internship report on bank islami by owais shafique
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Internship Report on Bank Islami By Owais ShafiqueTRANSCRIPT
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Executive Summary
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Executive Summary:
The whole period of my internship at Bank Islami and the preparation of this report have
been really helpful in making me understand Islamic and conventional banking in theory and in
practice and my experiences are so vast that I have no words to express them.
A bank is a financial institution that accepts deposits and channels those deposits into
lending activities. The Banks primarily provide financial services to customers while the main goal
is enriching investors.
Today banks work in a hybrid fashion providing a variety of services to their customers to
yield heavy profits. A valuable advice I learned on the way was;
“The days of conventional banking are long gone; it’s the era of customer oriented banking.”
Islamic banking refers to a system of banking or banking activity that is consistent with the
principles of the Shari'ah and its practical application through the development of Islamic
economics. The principles which emphasize moral and ethical values in all dealings have wide
universal appeal. Interest free banking is a narrow concept denoting a number of banking
instruments or operations, which avoid interest. Islamic banking, the more general term is expected
not only to avoid interest-based transactions, prohibited in the Islamic Shariah, but also to avoid
unethical practices and participate actively in achieving the goals and objectives of an Islamic
economy.
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Islamic banking system is based on risk-sharing, owning and handling of physical goods,
involvement in the process of trading, leasing and construction contracts using various Islamic
modes of finance. As such, Islamic banks deal with asset management for the purpose of income
generation. They will have to prudently handle the unique risks involved in management of assets
by adherence to best practices of corporate governance. In order to insure that these principles are
followed, each Islamic institution must establish and provide itself with an advisory council known
as a Sharia'a Board.
BankIslami Pakistan Limited (the Bank) was incorporated in Pakistan as a public limited
company on October 18, 2004 under the Companies Ordinance, 1984 to carry out business of an
Islamic Commercial Bank in accordance with the principles of Islamic Shariah.
BankIslami is the Joint venture project of 3 groups with 18.75% equity each, namely
Jahangir Siddiqui & Co. Pakistan, DCD Group UK, & Dubai Bank. Irrespective of stiff competition
in the market the Bank has successfully managed to grow over 400% during last one year.
BankIslami has become a hallmark of innovation and bringing new products and services in the
market and by introducing the Bio-Metric ATM facility it became the first bank of the region to
offer such services and till date no bank has been able to replicate this service. BankIslami has
been able to form a strong image of having authentic basis for its banking operations by using
smart marketing ideas that resonate well with the public mind. All branches of BankIslami have the
same look and feel irrespective of location.
The bank boasts an excellent technological ground for its operations and has a very robust
streamlined way of operating. Its staff being kept highly motivated by various strategies and its
human resource department, the bank always seems to leave almost all its customers with a smile
over their face. The experience whether for an internee or an employee or a customer is always
unique and stisfying in its own way. The banks employees play on the human way of thinking
naturally since they are a young energetic team collaborating with another instead of redundant
conflict siezed people in other organizations.
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My eperience with the bank was phenomenal and unforgettable at the same. I loved it and
enjoyed the best I could throughout the whole journey of learning and knowledge. It felt as I have
vividly expressed throughout my report as though I was always part of a bigger commitment to
serve and yet it boosted my individuality to work with its team as well. I felt as though for a brief
time period, this technical breathing corporate system accepted me as family, aloowed me on its
deepest systems and gave me the opportunity to walk on my own before I am ready to face the big
world myself. Thanking the bank simply just seems so less for all this.
Nothing short of incredible is the way in which Bank Islami Pakistan Limited functions. The
more I learned through my internship, the more I came to respect it. Just as a living creature, the
bank survives in the corporate world. I have grown a somewhat thorough understanding ofcourse
about the working of the bank and have presented my humble views, time and again where
required, to highlight further steps necessary in strengthening this magnificient organization.
Over to the end of my wonderful saga of learning and quest of knowledge I have
undoubtedly establighed evidently enough that Bank Islami is a force to reckon with in the indusrty
and has the best people working for it in the banking sector. Its philosophy of service is truly
evident in its sops and surely it compels out of every mind:
“Serving You; the Right Way!”
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Introduction of Organization
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History of Banking and Its Origin
History:
Banks date back to ancient times. The first banks
were most probably the religious temples of the ancient
world, and were most likely established sometime during the
third millennium B.C. Banks perhaps predated the
invention of money, initially deposits consisted of grain
and later other goods like metals(gold). Temples were
considered the safest places to store gold as they were
well built, constantly attended and protected from
thieves. There are extant records of loans from the 18th
century BC in Babylon that were made by temple priests/monks to merchants.
Banks in Persia and other territories in the Persian Sassanid Empire issued letters of credit
known as Sakks during the 3rd century AD. Muslim traders are known to have used the cheque or
Sakk system since the time of Harun al-Rashid (9th century) of the Abbasid Caliphate. In the 9th
century, a Muslim businessman could cash an early form of the cheque in China drawn on sources
in Baghdad, a tradition that was significantly strengthened in the 13th and 14th centuries, during
the Mongol Empire.
After the fall of Rome, banking was abandoned in western Europe and did not revive until
the time of the crusades. The earliest known state deposit bank, Banco di San Giorgio (Bank of St.
George), was founded in 1407 at Genoa, Italy. The oldest bank still in existence is Monte dei Paschi
di Siena, headquartered in Siena, Italy, which has been operating continuously since 1472.
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What is a Bank?
A bank is a financial institution that accepts deposits
and channels those deposits into lending activities. The Banks
primarily provide financial services to customers while the
main goal is enriching investors. Government restrictions on
financial activities by banks vary over time and location.
Banks are important players in financial markets and offer
services such as investment funds and loans.
In some countries such as Germany, banks have historically owned major stakes in
industrial corporations while in other countries such as the United States banks are prohibited from
owning non-financial companies. Today banks work in a hybrid fashion providing a variety of
services to their customers to yield heavy profits. The days of conventional banking are long gone;
it‘s the era of customer based banking.
Size of Global Banking Industry Today:
Assets of the largest 1,000 banks in the world
grew by 6.8% in the 2008/2009 financial year to a
record $96.4 trillion while profits declined by 85% to
$115bn in adverse market conditions. The United
States has the most banks in the world in terms of
institutions (7,085 at the end of 2008) and possibly
branches (82,000). As of Nov 2009, China's top 4 banks have in excess of 67,000 branches
(ICBC:18000+, BOC:12000+,CCB:13000+,ABC:24000+) with an additional 140 smaller banks
with an undetermined number of branches. Japan had 129 banks and 12,000 branches. In 2004,
Germany, France, and Italy each had more than 30,000 branches—more than double the 15,000
branches in the UK.
