment is made. Vouchers are given for posting and the entry that was made in the register is closed i.e. DD payable is Nil.
Telegraphic Transfer (TT)

It is the quickest way of transfer of funds from one place (Branch) to other place (Branch) of the same bank. Generally, a mail transfer advice reaches the drawer branch the next day through courier services. But sometimes, a customer demands that his funds should be transferred through the quickest means. In such cases, transfer of funds message is passed through telephone or telegram. This mode of transfer was used before online. Online system is very effective for this purpose now a day online system is used.
53
Issuance Procedure
The request of issuing TT is taken on the standard printed form. The customer fills the form properly and signs it. The Head of Remittance Department checks it, the charges such as commission, tax and telex as per effective schedule and signs it. If he fills the tax exemption form then no tax is deducted. Then a TT is made on white slip. There are 3 copies, the original one is faxed to the Branch, one to the Head Office and one is kept for record. The entry is made in the TT issuing register. When commission bill is received, it is attached to the TT office copy in the file.
Payment Procedure
When a TT arrives, the test numbers are checked and the signatures are verified. The entry is made in the TT payable register. If there is no account then the TT received needs revenue stamp and then payment is made. TT receipt is strictly non-negotiable.
Pay Order(within city)

It is an negotiable instrument issued for payment in same city. Pay order issued from one branch can only be payable from the same branch. It is normally referred to as bankers cheque. It is also called confirmed cheque, because bank issues this on it own guarantee.
54
Issuance Procedure
The standardized form is given to the customer. He fills in the details and signs it. The concerned officer checks the form. Bank charges (or commission) as per the schedule. A cash memo is signed, stamped and handed over to the applicant as a receipt. Then the pay order receipt is filled accordingly. Counter foil is also filled. An entry is made in the pay order issue register. Then the authorized officer signs it after checking the pay order. The order is then handed over to the applicant after having receiving signature on the PO Form. A voucher is also made and posted at the computer.
Payment Procedure
On presentation of the pay order receipt, two authorized officers of the branch sign the receipt. PO entry is made in the PO issue register. Then the amount is credited to the account of the customer or paid in cash. PO is posted at the computer.
55
CLEARING DEPARTMENT
Meaning of clearing
The word clearing has been derived from the word Clear and is defined as a system by which banks exchange cheques and other negotiable instruments draw on each other within a specified area and thereby secure payment for their client through the clearing house which is in State Bank of Pakistan at specified time in an efficient way.
Advantages of Clearing
Since clearing does not involve any cash etc and all the transaction takes place through book entries, the number of transactions can be unlimited. No cash is needed; as such the risks of robbery, embezzlements and pilferage are totally eliminated. As major payments are made through clearing, the banks can manage cash payment at the counters with a minimum amount of cash in vaults. A lot of time, cost and labour are saved. Since it provides an extra service to the customers of banks without any service charger or costs, more and more people are inclined and attracted towards banking.
56
Clearing House
It is a place where representatives of all scheduled banks sit together and interchange their claims against each other with the help of controlling staff of State Bank of Pakistan and where there is no branch of State Bank of Pakistan the designated branch of National Bank of Pakistan acts as controlling member.
Working of clearing house

All the bank which are the member of clearing house maintain accounts with State Bank of Pakistan by debit and credit to which the clearing settlements are made. If on a particular day, a bank delivers cheques and other negotiable instruments worth more than the total amount of Cheque received by it that banks accounts with State Bank of Pakistan would be credited with the differential amount. If on the other hand the total amount of cheques and other negotiable instruments draw on a certain bank by other bank is more than the total amount receivable by it from other banks, then this banks account will be debited on that day. types of clearing There are four types of clearing:1. Inward Clearing 2. Outward Clearing 3. Intercity Clearing
57
4. Same Day Clearing
OUTWARD CLEARING
The cheques delivered to the representatives of other banks for clearing is called outward clearing. INWARD CLEARING The cheques received from the representatives of other banks for payment are called inward clearing.
Inter City Clearing

The cheques that are presented in intercity clearing are of another city and received by air. In this type of clearing the bank confirm at that time that the cheques are clear or not and give to the rider.
Same Day Clearing

The cheques that are presented in same day clearing are the local cheques and these cheques are clear in same day. Basically it is the benefit that are provided to customer.
58
Cash department
The cash department is the most important department of the bank. It receives cash from customers and then deposits it into the accounts of the customers and maintained their balances. Cash department of every bank is a very sensitive department. I worked in operations department under the supervision of S.A shah Here I got knowledge about deposits and withdrawal arrangements of bank. Particularly about accounting treatment of different types of cash movements. It includes the entries of teller at the time of opening and closing of the day and the amounts present in the safe at opening and closing of the period The officers in this department are called teller. This department involves in two activates: Deposit cash in customers account Make payments from customers account
Deposit Cash in Customers Account:When the customer want to deposit amount in his account at opening of account or after that then he has to fill a deposit slip that shows the amount and the account in which the cash will be deposited. Then teller will receive amount and credit the customers account that shows increase in customers bank account. Make Payments from Customers Account:-
59
When the customer draws a cheque on the bank to pay a certain amount then teller will debit the customers account that shows reduction in his account balance. There are two main types of cheques that are Open Cheques Crossed Cheques Open Cheques:Open Cheques are those cheques, which are paid across the counter of the bank. Open cheques may be
Bearer Cheques
Order Cheques.
Bearer Cheque:If the drawer orders the bank to pay a stated sum of money to the bearer, it is called a bearer cheque. Any person who lawfully possesses a bearer cheque is entitled to receive payment of that cheque.
Order Cheque:The amount of this cheque is payable to the person whose name is written on the face of the cheque. The amount is paid at counter after identification of that person.
Crossed Cheque:-
60
The amount of this cheque is not paid at counter. The amount of this cheque is transferred to the persons account whose name is specified on the cheque. Two parallel transverse lines are drawn across the face of the cheque.
Kinds of Crossing:Legally there are two kinds of crossing
General Crossing Special Crossing General Crossing:In case of General Crossing the payment can only be deposited into the payees account only.
Special Crossing:In case of Special Crossing the payment can only be made to bank named therein the cheque. Cheque encashment procedure Cheque Encashment are made in four steps, these are: Receiving of Cheques Verification of Signature Computer Terminal Process Internship Report on Askari Islamic Bank 61
Payment of Cash
. Receiving of Cheques:The cash is paid against the cheque of the client. The following points are important. Cheque is drawn on Askari Islamic bank. Cheque is not post dated. Amount in words and figure are same. It should be a bearer cheque so the word bearer should not cross.
Verification of Signature:After receiving the cheque the cheque the officer verify the signature of the account holder and the signature on the cheque. If the signature is not same it is returned back otherwise forward to computer terminal.
Computer Terminal Process:-
62
The cheque is received in computer terminal, where the computer operator checks the balance of the account holder. The operator also sees the stop payment instructions are received from account holder or not. After considering these points computer operator post the cheque in account holder ledger and returned back to the officer.
Payment of Cash:After posting the cheque the officer cancelled the cheque and returned back to cashier. The cashiers enter the cheque in cash paid registered and pay against the second signature of receiver on the back of the cheque. If the payment is of Rs. 50000 the cashier can make it on its own. If the amount is greater than Rs. 50000 to Rs. 100,000 the cashier and cash deposit Incharge will verify the check and will sign it. Then the payment will be made. But, if the amount is greater than Rs. 100,000 to Rs. 1000,000 the manager operation will also verify the check and sign it so that the payment can be made. If the amount is greater than Rs. 1000,000 the Branch Manager will also verify the check and sign it. Otherwise the payment will not be made.
63
CORPORATE,COMMERCIAL AND SME DEPARTMENT
I. ASKARI IJARAH BI SAYYARAH II. ASKARI HOME MUSHARAKAH This department approves the cases of the Consumer finance and supervises all the branches of Islamic Banking. Islamic Banking Branches of Askari Bank sends their proposals to the Consumer department and the consumer department approves these cases. The difference between Corporate and Consumer is that in corporate banking the case may be sent to the Head office credit division (HOCD) or Head office credit committee (HOCC) the in Islamic Consumer Finance department the finally approves form this department of Islamic Banking Services division (IBSD).
64
As per Prudential Regulations, Consumer Financing means: Any financing allowed to individuals for meeting their personal, family or household needs. The facilities categorized as consumer financing are Credit cards, Auto loans, House financing and Personal loans. Standard Financing Facilities for these departments are:
ISLAMIC CAR FINANCING (CAR IJARAH)

