by Professor Hsieh

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Islamic Banking (8552)Islamic Banking (8552)

Topic:Topic:Establishment of Islamic Fund in BanksEstablishment of Islamic Fund in Banks

Presented to:Presented to:

Sir Salman Siddique Sir Salman Siddique Presented by:Presented by:

Mudassar Afzal Mudassar Afzal

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ACKNOWLEDGEMENT

I am thankful to the ALLAH ALMIGHTY , the most Merciful and beneficent, by he

assistance of Allah, I have accomplished my task.

I would like to thanks all people who directly or indirectly helped me to achieve this

target.

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Islamic Fund Islamic Fund “Islamic” funds or “Shariah” funds (hereinafter referred to Islamic funds), which follow the religious laws (hereinafter referred to as “Shariah”) laid down by the Holy Qu’ran. For believers, they may therefore be considered as funds with a “religious” connotation, whereby for non-Muslim investors, they frequently fall under the category of ethical or socially responsible funds.

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Islamic Investment Funds are joint pool of funds wherein the investors contribute their surplus money for the purpose of its investment to earn halal profits in strict conformity with the principles of Islamic Shariah.

Subscribers of funds receive a document may be called a certificate, a unit, a share or any other name representing the value and will earn pro rated profits on it.

Islamic Investment FundIslamic Investment Fund

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1. Equity fund

2. Ijarah funds

3. Commodity funds

4. Murabaha funds

5. Bai al Dain

6. Mixed funds

Islamic Investment FundIslamic Investment Fund

Equity Funds

Equity funds are invested in joint stock companies.

Profits are generated through the trading of shares in the stock market and the dividends.

It is prohibited to invest in stocks of those companies that are involved in activities not approved by sharia, e.g. companies manufacturing, selling or offering liquor, pork, haram meat, or involved in gambling, night club activities, pornography, prostitution, or involved in the business of hire purchase or interest etc.

Ijara Fund Funds or subscription amounts are used to

purchase assets like real estate, motor vehicles, or other equipment's for the purpose of leasing.

The ownership of these assets remains with the Fund and the rentals are charged from the users.

Rentals on these assets are the income of fund. Each subscriber is given a certificate that is

more likely to be called Sukuk Sukuk (Islamic Bonds). Sale of these Sukuk certificates would simply

change the owner in the asset.

Commodity Funds This type of fund is used for purchasing commodities for

resale to earn profits. All the transactions should comply the sharia conditions like;1. the seller must own the commodities.2. forward sales are not allowed except in case of salam and

istisna.3.Commodities must be Halal.4.The seller must have physical or constructive possession

over the commodity he wants to sell. 5.Price of the commodity must be fixed and known to the

parties, it can't be tied up with any uncertain event.

Murabaha Fund Kind of sale where the commodities are sold on a

cost-plus basis. This type of fund is a closed-end fund and its units

are not negotiable in the secondary market. As the Murabaha fund certificates don't represent a

physical ownership of assets rather it represents a claim of debt and profit there on, so the sale of debt is not allowed unless it is exchanged with exactly the same amount or at par value.

Bai al Dain / Sale of Debt Bay’ which means sale, while • Dayn means debt . Bai al Dain for sale of debt. It denotes the sale of debt

securities, debt certificates (commercial papers), or receivables for a specific amount (usually at a discount to its face value). For example, it may involve the situation where a person has receivables and wants to sell them at a discount to a third party. The third party will replace the original creditor/lender and will be able to claim the face value, with the difference between what he will get and what he has paid constituting his reward/profit.

Mixed Fund

A fund where the subscription amount is invested in

different types of investments, like equities, leasing,

commodities, etc.

Meezan Bank ltd is the first and largest Islamic bank in Pakistan. It is one of the fastest growing financial institutions of the country. The bank commenced operations in 2002 after being issued the first ever Islamic commercial banking license by the state bank of Pakistan.

Meezan Rupee Current AccountMeezan Rupee Saving AccountMeezan Bachat AccountKarobari Munafa AccountMeezan Business Plus AccountMeezan Kids Club AccountMeezan Teens Club AccountMeezan KafalahMeezan Labbaik

Foreign Currency Current AccountMonthly Mudarabah CertificateCertificates of Islamic InvestmentMeezan Amdan CertificateDollar Mudarabah CertificateCar IjarahEasy HomeLaptop EaseMeezan Roshni

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Meezan Islamic Fund (MIF) is not only the largest Shariah compliant equity fund but also the largest Equity Fund in private sector in Pakistan.It is flagship fund and has been rated 5-Star by JCR-VIS.  MIF was launched on 8th August 2003 as the first open end mutual fund of Al Meezan. MIF operates with a clear and well defined investment objective – To invest only in Shariah compliant instruments. Under all applicable rules and regulations of the SECP, the fund ensures an investment policy that is strictly in accordance with approved Islamic principles and Riba-Free.MIF invests in combination of income and growth stocks of Shariah compliant companies with demonstrated track record of profitability and stable dividend payout history.

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Meezan Bank was awarded 'Best Islamic Bank in Pakistan' by Islamic Finance News of RED money Group.

Best Islamic Bank in Pakistan' for consecutive 3 years 2012-2014 by ASIA MONEY Magazine

Become the 8th biggest banking network in Pakistan

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CONCLUSION CONCLUSION

The size of Islamic Investment Funds is expected to be at least doubled

during the next decade. Islamic investment Funds have become today an

undeniable fact. The number of Islamic institutions/Funds is ever increasing.

New Islamic Funds with increasing amount of capital are being established.

Conventional banks are opening Islamic windows for the operations of

Islamic Funds

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Questions

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