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Islamic Banking
What is Islamic Banking?
There is no standard way of defining what is an Islamic
bank is, but broadly speaking an "Islamic bank is an institution
that mobilize financial resources and invest that money in an
attempt to achieve pre-determined islamically - acceptable social
and financial objectives. Both mobilization and investment of
money should be conducted in accordance with the principles of
Islamic Shari'a".
It refers to a system of banking or banking activity that is consistent with the principles of
the Shari'ah and its practical application through the development of Islamic economics. The
principles which emphasize moral and ethical values in all dealings have wide universal appeal.
Shari'ah prohibits the payment or acceptance of interest charges (Riba) for the lending and
accepting of money, as well as carrying out trade and other activities that provide goods or services
considered contrary to its principles.
Interest free banking is a narrow concept denoting a number of banking instruments or
operations, which avoid interest. Islamic banking, the more general term is expected not only to
avoid interest-based transactions, prohibited in the Islamic Shariah, but also to avoid unethical
practices and participate actively in achieving the goals and objectives of an Islamic
economy.Islamic banking is not restricted to Muslims only. Islamic banking has the same purpose
as conventional banking except that it operates in accordance with the rules of Shari‘ah, known as
Fiqh al-Muamalat (Islamic rules on transactions).
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History of Islamic Banking:
During the Islamic Golden Age, early forms of proto-capitalism and free markets were
present in the Caliphate, where an early market economy and an early form of mercantilism were
developed between the 8th-12th centuries, which some refer to as "Islamic capitalism". A vigorous
monetary economy was created on the basis of the expanding levels of circulation of a stable high-
value currency (the dinar) and the integration of monetary areas. A number of innovative concepts
and techniques were introduced in early Islamic banking, including bills of exchange, the first
forms of partnership (mufawada) such as limited partnerships (mudaraba), and the earliest forms
of capital (al-mal), capital accumulation(namaal-mal), cheques, promissorynotes, trusts, loaning.
Organizational enterprises similar to corporation‘s independent from the state also existed in the
medieval Islamic world, while the agency institution was also introduced during that time. Many
of these early capitalist concepts were adopted and further advanced in medieval Europe.
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Banks in Persia and other territories in the Persian Sassanid Empire issued letters of credit
known as Ṣakks during the 3rd century AD. Muslim traders are known to have used the cheque or
ṣakk system since the time of Harun al-Rashid (9th century) of the Abbasid Caliphate. In the 9th
century, a Muslim businessman could cash an early form of the cheque in China drawn on sources
in Baghdad, a tradition that was significantly strengthened in the 13th and 14th centuries, during
the Mongol Empire.
The first modern experiment with Islamic banking was undertaken in Egypt under cover
without projecting an Islamic image—for fear of being seen as a manifestation of Islamic
fundamentalism that was anathema to the political regime. The pioneering effort, led by Ahmad
Elnaggar, took the form of a savings bank based on profit-sharing in the Egyptian town of Mit
Ghamr in 1963. This experiment lasted until 1967 (Ready 1981), by which time there were nine
such banks in the country.
In 1972, the Mit Ghamr Savings project became part of Nasr Social Bank which, till date, is
still in business in Egypt. In 1975, the Islamic Development Bank was set-up with the mission to
provide funding to projects in the member countries. The first modern commercial Islamic bank,
Dubai Islamic Bank, opened its doors in 1975.
The Philosophy of Islamic Banking and Finance:
Islamic Shariah prohibits ‗interest‘ (Riba) but it
does not prohibit all gains on capital. It is only the increase
stipulated or sought over the principal of a loan or debt
that is prohibited. Islamic principles requires consideration
of capital performance while rewarding the capital. The
prohibition of a risk free return and permission of trading,
as enshrined in the Verse 2:275 of the Holy Quran, makes
the financial activities in an Islamic set-up real asset-
backed with ability to cause ‗value addition‘.
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Islamic banking system is based on risk-sharing, owning and handling of physical goods,
involvement in the process of trading, leasing and construction contracts using various Islamic
modes of finance. As such, Islamic banks deal with asset management for the purpose of income
generation. They will have to prudently handle the unique risks involved in management of assets
by adherence to best practices of corporate governance. Once the banks have stable stream of
Halal income, depositors will also receive stable and Halal income.
The forms of businesses allowed by Islam at the time the Holy Quran was revealed included
joint ventures based on sharing of risks & profits and provision of services through trading, both
cash and credit, and leasing activities. In the Verse II:275, Allah the Almighty did not deny the
apparent similarity between trade profit in credit sale and Riba in loaning, but resolutely informed
that Allah has permitted trade and prohibited Riba.
Profit has been recognized as ‗reward‘ for the use of capital and Islam permits gainful
deployment of surplus resources for enhancement of their value. However, along with the
entitlement of profit, the liability of risk of loss on capital rests with the capital itself; no other
factor can be made to bear the burden of the risk of loss. Financial transactions, in order to be
permissible, should be associated with goods, services or benefits. At macro level, this feature of
Islamic finance can be helpful in creating better discipline in conduct of fiscal and monetary
policies.
Besides trading, Islam allows leasing of assets and getting rentals against the usufruct taken
by the lessee. All such things/assets corpus of which is not consumed with their use can be leased
out against fixed rentals. The ownership in leased assets remains with the lessor who assumes risks
and gets rewards of his ownership.
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Riba in Quran:
1. First Revelation (Surah al-Rum, verse 39)
"That which you give as interest to increase the
peoples' wealth increases not with God; but that which
you give in charity, seeking the goodwill of God,
multiplies manifold." (30: 39)
2. 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 peoples' property. We have prepared for those among them who reject faith
a grievous punishment (4: 161)"
3. Third Revelation (Surah Al 'Imran, verses 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."
4. Fourth Revelation (Surah al-Baqarah, verses 275-81)
"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." (275)
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Riba in Hadith:
From Jabir: The Prophet may curse the receiver and
the payer of interest, the one who records it and the two
witnesses to the transaction and said: "They are all alike [in
guilt]." (Muslim, Kitab al-Musaqat, Bab la'ni akili al-riba
wa mu'kilihi; also in Tirmidhi and Musnad Ahmad).
From 'Abdullah ibn Hanzalah: The Prophet, said: "A dirham of riba which a man receives
knowingly is worse than committing adultery thirty-six times" (Mishkat al-Masabih, Kitab al-Buyu',
Bab al-riba, on the authority of Ahmad and Daraqutni). Bayhaqi has also reported the above
hadith in Shu'ab al-iman with the addition that "Hell befits him whose flesh has been nourished by
the unlawful."