Askari Islamic Bank's car Ijarah is a car rental agreement, under which the Bank purchases the car and rent it out to the customer for a period of 3 to 5 years, agreed at the time of contract. Upon completion of the lease period the customer gets ownership of the car against his initial security deposit.
Basic Product Procedure:

Car Ijarah is structured under the concept of Ijarah, which works on the following lines; The customer will approach Askari Islamic Bank Limited with a request for Car Financing.
65
After required credit checks and approval of the case, the bank will take Security Deposit from the Customer. The customer will also sign a Letter of Undertaking to Lease to ensure that the customer will lease the car upon its delivery. At this stage tentative Ijarah rentals and tentative delivery period is communicated to the customer. Based on the customer's requirement, Askari Islamic Bank directly purchases the car from the authorized dealer and pays the purchase price directly to the supplier. Upon delivery of the car, Askari Islamic Bank as an owner of the asset get the asset insured and registered in its name. As per the rules of the Ijarah the cost of registration and insurance will be borne by the bank. However the bank has the right to recover these costs in future monthly rentals. At this stage Askari Islamic Bank will enter into an Ijarah Agreement with the customer and monthly Ijarah rentals are finalized. Monthly rentals will begin one month after the delivery of the car. These monthly rentals are charged for the use of Bank's Vehicle. The customer will also give a unilateral Undertaking to Purchase the asset in case the customer wants to purchase the car earlier (early termination) or in case of default. All risk and rewards of ownership of the asset will be borne by the bank. All expenses of normal wear and tear will be borne by the customer. Upon completion of the ijarah tenor, the customer can purchase the car from Askari Islamic Bank via separate Sale Deed or can return the car to the bank and can take back his security deposit.
Key Features of a Valid Ijarah

Risks and rewards of ownership lie with the owner; any loss to the asset beyond the control of the lessee should be borne by the lessor. This
66
condition is usually not complied with the conventional lease transactions and all risks are parked with the lessee or the customer. In Ijarah, the lessor (Bank) cannot unilaterally increase rentals. However generally under conventional lease arrangement the Lessor can increase the rentals at its sole discretion. In Ijarah, the Lessor cannot terminate the lease unilaterally while in conventional lease transaction the Lessor has the right to terminate the lease contract at its sole discretion. In case of late payment of rentals, under the Islamic contract, the Lessor (bank) cannot take any extra amount from the customer as it will be considered as Riba and is haram. However the lessee may be asked to promise that if he fails to pay rent on its due date, he will pay certain amount to charity account which is separate from the Bank's income account. However,
Basic Documents required

Complete Application Form Copy of CNIC Two passport size photographs Copy of Utility bills Driving license Last six months bank statement; signed and stamped Signature verifications Letter head of business, sign and stamp (with specify partnership, sole proprietorship etc) Salary slip and joining letter Salary slips if salaried person or last three year tax return if businessman References of two persons (not immediate family) with their CNIC and Contact #.
67
TWO Procedure
There are two ways to have a car;
Purchase a car on on
On means ready delivery but on a premium price. The premium is a payment above the cost of car is paid. This payment is given to the dealer or to the investor not to Askari Islamic bank . This payment varies with the type of car.
Book the car

Askari Islamic book their own vehicles in advance to provide to their customers in a short span of time and no premium is required. After the case is approved from head office the vehicle is delivered to the customer. This procedure takes ten days approximately.
68
The second option is normal booking where every company has its own time duration for vehicle delivery according to their booking schedule. According to this no extra payment has to be made. The car is delivered after some time. This time duration can be from two months to a year.
Payment procedure
First a security deposit has to be paid. The security deposit can be from 15% to 50%. The remaining amount is paid in the form of monthly instalments i.e. rent. In case of second hand cars 20% down payment has to be made if the car is two years old and 30% if car is three years old. The monthly rent extends from three to five years. One thing is to remember that the insurance is included in the monthly instalments.
TENURE OF THE CAR IJARAH

As per Prudential Regulation R-10, The maximum tenure of the auto loan finance is seven years. Keeping in view the limitation ASKARI BANK LTD ISLAMIC BANKING BRANCH offers the facility to its clientele for three, four and five years.
Profit rate
Askari Islamic bank charge rate according to the type of car. This profit rate is fixed by Rack Rate which is calculated on the head office level. Once a rate is written in agreement with the customer and the rate changes the profit or loss is to Askari Islamic bank with the decrease or increase in rate not to the customer. Once a car is leased the lease cannot be transferred to another person.
Years
3
Profit Rate (%)