From Abu Hurayrah: The Prophet, said: "Riba has seventy segments, the least serious
being equivalent to a man committing adultery with his own mother." (Ibn Majah)
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Modern Islamic Banking:
The first modern commercial Islamic
bank, Dubai Islamic Bank, opened its doors in
1975. In the early years, the products offered
were basic and strongly founded on
conventional banking products, but in the last
few years the industry is starting to see strong
development in new products and services.
Islamic Banking is growing at a rate of 10-15% per year and with signs of consistent future
growth. Islamic banks have more than 300 institutions spread over 51 countries, including the
United States through companies such as the Michigan-based University Bank, as well as an
additional 250 mutual funds that comply with Islamic principles. Conservative estimates suggest
that over US$500 billion of assets are managed according to Islamic investment principles. The
World Islamic Banking Conference, held annually in Bahrain since 1994, is internationally
recognized as the largest and most significant gathering of Islamic banking and finance leaders in
the world. The Vatican has put forward the idea that ―the principles of Islamic finance may
represent a possible cure for ailing markets.‖
The recent $2.35 billion bank financing for Ettihad Etisalat Company is a significant
milestone in the history of Islamic banking and sets a benchmark for Islamic financing deals into
the future. For the first time in the industry's history, several Islamic banks headquartered in the
Gulf have recently set up business operations in Malaysia, while making clear that on their radar
screens are Indonesia and China. Riyadh, Asharq Al-Awsat- In 1990, a new player emerged in the
Islamic banking market, signifying a huge leap in the Islamic banking industry. It was a landmark
year in the history of Islamic banking, indicating the beginning of an industry in terms of expansion
and growth.
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About Islamic Banking:
"Islamic banks operate in the Middle
East, Europe, Asia and Africa. At the
threshold of the 21st century, Islamic banks
had about US $700 billion in funds under their
management"
A few decades ago, modern banking
and financial institutions that encompass
Islamic values within their principles and practices seemed to be merely a remote dream. Today,
however, Islamic banking has become a viable financial approach that attracts an increasing
amount of capital investment. As a concept Islamic Banking was developed as a result of the
religious prohibition of the payment or receipt of interest. The fundamental principles of Islamic
Banking go back over one thousand four hundred years. They are set out in Shari'a law and are
enshrined in the Qur'an, the Hadith and the Sunna. Today, these principles form the basis of the
contemporary Islamic Banking range of Islamic financial products & services.
There is no standard way of grouping Islamic Financial Institutions, but in terms of services
rendered, today Islamic Financial Institutions can be divided into the following broad categories:
1- Islamic Banks. 2- Islamic Windows.
3- Islamic finance/Investment Banks. 4- Islamic Mortgage companies.
5- Takaful Companies. 6- Mudarabah Companies.
7- Islamic investment funds
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Principles of Islamic Banking:
The principles of Islamic finance are established in the Qur'an, which Muslims believe are
the exact Words of God as revealed to the Prophet Mohammed. These Islamic principles of finance
can be narrowed down to four individual concepts:
1. Prohibition of Interest or Usury
2. Ethical Standards
3. Moral and Social Values
4. Liability and Business Risk
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1- Prohibition of Interest or Usury:
The first and most important concept is that both the charging and the receiving of interest
is strictly forbidden. This is commonly known as Riba or Usury. Money, on its own, may not
generate profits. When Riba infects an entire economy, it jeopardises the well-being of everyone
living in that society. When investors are more concerned with rates of interest and guaranteed
returns than they are with the uses to which money is put, the results can only be negative. Usury is
forbidden in all the three religions, Judaism, Christianity and Islam, but it is the people who forget
the rules of Allah. All societies, nowadays - Muslims, Christians and Jews - deal with Usury.
2- Ethical Standards:
The second guiding principle concerns the ethical standards. When Muslims invest their
money in something, it is their religious duty to ensure that what they invest in is good and
wholesome. It is for this reason that Islamic investing includes serious consideration of the business
to be invested in, its policies, the products it produces, the services it provides, and the impact that
these have on society and the environment. In other words, Muslims must take a close look at the
business they are about to become involved in.
In all facets of the financial system, Islam has certain rules, certain regulations as to how
Muslims should go about participating in these activities. For example, in share trading or the
securities market, Islam looks at the activities of the companies, to establish whether or not the
companies are involved in activities which are in line with Sharia'a.
3- Moral and Social Values:
The third guiding principle concerns moral and social values. The Qur'an calls on all its
adherents to care for and support the poor and destitute. Islamic financial institutions are expected
to provide special services to those in need. This is not confined to mere charitable donations but
has also been institutionalised in the industry in the form of profit-free loans or Al Quard Al Hasan.
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An Islamic bank's business includes certain social projects, as well as charitable donations.
Islamic banks provide profit-free loans. For example, if an individual needs to go to hospital or
wants to go to university, we give what is called Quard Al Hasan. This Quard Hasan is normally
given for a short period of one year and the Islamic bank does not charge anything for that.
4- Liability and Business Risk:
The final principle concerns the overarching concept of fairness, the idea that all parties
concerned should both share in the risk and profit of any endeavor. To be entitled to a return, a
provider of finance must either accept business risk or provide some service such as supplying an
asset, otherwise the financier is, from a Sharia'a point of view, not only an economic parasite but
also a sinner. This principle is derived from a saying of the Prophet Mohammed (SAW) "Profit
comes with liability". What this means is that one becomes entitled to profit only when one bears
the liability, or risk of loss. By linking profit with the possibility of loss, Islamic law distinguishes
lawful profit from all other forms of gain.
In order to insure that these principles are followed, each Islamic institution must establish
and provide itself with an advisory council known as a Sharia'a Board. The members of Sharia'a
Boards can include bankers, lawyers or religious scholars as long as they are trained in the Islamic
law, or Sharia'a.
In 2001, the Industry witnessed a remarkable development in this regard by the initiative of
the Accounting and Auditing Organization for the Islamic Financial Institutions or AAOIFI. At that
time, AAOIFI's standards were enhanced to include elements that aim at broadening the role of the
external auditor. Now according to these new developments the external auditor is also required to
look for compliance with Sharia'a rules as defined by the Sharia'a supervisory board of each bank
and in accordance with the Sharia'a standards AAOIFI has begun to issue.
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History of Islamic Banking in Pakistan:
Steps for Islamization of banking and financial system of Pakistan were started in 1977-78.
Pakistan was among the three countries in the world that had been trying to implement interest free
banking at national level. But as it was an epic task, the switchover plan was implemented in
phases. The legal framework of Pakistan's financial and corporate system was amended on June
26, 1980 to permit issuance of a new interest-free instrument of corporate financing named
Participation Term Certificate (PTC). An Ordinance was promulgated to allow the establishment of
Mudaraba companies and floatation of Mudaraba certificates for raising risk based capital.
Amendments were also made in the Banking Companies Ordinance, 1962 (The BCO, 1962) and
related laws to include provision of bank finance through PLS, mark-up in prices, leasing and hire
purchase.
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Pakistan adopted a policy of gradual transformation of its banking system from February
1979 after several years of study and preparation by the government-appointed Council of Islamic
Ideology (CII). The procedure adopted by banks in Pakistan since July 1 1985, based largely on
‗mark-up‘ technique with or without ‗buy-back arrangement‘, was, however, declared un-Islamic
by the Federal Shariat Court (FSC) in November 1991. However, appeals were made in the Shariat
Appellate Bench (SAB) of the Supreme Court of Pakistan. The SAB delivered its judgment on
December 23, 1999 rejecting the appeals and directing that laws involving interest would cease to
have effect finally by June 30, 2001. In the judgment, the Court concluded that the present financial
system had to be subjected to radical changes to bring it into conformity with the Shariah. It also
directed the Government to set up, within specified time frame, a Commission for Transformation of
the financial system and two Task Forces to plan and implement the process of the transformation.
The House Building Finance Corporation had shifted its rent sharing operations to interest
based system in 1989. The Task Force of the M/O Law proposed amendments in the HBFC Act to
make it Shariah Compliant. Having vetted by the CTFS, the amended law has been promulgated by
the Government. The State Bank issued detailed criteria in December 2001 for establishment of
full-fledged Islamic commercial banks in the private sector. Al Meezan Investment Bank received
the first Islamic commercial banking license from SBP in January 2002 and the Meezan Bank
Limited (MBL) commenced full-fledged commercial banking operation from March 20, 2002.
The Government as also the State Bank are mainly concerned with stability and efficiency of
the banking system and safeguarding the interests, particularly, of small depositors. With this
concern in mind it has been decided to operate Islamic banking side by side with traditional
banking. The approach is to institute best practice legal, regulatory and accounting frameworks to
support Islamic banks and investors alike. The year 2002-2003 witnessed strengthening measures
taken in the areas of banking, non-bank financial companies and the capital markets.
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Conventional Banking Vs Islamic Banking:
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Key Distinguishing Features:
The key distinguishing features that diffrentiate Islamic banking from
conventional banking are:
Transactions are asset-based
It is socially-responsible banking because it operates under Shariah
restrictions.
Does not permit financing of prohibited goods / Industries
Conventional Banking Islamic Banking
- Profit rates are fixed
- Interest based
-Doing financing in cash form
- Does not involve itself in trade and business
-Current account based on profit
- Depositors get a fixed rate regardless of the
bank’s profitability, thus insulating them
from the bank’s true performance.
- Profit rates are variable
-Interest free
-Doing financing in form of products
- Actively participates in trade and production.
-Current account based on no profit no loss
- Profit is shared with the depositor, higher the
bank’s profit, higher the depositors income.
The conventional banking, which is interest based, performs the following major activities:
Deposit creation
Financing
Agency services
Issuing LCs
Advisory-services
other related services
Now I would like to make a comparison of these activities with Islamic concept of banking:
Deposits (The liability side)
Deposit qard (loan) not amanah (Trust)
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The common misconception regarding "deposit" is that it is a form of amanah
(security/trust). However, according to Shariah definition, deposit has more resemblance to qard
(loan) than amanah. In Islam an item is termed as amanah, if it bears all the features of amanah.
Deposits cannot be termed amanah, as they do not have two of its special features:
1. Amanah cannot be used by the bank for its business or benefit.
2. The bank cannot be liable in case of any damage or loss to the amanah resulting from
circumstances beyond its control.
Whereas in banks, deposits are primarily placed to earn profit, which is only possible when
the bank uses these deposits to invest in other business. Hence deposits do not fulfill the first
condition of amanah, which says that it should not be used by the caretaker for his own business or
benefit. Secondly, the bank is held 100% responsible for these deposits in all circumstances even in
case of loss or damage to the bank. This feature releases deposits from the ruling of amanah where
the assets will not be returned in case of any damage to the asset resulting from circumstances
beyond caretaker's control. According to this justification, all three kinds of deposit namely current
accounts, fixed deposits and saving accounts are not amanah. They are all governed by qard.
One school of thought says that only fixed deposit and saving accounts fall under the laws of
qard but current account is governed by amanah. However, this is also not correct because the
bank is as much liable to current account holders as it‘s PLS account holders and is called the
"guarantor" in fiqh terminology. Due to this feature, current account is also governed by qard.
The depositors are not interested in terminology but the end-result of holding an account.
Therefore if a bank does not offer security to the assets, the depositors under normal circumstance
will never keep their assets at such a bank. Similarly if the depositors are told that the status of
their account will that be of amanah and in case of any loss to the assets, without any negligence of
the bank, will not be returned to them, not a single person would put his asset in the bank.
Therefore the bank provides the security to the assets, which the depositors themselves want.
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We thus conclude that the main intention of the depositors is not to put the assets in banks
as amanah; rather as qard by having collateral security by appointing the bank as guarantor.
Role of the Bank as Agent:
A bank under Islamic Shariah can act as an agent (on Al-Wakalah basis) of the customer and can
carry out the transaction on his behalf. Moreover it can charge agency fee for the services.
The agency fee can be charged in the following cases:
Payment / receiving of cash on behalf of the customer
Inward bill of collection
Outward bill of collection
LC opening and acceptance
Collection of export bills / bills of exchange. In this case the undertaking or guarantee
commission and take-up commission can be Islamized. Bank will charge an agency fee for
accepting the bills, which is bought at face value.
Underwriting & IPO services
Role of the Bank as Guarantor:
The bank or financial institute gives a guarantee on behalf of its customer but according to
Shariah, guarantee fee cannot be charged. Normally conventional banks charge fee for following
guarantees:
Letter of guarantee
Shipping guarantee
Advisory Services:
Most of the advisory services provided by the financial institutes can be carried out easily in
compliance with Shariah as long as the nature of business is Halal:
Privatization advisory services
Equity placement
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Merger & acquisition advise
Venture capital
Trading (Capital market operations)
Cash & portfolio management advice
Brokerage services (Purchase & buying of share of companies involved in halal business, a
fee could be charged for it).
Other Allowed Islamic Financial Services & Products:
Remittance
Zakat deduction.
Sale & purchase of foreign currency
Sale & purchase of travelers checks (local foreign currency)
ATM services
Electronic online transfer
Telegraphic transfer (of cash)
Demand draft
Pay order
Lockers & custodial services
Syndicate funds arrangements services (non-interest or markup based) for some fee.