13.75
69
4 5
14.75 15.75
Insurance policy
The Askari Islamic bank have to insure the as it is included in the policy of Car Ijarah. Askari Islamic bank insure a car through Pak Takaful Insurance company which is also pure Islamic as they only insure physical property but do not make life insurance. According to Car Ijarah the annual Insurance amount, at the beginning of year. AskariIslamic bank pays the insurance and recover this insurance amount in monthly rent of the car. The insurance of the car is from bumper to bumper. If a customer claims the insurance in case of accident the following procedure is carried: 1st year 5% of damage repairing is paid by customer and 95% is paid by insurance company. 2nd year 10% of damage repairing is paid by customer and 90% is paid by insurance company.
Negative Professional List
Following is the list of person who cant be allowed to lease a vehicle from Askari Islamic bank. Law enforcement agencies. Non-resident Pakistanis. Property dealers. Landlords. Politicians. Overseas employment agencies. Lawyers. Internship Report on Askari Islamic Bank 70
Journalists. Motorcar dealers. IT schools.
Car Ijarah VS Conventional Leasing Features

Ownership and Risk
Askari Islamic bank Car Ijarah

In Car Ijarah asset remain in the ownership of the bank through out transaction tenor. Risk and rewards of ownership lie with the owner i.e any loss to the asset beyond the control of the lessee should be borne by the lessee. The rental amount decided at the time of the agreement cannot fluctuate unilaterally at the sole discretion of the bank. Bank / Lessee All expenses related to the ownership of the asset i.e. insurance, accidental damage, will be borne by the lessor. Lessor All actual operating/ overhead
Conventional Leasing
Although ownership remains with the lessor, but all risks of ownership are parked with the lessee as well. This is not permissible as per rules of the Ijarah. The bank can on its sole discretion increase transaction rates and rentals. All expenses relating to the corpus (ownership) of the asset i.e. insurance, accidental repairs, actual operating / overhead charges are borne by the lessee.
Rentals
Expenses
71
expenses related to running the asset will be borne by the lessor Late Payment Charges In car Ijarah, lessee may be asked to promise that if he fails to pay rent on its due date, he will pay certain amount to a charity account. This amount cannot be taken in Bank's income and its nature is of charity not of Riba. Charity is charged only to discipline the customers. Asset Theft/ Damage In case of asset theft/ or severe damage (that it becomes unusable) rentals are stopped because rentals are obtained only for the use of the asset. Rentals / Monthly Rentals start after one month Payments delivery of an asset.
An extra monetary amount is charged if rent payment is not paid on time and is taken in the income of the institute. This extra amount is Riba and is haram.
Monthly payments are not stopped in any case of theft or severe damage to the asset. Monthly payments start from the booking of an asset irrespective of the condition that the asset is delivered to the customer or not. Upfront payments generally consist of: Down payment ranging from 15-20% min. Registration charges 1st year insurance premium 1st monthly rental 1st installment of 2nd year insurance The vehicle is automatically transferred in the name of the customer as per part of the contract.
Upfront Payments
Customer is only required to pay a Security deposit in a range of 15-50% along with actual documentation and processing cost. There are no other upfront payments. Upon completion of the ijarah tenor, the customer can purchase the car from Askari Islamic Bank via separate Sale deed or can return the car to the bank and take back his security deposit.
At the end
72
LEGAL DOCUMENTS
Following are the five main legal documents which are involved in the agreement of Car Ijarah.
Letter of undertaking to lease: Purpose:

This is an undertaking by the customer that they will lease the car upon delivery. This undertaking is taken only if the car is on booking and there is a time lag in the delivery of the car.
Components
Description of the car Tentative rental amount and tentative delivery date.
Agency Agreement Purpose:

Under this agreement the bank appoints the customer as its agent to select the car. This is used in imported and used car cases.
Lease Agreement for Car Iajarah Purpose:

This agreement is signed before the delivery of the car. Under this agreement the bank gives customer the right to use the Bank's car.
Components:
Copy of application form Asset description Rental schedule (rental and due dates) Receipt of vehicle(delivery date) Demand promissory note.
Letter of Undertaking to Purchase: Purpose:

This is an undertaking by the customer to purchase the car from the bank cases of default and early termination.
Components:
Early purchase price schedule
Sale Deed Purpose:

This document records the formal sale of the car by the bank to the customer. Eligibility Criterion: Pakistani Nationality Corporate employee, professional or a businessman
74
3-years experience in employment, or business or professional At least 2 months spend in the current employment Income is 3 times of the monthly rentals.
ISLAMIC HOUSE FINANCING (HOME MUSHARAKA)

Askari Islamic bank also provides facility for pure and easy financing for constructing, purchasing, replacing and renovating a house. The nature of contract in Islamic House Finance is a co-ownership and not a loan because the transaction isnt based on the lending and borrowing of money but on the joint owner ship of the asset. The profit charged by the bank is the utilization of the contract thorough the life of agreement.
Documents required
CNIC Two photos Utility bills Internship Report on Askari Islamic Bank 75
Last six months bank statement Salary slips if salaried person or last three year tax return if businessman. All legal documents of property If a person living abroad has to attest the documents from Pakistan embassy The customer dealing with Askari Islamic bank makes a monthly payment that includes the unit price, insurance and monthly profit of the bank. In case of construction the unit price is not charged to customer but only the rent and in purchase case both the rent and unit price is charged to customer. The financing is for personal use only not for commercial purpose.
The criteria
When a house is constructed or when a house is purchased, the house is transferred in the name of customer then he pledges it in the name of bank. Finally this pledging is expired when whole amount of house is recovered through monthly rent. In construction case the financing is up to the value of plot. If person wants to make a balloon payment i.e., payment of more than one month instalments the monthly rent is not charged only the unit price have to be paid. But 3% of monthly payment is also included in it. There is a difference in financing for a salaried person or businessman:
Salaried person: Minimum salary required is Rs. 20,000 then the max
financing can be up to Rs. 600,000. Profit rate is 13%.
76
Customer has to make his financing of 15% and the remaining 85% is provided by bank.
Businessman: Minimum income required is Rs. 50,000 then the maximum

financing can be up to Rs. 12, 00,000. Customer has to make his financing of 30% and the remaining 70% is provided by bank. Above to both cases i.e. Car Ijarah and House financing, the front office has limited duties to perform. There work ends when they get the documents required for the case approval. When the case is approved there are some functions that are performed by the Credit Administration Department.
CORPORATE DEPARTMENT
DEPARTMENT CYCLE
Credit Management is composed of five steps: Proposal Processing Decision Documentation Disbursement
Proposal
77
The first step in the Credit Management is receiving a credit request, which is a lending proposal for the bank each borrower has a purpose for borrowing. Some borrow to fulfill their working capital needs, others wants to finance any project. The customer presents his idea to the banker and wants the information on banks facilities. Then after collecting information if the customer deems it beneficial he makes a loan request. This bank customer relationship should be mutually beneficial.
Processing Of Loan Proposal