Opening of bank account (current & non-interest or no-markup)
Clearing facility
Sales & purchase of shares/stock (of companies
involved in halal activities)
Collection of dividends
Electronic banking window
Telephone banking.
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Introduction of Bank Islami Pakistan Limited
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History
BankIslami- The Idea:
The epochal idea of BankIslami was conceptualized by
Jahangir Siddiqui & Company Limited and DCD Group in late
2003. Mr. Hasan A. Bilgrami was appointed as Adviser to the
sponsors on March 16, 2004 to formalize the idea. He presented
the concept paper of BankIslami to sponsors on March 24, 2004. A
detailed business plan was then prepared and a formal application
was submitted to the State Bank of Pakistan on May 26, 2004. On September 26, 2005, Dubai Bank
joined the Sponsors and became one of the founding shareholders of BankIslami by investing
18.75% in the total Capital.
Accredition by State Bank of Pakistan:
The State Bank of Pakistan issued a No
Objection Certificate in no time on August 19,
2004 and BankIslami Pakistan Limited, the
second full-fledge Islamic Commercial Bank
in Pakistan, was incorporated on October 18,
2004 in Pakistan.
BankIslami Pakistan Limited was the first Bank to receive the Islamic Banking license under
the Islamic Banking policy of 2003 on March 31, 2005. The Bank envisioned to focus primarily on
Wealth Management as the core area of business in addition to Shariah compliant Retail Banking
products, Proprietary and Third party products, and Integrated financial planning services.
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Initial Public Offering of BankIslami:
BankIslami Pakistan Limited made a
public offering of Rs. 400 Million, at par, from
6th to 8th March. This was the first primary
issue by a Bank in over a decade in Pakistan.
The Initial public offering (IPO) of BankIslami
received overwhelming response from the
general public as the applications received were
9 times higher than offered, fetching nearly Rs.
3.5 Billion, against the demand of Rs. 400 Million.
Inauguration & Network Expansion:
The State Bank of Pakistan declared
BankIslami Pakistan Limited as a Scheduled
Bank with effect from March 17, 2006.
BankIslami started its Banking operations on
7th April 2006 with its first branch in SITE,
Karachi. By the end of 2006, the Bank had
10 branches, nine in Karachi and one in
Quetta. The Bank further concentrated in
building a nationwide network and by the end of year 2007, its branch network grew to 36 branches
in 23 cities. In 2008, the Bank opened 66 new branches nationwide which expanded its network to
102 branches in 49 cites. This gives BankIslami the distinction of having the fastest expanding
network in Pakistan as well as offering the widest network by any Islamic Bank in Pakistan.
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Competition Situation:
BankIslami is the Joint
venture project of 3 groups with
18.75% equity each, namely
Jahangir Siddiqui & Co. Pakistan,
DCD Group UK, & Dubai Bank.
Irrespective of stiff competition in
the market the Bank has
successfully managed to grow over
400% during last one year and all
set to be a 100 Online Branch Network by the year end 2008.
The same was achieved by the existing largest player in the Islamic Banking Industry
Meezan Bank in 6 years time at December 2007. BankIslami has become a hallmark of innovation
and bringing new products and services in the market and by introducing the Bio-Metric ATM
facility it became the first bank of the region to offer such services and till date no bank has been
able to replicate this service. Bio-Metric identification (based on finger print) removes the need for
PIN based verification and it adds the security element in ATM transactions.
Image Marketing:
BankIslami has been able to form a strong
image of having authentic basis for its banking
operations by using smart marketing ideas that
resonate well with the public mind. For example,
the calligraphy of the bank's name in Urdu is
claimed to have been done by the same
calligraphers who have done similar work in the
Holy Mosque of Madina in Saudi Arabia. Marketing Department of the Bank was at the forefront of
re-branding exercise and achieving greater standardization across the network. All branches of
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BankIslami have the same look and feel irrespective of location. An agreement was also signed with
VISA for launch of the debit card. BankIslami has also entered into an agreement with Pak-Qatar
Family Takaful for distribution of BancaTakaful from selected branches of the Bank.
Key Achievements of Bank Islami:
The foremost achievement of the Bank during the year 2010 has been its emergence as a
serious Islamic Bank which is increasingly being seen as the most authentic provider of Islamic
Financial Solutions. Bank Islami is thankful to Almighty Allah and his customers‘ base who are
now willing to pay a premium to bank for the authenticity of products, commitment to adhere to
Shariah principles without any compromise and delivery which is better than most of our counter
parts, including conventional banks. In less than three years BankIslami is an established franchise.
Another key achievement of bank Islami was the completion of branch expansion target of
100 branches and sub-branches. Bank Islami actually opened 102 branches and sub-branches
covering 49 cities in all four provinces, Azad Kashmir and Northern Areas. Not only does
BankIslami offer the best coverage compared with any Islamic Bank, but also this is the fastest
expansion achieved by any Bank in Pakistan's Banking industry. Almost all branches are online,
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serviced with 24×7 Phone banking and offer the same standard facilities across the network. For
year 2010, BankIslami intends consolidating its network and operations.
Bank Islami core Banking system, iMal, was successfully deployed in the first branch in
November 2008. The core banking module is completed deployment in nine largest branches
towards end of the year2008. Deployment of iMal has made BankIslami the only bank in Pakistan
to use Banking software that has been designed for Islamic Banking as well as the bank was the
fifth largest net acquirer on the 1 Link ATM network.
Human Resources Department responded well to the challenge of recruitment for 66
branches. Staff strength rose from 563 as on December 31, 2007 to 1,188 on December 31, 2008. In
all, 2,500 interviews were conducted and 785 training sessions were held. Online recruitment was
launched with success. Staff turnover remained one of the lowest in the industry at 1.9%.
BankIslami was the first Bank that has a full time Shariah Adviser the scope of the Shariah
Department was further strengthened with more pro-active involvement in Product Development,
Training and Audit. The first Shariah Audit of the Bank was conducted in year 2008 and it reported
that not even a single deviation was found. BankIslami is actively involved in different forums at the
State Bank‘s level for development of Islamic Standards in the country as well.
BankIslami's performance for the year 2009:
Due to a heavy expansion last year, the full cost
impact of which came this year, BIPL is reporting a
loss of Rs. 563M before tax and Earning Per Share
stood (0.91). This is approximately Rs. 250M more
than what we had budgeted. Due to economic in-
stability, we preferred to conserve the liquidity. At the
same time, private corporate credit off take was slow
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there by drying up appetite for quality credit. While our closing ADR is still less than 50%, going
forward the signs are very positive. Almost 30% growth came in the last quarter only.
Growth in consumer financing was contained, though the Bank continued to finance good
credit. BIPL has also successfully negotiated with CITI Bank acquisition of its mortgage portfolio
of Rs. 1.5b. This transaction is expected to close in the second quarter. The Book quality remains
good and improving. Most of the nonperforming financing consists of quality collateral with a
market. We expect a strong recovery this year. We are aiming to close the year at around 60% ADR
with NPL's contained at less than 5% of the portfolio.
The success story of the year was the growth in deposits, which came almost entirely from
retail segment. BIPL is one of the few banks in Pakistan which has a genuine deposit franchise.
Instead of targeting large, rate sensitive accounts, BIPL as strategy focused on retail customer
which are stable, less rate sensitive and loyal. Current and Saving Accounts recorded impressive
growth. Even growth in Fixed Deposits was propelled by our five and ten depository products
which now accounts for 21% of the deposit base. Despite of 124% increase in deposits, cost of
funds actually declined. BIPL will continue to follow the same strategy – strong focus on retail
deposits, a further 5% to 10% reduction in cost of fund coupled with at least 50% increase in the
deposit base.
Our technology infra-structure was further strengthened during the year with full
deployment of state of art sharia compliant core banking system, iMal. We remain the largest user
of Linux in Pakistan which has helped us to have a stable, cost effective platform compared to our
peers. Our market share in ATM transactions has improved to 11th position amongst 1-LINK
members. We are aiming to complete deployment of the next phases of iMal during 2010.
Head count in 2009 increased by almost 24%. Most of the hiring took place in the branches.
Head count/branch of BIPL remained impressive at around 14, which is one of the best in the
industry. The highlight of this year was our focus on Training. BIPL is strictly following mandatory
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training hours for all employees which in some cases is as high as 80 hours. The first batch of
trainee officers has graduated and assumed responsibility in the branches. We plan to induct a few
more batches this year in Karachi, Lahore, Islamabad, and Balochistan where we have a strong
presence. BIPL also continued with focus marketing initiatives. Our greatest asset today is
probably our brand name 'BankIslami'. Going forward, we plan to maintain presence in selected
media segments.
This was a year of consolidation for the Bank. To ensure and maintain Shari'ah compliance
of highest possible standards in all transactions (particularly Murabahah transactions) in the
increased branch network remained the matter of focus. Following were the major development of
the period under review:
Product Development:
BankIslami Pakistan Limited had voluntarily stopped
Commodity Murabahah transaction after some scholarly
reservations raised on the transaction structure. However, huge
liquidity arising from tremendous deposits growth necessitated an
efficient but Shari'ah compliant Treasury Product for management
of liquidity. For this reason, Product Development and Shari'ah
team of BankIslami in coordination with prominent market players
brought certain improvements in the existing structure of
Commodity Murabahah transactions. After considerable efforts
BankIslami undertook a few transactions, under the revised
structure, during last quarter of the year 2009. Efforts are still in
progress to further improve the process which are expected to bring fruits shortly and BankIslami
plans to present the revised structure and processes to prominent Shari'ah scholars InshaAllah
after post-launching study of the product.
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The Bank also carried out major revision of Policy and Procedure Manuals for Deposit,
Murabahah, Ijarah, Diminishing Musharakah and Istisnaa' products to make them more user
friendly. Finished goods purchase product with the name ―Karobar Financing‖ has been
developed for working capital financing during the year.
Islamic Banking Training:
Besides Systems and SOPs employees are the major contributor to
success or failure of any organization. BankIslami has greatly emphasized
on Islamic banking products to ensure Shari'ah compliance from their
end. With a handsome budget allocated for training program and state of
the art Training Centers have been established in Karachi, Lahore and
Islamabad, a detailed Training Calender was prepared to organize the
sessions properly and to ensure that every employee gets proper training. Following Training
Methodology was adopted during the training sessions:
Case study based Method of training was introduced which was found very useful by the
participants. Training manuals for Murabahah, Ijarah and Diminishing Musharakah products were
also developed.
Following are the details of the training sessions held in 2009:
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Future Outlook:
Despite of testing times, bank Islami is
optimistic about the coming years. BIPL
management team target for the coming years is to
consolidate the operations and bring greater
efficiencies in operations. Specifically, they would
like to grow the balance sheet and wipe off the
accumulated losses of Rs. 577,246,000 which are
expected to decrese this year.
Growing network, a viable and working depository franchise, growth in the Islamic Banking
industry and technological advantage places them in an ideal position to take advantage of the opportunities
that lie ahead due to State Bank‘s increased capital requirements. The bank is also unin IT effectively and
efficiently to reduce cost ofcommunication and its taking the maximum posible banefitout of it. The bank is
alsoexpectedto takeover another chainofbanks as soon as the bank recovers from the accumilated loss.
As discussed earlier, the reason for our losses this year is non-absorption of operating costs due to
lower asset volumes. Besides that, BIPL has all the right straits which a successful bank may wish to have.
Our net-work is large and well spread out, deposit base is stable and cost effective, intermediation cost is
within the top quartile in the industry, NPLs are low and that too contained and technology base is one of
the best. With improving asset deployment, BankIslami achieved operating break from December. On full
year basis, we will inshallah report a profit starting from first quarter. No large expansion in net-work is
envisaged this year.
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Our Logo Story
Our name & logo set the benchmark:
When it is a question of faith,
Authenticity
Is the key word.
A simple, local and Authentic name that leaves
no confusion about what we do
Only Islamic Banking!
The same thought process went into designing the
logo- simple local and Authentic to the core.
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Motif:
The blue and green motif sets the background
of the logo. Like all ‗Authentic‘ Islamic
motifs, it has eight corners filled with flowing
lines without any source point. These two
features are an important part of Islamic art.
Next time you see an Islamic motif, check its
authenticity by these banchmarks.
Script and Calligrapher:
We opted for the Arabic script for its
versatility, beauty and Authenticity ‗Khat-
e-Sulus‘, a script which has graced the
Islamic monuments from the subcontinent
to Turkey to Arabia including the two most
sacred mosques, was opted for. It stands
for timeless traditions and values that
Muslims in these regions have shared for
centuries-trade and commerce included.
When it came to the Calligrapher, we went to one of the best sources in the world-
Ustad Shafiq-uz-Zaman, the only person chosen to do calligraphy in the Masjid-e-
Nabwi after 500 years.
Can you think of any better and more authentic standard?
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The Crescent:
A rising crescent in the traditional green
encircles the motif and calligraphy. The
Crescent has deep association with
contemporary and modern Islam. In our
logo, it stands for Shariah encompassing
everything that we do at Bankislami.