Managing a safe, healthy and profitable credit portfolio depends on the quality of judgment exercised by the officer and the depth of their risk associated with the nature of the borrowers business. The banker is supposed to make a judicious judgment, which should be based on a critical study of advance proposals. It is very much necessary that the banker should have a complete confidence in the integrity and ability of the customer to use the money to his advantage and repay it within a reasonable period. Information must be collected and confirmed by investigation and negotiation during processing of the proposal.
Evaluation
To assess the risk and estimate the potential of a particular business, a series of investigative exercise is undertaken. This evaluation stage include knowing the purpose of borrowing, knowing business prospects of a customer, visiting the business place, analysis of financial statement, visiting the collateral securities etc.
Purpose of borrowing
78
The borrower must disclose factual purpose for seeking financial accommodation from bank without such, the proposal should not be given due consideration. The possible purpose may be as follows: Export Financing / Packing Credit. Import Trade Financing. Working Capital need for Trade and industry. Fixed Investment for Industry (Project Financing). Purchase of Industrial or Commercial Vehicles. Construction of Residential, Industrial and Agricultural Buildings. Finance for movement of Goods / Crops within the country. Purchase of Agricultural Machinery. Development of Agricultural Land.
Financial analysis
The purpose of analysis of Financial Statement (FS) is to examine past and current financial data so that a companys performance and financial position can be evaluated and future risk and potentials can be estimated. The analysis can yield valuable information about trends and relationship, the quality of company earnings and its financial strengths and weaknesses. Financial Statements among other things include balance sheet and income statement. Balance sheet represents assets and liabilities of the business at a given data. Besides showing the ability of the business to service the loans on the strength of its financial structure. It also helps in evolving secured basis for extending financial support. Apart from showing the profitability of a business, income statements disclose how the business has been conducted and determines factors behind a rise or decline in the net worth. Internship Report on Askari Islamic Bank 79
Negotiation
While processing a loan proposal, a banker has to do a detailed negotiation with the customer, to have firsthand knowledge about certain things and then confirm them. The negotiation phase is very important for creating a safe credit portfolio. The information collected in this phase may include the type of advance, the mode of creating charge over securities, the source of repayment and period for which the facility is needed.
Period of Financing:
The period for which the finance is issued is called the maturity period. It may be for a month two months, 3 months, 6 months and for a maximum period of 1 year. If the facility of advance is allowed up to 3 months then it will be considered as temporary accommodation and if it exceeds to 6 months t 1 year, then it will be a permanent limit.
Making a Lending Decision

Bank credit decision for any proposal has to be very rational one, because there are many restrictions on monetary and credit expansion by the State Bank of Pakistan and it is no longer within the power of banks to distribute it freely. Credit office must learn to make the best use of the banks available deposits by deploying them in the most productive advances. To make a prudent decision it is required that decision should be made only after comparing the benefits available from several competing proposals and agree to finance the proposal which offers a risk-reward combination closest to the standard set out in the Banks Credit Policy. Before recommending facilities for any customer, banker must ask himself the question Internship Report on Askari Islamic Bank 80
Why should we lend to this customer in particular? Why not the next one?
Documentation
Document shall include any matter written, expressed or described upon any substance by means of letters, figures or marks or by more than one of those means which is intended to be used for the purpose of recording that matter. Obtaining the proper documents, legally valid and enforceable, is a prerequisite for the disbursement of an advance by bank. The type of document to be obtained mainly depends on the following aspects:
Disbursement
Procedure
Proper documents, which are legally valid and enforceable at law, are obtained. The concerned Credit Officer in the branches prepares proposal which purpose is to record the required information on it and having approval of the Branch Credit Committee and Head Office on it. Credit line proposal include the following information: Date of opening. Date of maturity. Nature of the business. Type of facility.
81
Purpose of facility. Securities. Source of repayment. There is a Branch Credit Committee in each Branch. Committee holds a meeting and takes decision whether to give loan or not. This decision is taken by keeping in view all the risks associated with that borrower. New account with a new account number is opened. These account numbers are previously fed into the computer if the system is online. After a fix time period, on decided date, borrower has to repay the principal and profit.
REQUISITES OF A CREDIT FILE

File Checklist
Repayment schedule Follow-up schedule Covenants General Information of the Customer
Approvals:
Entire Process Flow Credit Proposal with Attachments Credit Approvals Price Change Approvals
82
Security Change Approvals
Customer Profile:
Borrower's Basic Fact Sheet (BBFS) Basic Information Report Company Profile / Management Structure NTN / Sales Tax / Import/Export Registration Certificates Memorandum and Article of Association Certificate of Incorporation / Certificate of Commencement of Business Latest Form 29 (copy) CNIC of Directors / Partners / Mortgagors (copy)
Irregularities / Audit Comments

Irregularity Report CIB with customer response Any Adverse Information Audit Comments Internal External State Bank of Pakistan Shariah Audit Comments.
Customer / Third Party Correspondence

Board Resolution Facility Request Letter Security Change Letter Facility Offer Letter
Information Reports
Business Call Reports Site Visit Reports Inspection Report Bank / CIB / Market Report
Credit Administration
Legal Opinion Valuation Report Copy of SSC
Financials
Quarterly Half Yearly Management Accounts Annual Audited Financial Reports for last 3-years Cash Flow Statement Prospectus Financial Projections Net-worth Statement / Income Tax Returns
CREDIT ADMINISTRATION DEPARTMENT

In Islamic the general documents required are Offer letter Financing agreement Purpose and definitions Terms and period Security Internship Report on Askari Islamic Bank 84
Fees and expenses Payments and accounts Delivery Maintenance of financed asset Insurance, accidents, injuries and indemnifications Registration and title Return of financed assts Limitations and liabilities Default and termination Inspection Prudential regulations Inspections Representations and warranties Written request Undertaking Receiving notice Envoice Pay Order in the name of seller of commodity.
Security Documents are also verified and kept in this department which may include: Registry of the Property Mutation Certificate Fard-e-Malkiyat Aks Shajrah
85
OPERATIONS ARE CONDUCTED IN THIS DEPARTMENT:

Ijarah Musharika Diminishing Musharika Salam Istisna Mudarabah
Ijarah
To give something on rent In Islamic banking it means to transfer the rights of use of a property to another person in exchange for a rent claimed from him, while the owner remains with the bank only the rights of use is transferred to the person renting it.
Features
A contract The asset which is allowed in Shariah Asset must not consume able Liabilities relating to the ownership of asset shall be born by the
lesser (bank) and the liabilities relating to the operation of the asset shall be born by the lessee. Asset cant be used for any purpose other than mentioned in the agreement. Period of lease start form one month after the delivery of product. Under Ijarah transaction lays Car Ijarah
86
Musharika
SHARING (being a partner) The word Musharika is derived from SHIRKAH the profit is shared according to the decided ratio while the loss is allowed to be shared according to the ration of the capital.
Features
According to this each partner has a right to take part in Musharika management If the partners wish they can appoint a managing partner by mutual consent Among those partners one can work for Musharika and work as a sleeping partner The profit will be decided before the contract
The ration of sleeping partner should not exceed his capital ratio In banking transaction when a bank become a sleeping partner it has the right to obtain a security from the client to ensure the return on his investment will be paid to him without any delay. But the security cannot be used to set off any loss incurred due to any reason inherent in the nature of the contract.
Diminishing Musharika
Diminishing Musharika is usually done under Shrkat ul Milk, Arabic word meaning a kind of partnership. This type of Musharika is primarily used for Real Estate Financing. The share of bank gradually decreases until the full ownership moves in the name of client. Under diminishing Musharika lays Easy Home Financing
87
Easy Home Financing

Same as the case of Car Ijarah when approval from head office is received from head office, final documentation starts.
Salam
A sale transaction, where the seller undertakes to supply some specific goods to buyer at future date against advance price fully paid on spot but the supply is differed.
Features
delivery Exactness of date and place of delivery Security Settlement as per contract only Cancellation of contract only on the Full payment Homogeneity of the product Availability of the product at the time of
consent of both the parties of contract
Istisna
Sale transaction in which commodity is transacted before it comes into existence. It is an order to the manufacturer to produce a specific commodity for purchase.
Features
88
The contract starts when the producer starts manufacturing the
commodity. It isnt necessary that price must be paid in full amount, it can be paid in installments Buyer can reject the goods Fixing the delivery time isnt necessary
Manufacturer has to use his own material, meaning the ordering party cannot provide the goods.
Mudarabah
Kind of partnership where one partner gives money to another for investing in a commercial enterprise
Features
Investing partner is called Rabb-ul-Maal Managing partner is called Mudarib
Rabb-ul-Maal must had over all the managing power to the Mudarib Mudarib cannot keep another Mudarib (partner) without the consent of Rabb-ul-Maal Mudarib cannot mix his own investment without the consent of Rabbul-Maal There are four terms WAKEEL (agent) SHAREEK (partner) ZAMIN (liable) AJEER (employee) The period of the contract should be specific
89
In Islamic banking it is used for Term financing Project financing Enterprise setup financing Import and export financing Working capital financing Running capital financing
Murabahah
A sale transaction in which cost price and profit is disclosed to the end customer.
Modes of payment
Prompt payment Full amount payment in future Payment in instalment
Features
The existence of goods is necessary Clear Specification and identification of goods is necessary Owner of goods is necessary Possession of goods in the name of bank at the time of delivery is necessary After the purchase of goods the Bank must bear the risk, until they are delivered to the client.
Basic Rules for Murabaha

Should not be used for Un-Islamic Purpose
90
Assets to be sold
Should be in ownership of the Seller at the time of Sale Payment of Murabaha Price may be At Spot In Instalments In lump sum after a certain time
Its a kind of Sale not of Financing Transaction is done on the "cost plus profit" basis. Renegotiation of the price and roll-over of Murabaha are not permitted. Discounting of Murabaha Instrument is not permitted. Sale Price must be Unconditional Sale price must be determined.
TRADE DEPARTMENT IMPORT

The international trade transaction, in which one country buys goods from other country, is called import. The import trade in Pakistan is governed by import and export Act of 1950. Previously, the regulating body of imports was controller of Import and Export. But this function has been shifted to Export Promotion Bureau. Foreign Exchange Departments of all banks are restricted to word under the rules and regulations of government.
Letter of credit
Foreign trade payment problems are mainly solved by a letter of credit. A letter of credit is issued by the importers bank. If guarantees payment to the exporter up to specified amount of money provided the terms and conditions laid down the L/C are fulfilled. A letter of credit is a commitment on the part of buyer's bank to pay or accept draft drawn upon it, provided drafts do not exceed a specified amount. A letter of credit thus is a Written undertaking by an importers bank to exporters bank. That it will pay or accept draft drawn upon it up to a stated amount with a specified time. The payment will only be made to the exporter if he compliers with the terms of credit.
Parties to a letter of credit:

There are four parties involved in letter of credit. Account party: The buyer or the importer on whose account and request the letter of credit is opened is known as account party or opener. Issuing bank: The bank which issues or opens a letter of credit at the request of importer is called issuing bank. Exporter or seller: The seller or the party in whose favour L/C is drawn is the exporter. He is also called beneficiary. Negotiating bank: The paying bank in the exporters country, on which the draft is drawn, is called negotiating bank or paying bank.
Opening of letter of credit

The main steps involved in the opening of the letter of creditor as follows: Internship Report on Askari Islamic Bank 92
Application for letter of credit

The importer will request his own bank or any other bank, which deals in foreign trade transactions to issue a letter of credit in favour of the exporter. He will prepare an application on the prescribed form available from the bank. The information, which are supplied in the application are based on the contract of sale and include only the important feature of contract, such as value of merchandise, port of shipment, documents to be presented, port of unloading, brief description of goods, import license etc.
Scrutiny of application
Before issuing a letter of credit, the bank will scrutinize whether the importer is of good financial standing, possesses the import license issued by import control. Authorities, the amount available covers the letter of credit applied for, market demand of goods, collateral offered to cover the credit etc.
Cash margin
The bank asks the importer to deposit cash or securities with the bank. The bank depending upon the credit worthiness of the importer decides the proper margin of cash or securities to be deposited.
Issue of the letter of credit