Motif Bands:
Two motif bands run parallel to each other and frame the symbol. Again, stars in the
bands have eight corners. This band is found on many Islamic Monuments all around
the world including the Holy Ka‘ba.
Do you think Authenticity will ever escape
our attention in whatever we do?
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Board of Directors
The Board of Directors of
BankIslami comprises of eminent
representatives from the Bank and its
Sponsors. These include Chief Justice
(R) Mahboob Ahmed (Chairman), Mr.
Ahmed EIshall, Mr. Ahmed Randeree,
Mr. Ali Raza Siddiqui, Mr. Hasan A.
Bilgrami, Mr. Shabir Ahmed Randeree
and Mr. Mohamed Al Amiri.
Chief Justice (R) Mahboob Ahmed
Chief Justice (R) Mahboob Ahmed is
the Chairman of the Board of Directors of
the Bank. Mr. Mahboob Ahmed graduated
from University of Punjab and completed
his LLB in 1957. He practiced at the Bar of
Lahore High Court and Supreme Court of
Pakistan for 19 years particularly on the
constitution and commercial sides. Mr.
Mahboob Ahmed was appointed Judge of Lahore High Court in 1978 and became Chief Justice
in 1990-91. He also has been the Chief Justice of Federal Shariat Court of Pakistan in 1997. He
has also served as the acting Governor of Punjab. During his tenure as judge of Lahore High
Court he was the first original side judge on the Banking Jurisdiction and also the Company
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Judge and Chairman-Election Authority. He also represented Pakistan in a number of
conferences in the Middle East, Far East and Europe.
Mr. Mahboob Ahmed has been on the Board of Directors of Jahangir Siddiqui & Co.
Ltd. since October 31, 2002. He is also the Director of Azgard Nine Limited.
Mr. Ahmed Elshall
Mr. Ahmed Elshall is the Chief Financial Officer of Dubai Bank. Mr. Elshall is an MBA,
CPA and a Certified Financial Planner (CFP) and has more than 20 years of experience in
Investment, Commercial and Islamic Banking.
He served as Senior Vice President and Group Head incharge of strategic projects at
Union National Bank following a stint with the Abu Dhabi Islamic Bank where he held the
position of SVP, Strategic Planning and Financial Control. Mr. Elshall also served as the
Financial Controller, International Division and Senior Manager for Strategic Planning at
Riyad Bank and as the Manger, Investors Tax Reporting Group at the Federal Home Loan
Mortgage Corporation in Washington, D.C.
Mr. Ahmed Goolam Mahomed Randeree
Mr. Ahmed Goolam Mahomed Randeree is the Chairman of the DCD Group and its
associated holdings in International Trade Finance and Property & Investment businesses.
Having moved from South Africa to the UK in the mid 1970's, Mr. Randeree was instrumental
in growing the groups Textile and Trade Finance business, Revelate Limited. The business
operated throughout the UK, South Africa and the Far East. Mr. Randeree presided over the
Group when its turnover and operations grew from US$ 2.5 million in 1977 to over US$ 150
million by 1998.
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Over the past 6 years, Mr. Randeree moved to the Middle East and concentrated on
various new businesses on the Indian subcontinent, Hong Kong and the UAE. Dominion Asset
Management, Hong Kong and Al Ajwad International, Dubai, U.A.E represent the on-going
diversification of Mr. Randeree's holdings worldwide.
Mr. Ali Raza Siddiqui
Mr. Ali Raza Siddiqui joined JS-Investments as an Executive Director in 2005.
Previously, he was Assistant Vice President at AIM Investments, a wholly-owned subsidiary of
AMVESCAP Plc in Houston, U.S.A. At AIM, Mr. Siddiqui was part of a Five-person team
responsible for the management of US$ 60 billion in mutual fund assets.
Mr. Siddiqui holds a Bachelors Degree from Cornell University, USA, with double
majors in Economics and Government.
Mr. Hasan A. Bilgrami
Mr. Hasan A. Bilgrami is the Founding Chief Executive Officer and Director of
BankIslami. His association with BankIslami started as a consultant to the sponsoring
shareholders right at the inception of the project where he was responsible for developing the
business plan, arranging permissions, staffing and capital raising. Previously he worked as the
Head of Asset Management with the National Investment Trust (NIT), as Country Manager
Consumer Banking & Corporate Business with Gulf Commercial Bank (now PICIC
Commercial Bank Limited) as General Manager Corporate Finance with ORIX Investment
Bank and as Director and Head of Corporate Finance with Khalid Majid Husain Rahman, then
a member firm of Deloitte & Touche. Mr. Bilgrami has overall 19 years of professional
experience.
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Mr. Bilgrami has hands on experience in structuring Islamic modes of financing while
he worked as a Secretary of the Financial Instruments Committee of the Islamic Finance
Commission. His specific task was development of model financial instruments that could be
used by the financial services industry in Pakistan. The scope of work not only included both
asset and liability side products, but also included areas such as risk management and capital
adequacy. Model agreements were also part of the mandate. His work of model agreements has
been approved by the Shariah Board of the State Bank of Pakistan and has become the industry
standard.
He is a Director on the Board of BankIslami's subsidiary, BankIslami Modaraba
Investment Limited, Director of KSB Pumps Limited as well as a Chairman of its Audit
Committee, Nominee Director of Haleeb Foods Limited. He is also the President of the National
Council of the Institute of Cost and Management Accountants, Director of Pakistan Institute of
Corporate Governance and a member of the Institute of Capital Markets, Pakistan.
He has also been a Director on boards of PICIC, Soneri Bank Limited, Crescent
Commercial Bank Limited, Fauji Fertilizer Company Limited and National Refinery Limited.
Mr. Bilgrami graduated in Commerce from Karachi University and is a Fellow member of the
Institute of Cost & Management Accountants of Pakistan and a Fellow of the Canadian
Securities Institute.
Mr. Shabir Ahmed Randeree
Mr. Shabir Ahmed Randeree is a principal and CEO of DCD Group Ltd (Global), a
worldwide group with core business interests in Finance and Property & Investments. He has
over 25 years of experience of a broad array of real estate investments, including the
development, acquisition and management of offices, hotels, retail space and residential
developments.
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He has been the Group's Managing Director for the since 1992 and previous to this he
was a founder member and Managing Director of Warrenby Limited, a business involved in
International Trade Finance and Real Estate Commercial Investments in the UK, and which
was later acquired by the DCD Group. He also has worked in the clothing import and export
business with Dominion Clothing Distributors Limited where he was the Sales and Finance
Director in the mid 1980's.
Mr Randeree holds a number of Directorships, including being a Director of the Al
Baraka Bank Limited of South Africa and European Islamic Investment Bank Plc in UK. Mr.