The importer bank after being fully satisfied will issue a letter of credit in favour of the exporter. The L/C may be sent directly to the exporter or the advising bank in
93
the exporters county. In such a case, the advising bank will inform the exporter about opening a letter of credit.
Shipment of goods
When the exporter receives L/C, he examines it to ensure that it conforms to the terms of contract of sales. He then shifts the goods and presents all required documents along with the bill to negotiating bank.
Role of negotiating bank

The negotiating bank after receiving all the documents and the bill from the exporter will scrutinize them whether these conform to the terms of letter of credit. If the documents of title accompanying the bill are in order, these will be sent to the importers bank for payment.
Liability of the issuing bank

On receipt of documents and the bill, the issuing bank will examine them. If the documents on the face appear to be in order, the bank would release the payment. In case any defect is found in the documents and the draft is honoured by the issuing bank the importer can claim damages on the issuing bank. The issuing bank is only accountable for the completeness of documents, not to see whether goods conform to the contract of sale.
Payment by importer to the bank
94
First the importer pays all his obligations the bank then bank releases the documents. In case of sight draft, the importers bank pays the amount on the same day charging the importing customers account. In case of a time draft, the importer discharges his obligations to the accepting bank on or before the maturity date of acceptance. The accepting bank will then release all the shipping documents to the importer.
Payment to the exporter

The exporter can obtain payment from the negotiating bank by discounting the draft (L/C) immediately after shipping the goods and obtaining shipping documents.
EXPORTS
The international trade transaction in which one country sells its goods to other country is called Export. The controlling body of export in Pakistan is Export Promotion Bureau; it gives different incentives to the businessmen for enhancing the exports and reducing the Balance of payment deficit. It restricts the export of some goods and reinforces export of other. The steps involved in import are described earlier from the importers point of view. The procedure of export is same, as it can be described from exporters point of view. The activities, which are different, described here.
95
FUNCTIONS OF FINANCE DEPARTMENT

ACCOUNTING SYSTEM OF THE ORGANIZATION Fully computer based accounting system Reliable electronic data is used in decision making Generation of fund from sales of shares and fixed deposit from customers High rate of interest on loan and different services good sources of fund Allocation of funds by providing financial services Double entry book keeping system Fool proof
FINANCE SYSTEM OF THE BANK

Based upon borrowing and lending, means finance system of the organization is based on borrowing and lending, borrowing means borrow money from those people who have surplus and lending means give to those people who need money.
USE OF ELECTRONIC DATA IN DECISION MAKING

Fully computer based accounting system.
Reliable electronic data is used in decision making.
MOBILIZTION OF FUNDS
Advertisements Sales Promotions Activities
GENERATION OF FUNDS
Sales of shares Fixed Deposits from customers
Sources of funds
Fixed Deposits from customers Sales of shares General Banking Income
ALLOCATION OF FUNDS
Lending to financial institutions Lending people on interest e.g. loans, Car finance, House finance
Profitability Ratios:
97
NET PROFIT MORGIN = net income/net sales
YEAR
2006 2007 2008 2009 2010 17.86% 17.70% 2.1% 4.9% 3.37%
RATIO
Net Profit margin

20.00% 15.00% ratios 10.00% 5.00% 0.00% 2006 2007 2008 years 2009 2010
Interpretation:This Graph shows that 2006 is a good year for the bank as compared to the other years whereas the position of 2008 was so bad. It is due to the fact that management was unable to impose a strong control on the expenses. A strong control on expenses can bring a favorable change on the net profit margin.
Administrative Expense Ratio:98
= Admin expenses/net sale
YEAR
2006 2007 2008 2009 2010 26% 32% 32% 31% 28%
RATIO
Administrative expense
35% 30% 25% 20% 15% 10% 5% 0% 2006 2007 2008 years 2009 2010
Interpretation:this graph shows that in 2008 the admin expenses were so high as compared to any other year and in 2006 admin expenses were lowest . if the admin expenses are low than it brings an favorable change on the profitability of any bank and management should try to improve the situation.
Ratios
Operating Expense Ratio:-
99
=operating expense/net sale
YEAR
2006 2007 2008 2009 2010 26% 32% 32% 31% 28%
RATIO
0perating expens
35% 30% 25% 20% 15% 10% 5% 0% 2006 2007 2008 years 2009 2010
Interpretation:Operating expense was highest in 2007 and 2008 as compared to other years and operating expenses were lowest 2006. According to this ratio criterion the lower the ratio the better it is for the company/ bank. Management should take important steps to control this unfavorable situation.
Ratios
100
Return on Equity:= net income /share holder equity
YEAR
2006 2007 2008 2009 2010 23.39% 22.15% 3.20% 8.35% 6.36%
RATIO
Return on equity
25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 2006 2007 2008 years 2009 2010
Interpretation:Return on equity ratio is highest in 2006 and lowest in 2008. According to this if ratio is high than it is good for company. High ROE satisfies the requirement of stockholders and market value of share remains at the satisfactory level. Management should improve the current situation.
Ratios
101
Liquidity Analysis:Current Ratio:=Current Assets/Current liablities
YEAR
2006 2007 2008 2009 2010 .20 .19 .13 .13 .12
RATIO
current ratio
0.25 0.2 Ratios 0.15 0.1 0.05 0 2006 2007 2008 years 2009 2010
Interpretation:Current ratio position was so bad. This increase of this ratio is beneficial for the organizatrion so bad for the bank management should take steps to improve the situation.
102
Current Assets to Total Assets:

=Current Assets/ Total Assets
YEAR
2006 2007 2008 2009 2010 18% 17% 11% 12% 11%
RATIO
Current Asset to Total Assets

20% Ratios 15% 10% 5% 0% 2006 2007 2008 years 2009 2010
Interpretation:Current assets were highest in 2006 and lowest in 2008 and 2010. At the current situation of 2010, they are decreasing day by day which are not beneficial for the bank management ,it is the duty of bank management to improve the present current asset situation.
103
Quick Assets Test Ratio:=Quick Assets/Current liablities
YEAR
2006 2007 2008 2009 2010
current ratio
0.25 0.2 Ratios 0.15 0.1 0.05 0 2006 2007 2008 years 2009 2010
RATIO
.20 .19 .13 .13 .12
Interpretation:Quick assets were highest in 2006 and lowest in 2010, the present situation is not satisfactory . Management should take important steps to improve the situation to substantial extent.
104
Long Term Debt Paying Ability Analysis:Debt Ratio:=Total liabilities/Total Assets
YEAR
2006 2007 2008 2009 2010 93% 93% 94% 94.12% 95%
RATIO
Debt Ratio
96% Ratios 95% 94% 93% 92% 2006 2007 2008 years 2009 2010
Interpretation:Debt ratio is highest in 2010 and low in 2006 and 2007 according to this ratio criterion the lower the ratio the better it is for any organization. The bank should try to reduce its liabilities as compared to its assets.
105
Debt to Equity Ratio:=Total liabilities/Total Equity
YEAR
2006 2007 2008 2009 2010 16 14 16 18 20
RATIO
Debt to Equity Ratio

25 20 15 10 5 0 2006 2007 2008 years 2009 2010
Interpretation:Debt to equity ratio is highest in 2010 and lowest in 2007 and according to this ratio criterion the lower the ratio the better it is for the company. At present level in 2010, this ratio increasing which is an unsatisfactory sign and management should take important steps to improve the situation.
Ratios
106
Analysis for Investor:Earnings per Share:=net income/outstanding shares
YEAR
2006 2007 2008 2009 2010 7.48 8.92 .76 2.18 1.48
RATIO
Earning per share

10 8 6 4 2 0 2006 2007 2008 years 2009 2010
Interpretation:Eps was highest in 2007 and lowest in 2008 which is mainly due to lower profitability of the bank. The bank should try to meet its obligations on time and try to curtail its expenditure on non development head. Management can play an important role to control the present situation and in 2010 the bank earning per share is al so not so good it is due to operating expenses and admin expenses.
ratios
107
DIVIDEND PAYOUT RATIO =di
YEAR
2006 2007 2008 2009 2010 13.37% 16.82% 13.15% 14.5% 15.5%
RATIO
Dividend payout Ratio

20.00% Ratios 15.00% 10.00% 5.00% 0.00% 2006 2007 2008 years 2009 2010
Interpretation:Beside of availability of lower profits, the bank pays higher amount of cash dividends during the lower profitability years. The bank used its reserve and retained earnings to satisfy the shareholders and maintain its goodwill in the market. DP ratio is highest in 2007 and lowest on 2008. Although this measure is beneficial for the short term but it can be harmful for the long run.
108
Critical analysis of bank
Askari Islamic Bank branch is a Islamic branch I saw in the bank that most of the employees are not devoted with there work It is true that bank is trying to adopting computerized system but their most of staff is unable to use computerized system or not familiar with computer even operational manager does not know how to operate computer and how to send or receive a mail. There are no proper facilities in bank for customer. And they face so many problems in bank. There is no any shop for bank staff so that they can bring something for themselves or their guests in break time. Employees of the bank are not happy with there branch manager their all system is manual so much time waste in different process. There is also an electricity problem in this bank. There is reduction of staff in some departments, so they complete almost their work from internees. There is reduction of law & order, so sometimes branch faces so many problems especially in the dates of pensions. All types of pensioners are treated same day thats why this creates problems.
109
PEST ANALYSIS
PEST stands for political, economic, social and technological. These are some factors which can affect the business efficiency of a company. POLITICAL Laws, government agencies and pressure groups that influence and limit various organization and individuals in a given society if the political situation in a country is unstable than the business situation of organization will be effected and people will hesitate to invest in that organization. Pakistan political situation is so volatile. ECONOMIC Economic factors are the factors that affect consumer buying power and spending patterns. If the economic situation of the country is not good than the business efficiency of the organization will be effected. Due to poverty ,unemployment ,inflation and high taxation the standard of living has been very low this will effect the saving habit of people and they will not invest in different businesses. SOCIAL Social analysis includes the culture, norms, rituals and religion of the country. Pakistan is an Islamic state some religious scholars say that Islam prohibits the interest (sood). So this is also affecting the banking business which is wholly depends on the interest rate business. Illiteracy is another factor people have no clear awareness about the business of banks and their benefits. There are several social classes in the country, these social classes also affect the business efficiency of the organization, and social classes affect the whole economy.
110
TECHNOLOGICAL Forces that create new technologies, creating new product and market opportunities. Technology are the major factor which can bring greater changes or improvement in the organization the companies which use advance technologies can captures major part of the market. Askari bank has an E-banking system through which people can do different type of transactions without visiting the banks which is time saving process for both Bank and Customers. Askari bank has not full competitive edge like other banks in the technology it has not enhanced the Mobile Banking system for general use. These are some factors which can affect the business and our all economic situation of the country.
SWOT ANALYSIS OF ASKARI ISLAMIC BANK LIMITED

SWOT stands for Strength, Weaknesses, Opportunities and Threats. SWOT is useful tool for providing a framework for analysis of an organization. It is widespread approach to make assessments in terms of internal and external environment of the organization and to formulate strategies by analyzing its internal strengths and weaknesses, external opportunities and threats. SWOT analysis for ASKARI Islamic Bank is as follow:
STRENGTHS
banks Provide a record business in exports sector 111 Holds a sound repute in the financial circle Personalized services of the staff to the employees Located in the commercial area, so that the customers face no providing Islamic banking services Shariha Approved Product & Maintaining the healthy correspondent relationships with foreign
problems in reaching to the bank. Services.
it has a reliable and easy to use internal computer system. All the transactions and information regarded the customers
deposits has been computerized. Currently, Unibank System is being practiced for this purpose. Now Askari Bank is decided to change the Unibank System into flexcue. Askari Islamic bank has launched its Mobile ATM Bus Service, which is the Pakistans First Mobile ATM Bus Service. No other bank has taken initiative of mobile ATM Bus yet.
WEAKNESSES
No advertisement on electronic media has been seen yet. Since, Askari islamics bank major competitors are Meezan bank and
Bank Alfalah has started large media campaign, so keeping in view these threats, Askari Islamic Bank should emphasize more on its advertisement. some of the employees are burdened with over work. Division of work and description of job is not properly defined to each
and every staff member.
OPPORTUNITIES
All the opportunities of the 21st century are to be availed in the
information technology. Information technology is the future. Therefore Askari Islamic bank should emphasize much on IT,
112
Askari Islamic bank should emphasize on E - Banking. In which Bank
can design a universal account like other foreign banks, to enhance online facilities. Askari Banks growing business requires an extensive branch network. There are great opportunities for Askari Islamic bank for the expansion of its business.
THREATS
Askari Bank is facing a strong competition by its major competitors;
Meezan Bank and Bank Alfalah. Business of these banks is also growing with very high pace. So in order to achieve the sustainable growth in a market, Askari Islamic bank has to remain vigilant about the ever changing environment and the competitors. All the competitors are using different means and methods to popularize their product and services. So Askari Islamic bank should keep in mind that a customer cannot come to the bank until he know that my demands will be fulfilled over here. Askari Islamic bank should enhance the Pay Packages given to the
employees, because it has been noticed that the competitors of the Askari Islamic bsnks are giving more suitable pay package to their employees. Askari Bank should enhance its Branch Network, in order to capture
the market of different areas. The SWOT analysis of the bank signifies that its strengths overcome its weaknesses and its opportunities are more than its threats. This is positive sign for any Organization.
113
CONCLUSION & RECOMMENDATIONS
CONCLUSION
After observing this Askari Islamic bank very closely, following outcomes have been concluded. The decision making is still centralized as the middle and low level management is not taken into confidence. There are no sub divisions at the provincial or branch level. So when different problems related to HR are raised, they are left unaddressed. Most of the employees working in this branch are not much familiar with computer.They just know how to use their part of software if any problem comes in the computer they cant fix it.
114
The recruitment process is very lengthy it should be trimmed. The marketing efforts at the branch level are less disciplined and there are no integrated efforts from all the staff members. The mobilization of deposits is mainly considered as the responsibility of the branch manager but the rest of the staff is usually least interested. Bank branches are restricted to some specific cities. staff of the branch has been found less motivated towards the organizational objectives
RECOMMENDATIONS
As I have spent two months in Askari Islamic Abdali Road Branch for the
Internship purpose.During this period I have tried my best to observe the banking environment. Ihave observed a lot of strengths and weaknesses in the branch. On the basis of this observation I have come up with certain recommendations particularly related to the Askari Islamic Abdali Road Branch but generally can be applicable to the whole banking system of Pakistan including all other branches of Askari Islamic Bank for improvement. These recommendations will help to cope with the problems being faced by the Bank and will enhance the efficiency and performance of the AIB in particular and all the banking sector of the country in general. As we know that nothing is perfect, there is always a room for improvement, so I will recommend following suggestions for AIB There are some problems in Islamic Banking of Askari Bank and general problems which should
115
be resolved for the growth of Askari Islamic Banking Services. So following are some points, According to my observations Askari Bank in case of Ijarah pays the amount of Takaful and then recovers that amount from client with same name.
RECOMMENDATION: But According to my point of view the Bank should

calculate all expenses and then calculate one rental amount which should charge from client. In Case of Diminishing Musharkah when the client takes finance from bank for building his house the bank charges rentals. Till now I am not satisfy on this point. In Ijarah the Bank charges Depreciation from Client which is also a shariah problem according to my observations. Because depreciation is ownership expense. In Murabha Normally Banks hires his client as agent and some people consider it as shariah issue. Employees Training programmes must be introduced on continuous basis so that Employees have understanding with the latest developments especially with the customers Fresh graduates must be recruited. As the combination of Experienced and fresh can produce better results and it will improve the efficiency of management. To motivate the employees their remuneration / salaries should be made at par with top tier Banks. Misuse of telephone internet, fax machines and other facilities available to the employees of the bank must be handled properly. The coordination among employees and different departments should be improved. The coordination between top and lower management also needed to be improved.
116
REFERENCES
WWW.ASKARI BANK.COM WWW.GOOGLE.COM WWW.SBP.COM.PK WWW.WIKIPEDIA.COM
ASKARI BANK EMPLOYEES SIR JAWAD RAZA SAHIB Annual reports of 2010 and 2009
117
118
119

Akash Internship Report

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Akash Internship Report

Uploaded by

Copyright:

Available Formats

INTERNSHIP REPORT ON ASKARI ISLAMIC BANK OF PAKISTAN

UNIVERSITY OF EDUCATION LAHORE MULTAN CAMPUS MULTAN

Internship Report on Askari Islamic Bank

Internship Report on Askari Islamic Bank

Internship Report on Askari Islamic Bank

INTRODUCTION OF ASKARI BANK LIMITED

Internship Report on Askari Islamic Bank

PRODUCTS AND SERVICES

Deposit Multiplier Account

Mahana Bachat Account

Internship Report on Askari Islamic Bank

Paishgi Munafa Account

Value Plus Deposit Account

Rupee Traveler Cheques

Internship Report on Askari Islamic Bank

Roshan Mustaqbil Deposit

Corporate and Investment Banking

Internship Report on Askari Islamic Bank

Internship Report on Askari Islamic Bank

Visa Debit Card

Internship Report on Askari Islamic Bank

Master Credit Card

Internship Report on Askari Islamic Bank

Ijarah Vehicle Finance

Alternate Delivery Channels

Internship Report on Askari Islamic Bank

Auto Teller Machine (ATM)

Commitment Integrity Fairness Teamwork Service

Internship Report on Askari Islamic Bank

Internship Report on Askari Islamic Bank

To explore new avenues for growth and profitability.

Internship Report on Askari Islamic Bank

Internship Report on Askari Islamic Bank

Internship Report on Askari Islamic Bank

Lt. Gen. (R) Imtiaz Hussain

Non-Executive Independent Director

Non-Executive Independent Director

Non-Executive Independent Director

Non-Executive Independent Director

Non-Executive Independent Director

President & Chief ExecutiveAudit Committee

Dr. Bashir Ahmad Khan

Chief Financial Officer

HISTORY OF ISLAMIC BANKNG

Internship Report on Askari Islamic Bank

Islamic Banks Islamic

Internship Report on Askari Islamic Bank

emphasis on credit-worthiness of the clients.

THE HOLY QURAN

Internship Report on Askari Islamic Bank

Internship Report on Askari Islamic Bank

FRAME WORK OF ISLAM

AQIDAH Faith& Believe

SHARIAH Practices& Activities

AKHLAQ Moralities & Ethics

IBADAT Man to God activities

MUAMALAT Man to Man activities

Internship Report on Askari Islamic Bank

QURANIC VERSES RELATED TO RIBA

Second Revelation(surah al-Nisa, verse 161)

Third Revelation(surah al-Imran, verse 130-2)

Fourth Revelation(surah al-Baqarah, verse 275-81)

Internship Report on Askari Islamic Bank

Dear Sir/Madam, Account Number