Randeree is also on the Executive committee of BMRC (a Charity related to the Ethnic
Minorities Foundation UK) and Trustee for the British Edutrust Foundation, chaired by Lord
Bhatia
Mr. Randeree has done his BA Honors in Accounting and a post graduate MBA.
Mohamed Amiri
Mohamed Amiri has over 18 years of banking experience in both Islamic &
International Banking and is presently working for Dubai Bank, U.A.E as Head of Retail &
Business Banking
Prior to joining Dubai Bank, Mr. Amiri was working for Dubai Islamic Bank as
Executive Vice President – Retail & Business Banking and was successful in opening many
branches in a short span of three years.
Mr. Amiri also carries a 9 years of valuable experience with HSBC Dubai, where he
held the position of a Branch Manager at Deira Branch, the 2nd largest branch of HSBC in the
Middle East.
Mr. Amiri has a Bachelor‘s degree in Management Information System and is also a
Graduate from the first batch of Mohammed Bin Rashid Program for Leadership Development
(MBRPLD).
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Sponsors
BankIslami is a joint venture among
three financially sound and progressive
shareholders, namely, DCD Group, Dubai Bank
and Jahangir Siddiqui & Co. Ltd. Please click
on the following for details of our Sponsors:
DCD Group
The history of the modern DCD Group can be traced back to
Jersey ( The Channel Islands ) in 1975 with the formation of DCD
Holdings Limited. After three decades of trading, today the Group
has its Family Investment office based out of the DIFC (Dubai
International Finance Centre) with its operations extending to
London, New York and Dubai.
The DCD Group's core business activities are concentrated in the Real Estate and Banking
sectors. The Real Estate division of the DCD Group concentrates on enhancing and delivering
long-term gains for the Group and its Partners internationally. The Group has built its track-record
primarily in the UK and USA, then spread to the Middle East and a select number of Far East and
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African destinations. Over the past three decades, the Group's real estate investments have
produced a consistent, attractive IRR.
The Group takes a proactive hands-on Asset Management role and is responsible as a
managing partner for all or a portion of the equity required in any given transaction. As of June
2007, the total value of properties owned and/or managed by the DCD Group, was in excess of US
$3.0 Billion.
The DCD Group's interests in the Banking sector comprise of various niche holdings
internationally, including a stake in Dallah Albaraka Bank Limited in South Africa which was
formed in 1989 .
More recently, the Group played a pioneering role with QIIB (Qatar International Islamic
Bank) in the formation of the Islamic Bank of Britain PLC (IBB) and retains its shareholding in the
Bank. DCD also remains a founding shareholder in the European Islamic Investment Bank PLC
(EIIB), which raised approximately 200 million pound, pre and post listing on the LSE. In 2007, the
Group were founding investors in The Islamic Bank of Asia in Singapore, with DBS Development
Bank of Singapore as the principle promoter.
Dubai Bank PJSC
Dubai Bank PJSC which commenced operations in
September 2002, is one of the UAE‘s most dynamic financial
institutions and closely associated with Dubai's plans of
establishing itself as the region‘s financial and trading centre.
The Bank‘s focus is to be a leading financial institution that is a
flagship for Dubai, the UAE, the GCC and beyond. Dubai Bank
is 70% owned by Dubai Banking Group, with the remaining 30% being held by Emaar Properties.
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Dubai Banking Group was launched in May 2008 under the directive of HH General Sheikh
Mohammed bin Rashid Al Maktoum to consolidate the existing Shariah-compliant investments of
Dubai Holdings and form a global Islamic investment company.
Dubai Banking Group is managed by Dubai Group, the leading diversified financial
services company of Dubai Holding. Emaar Properties is the largest real estate developer in the
GCC region and have managed large-scale projects in Dubai such as: Dubai Marina, Burj Dubai,
Dubai Mall. The Company has a collective presence in over 36 markets spanning the Middle East,
North Africa, Pan-Asia, Europe and North America.
Dubai Bank offers a full range of products and services through its Corporate & Consumer
Banking divisions. These include transaction and deposit accounts,financing, trade finance, and
wealth management services as well as a host of other unique Banking services. In the near future,
Dubai Bank plans to increase its current Banking network by opening additional branches, and
developing new alliances with key financial institutions in the GCC and beyond.
Dubai Bank has identified Islamic Banking as a promising area. On January 1,2007, the
Bank became a Shariah compliant financial institution. The members of Shariah Supervisory Board
of Dubai Bank consists of Justice (R) Muhammad Taqi Usmani, Sheikh Nizam Yaquby, Dr
Mohamed Elgari and Dr Mohamed Daud Bakar.
Jahangir Siddiqui & Co. Ltd.
Jahangir Siddiqui & Co. Ltd. ("JSCL") is the holding
company for one of the largest and most diversified financial
services groups in Pakistan, involved in investment Banking,
broker-dealer operations, proprietary trading, insurance, Banking and asset management.
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The Company was established in 1991 and was the first Pakistani financial services
company to boast a Wall Street pedigree due to its previous joint venture with Bear Stearns and Co.
It is also the only securities company to be a primary dealer for Government securities in Pakistan
and is one of the largest bond trading firms in Pakistan. JSCL is a listed company on the Karachi
Stock Exchange.
JSCL subsidiaries include JS Global Capital Ltd, JS Bank., and JS-Investment Ltd. JSCL
also has holdings in the sugar, sugar derivatives, specialty textile, specialty steels and insurance
sectors through significant minority holding in leading companies in these sectors. These strategic
investments and associated companies include, EFU General Insurance, EFU Life Assurance,
Allianz EFU Heath Insurance, Azgard Nine and Al Abbas Sugar Mills amongst others.
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Shareholding Pattern:
* The initial public offering of BankIslami took place in March 2006. BankIslami shares were
formally listed on the Karachi Stock Exchange on April 17, 2006.
On October 31, 2006, the Board of Directors of BankIslami decided to further issue capital of
Rs. 1.2 Billion through a right share issue of 60% at par i.e. Rs.10 each to existing
shareholders.
On August 23, 2007, the Board of Directors of the Bank decided to raise the paid up capital of
the Bank to Rs. 4.2 billion through a right issue of 31.25% at par i.e Rs.10 each to existing
shareholders.
On March 31, 2008, BankIslami issued an additional Rs. 80 Million shares to general public.
On August 27, 2008, the Board of Directors of the Bank decided to raise the paid up capital of
the Bank to Rs. 5.2 billion through a right issue of 23.366% at par i.e Rs.10 each to existing
shareholders.
Shareholding Rs. (Million) %
Founding Sponsors
Dubai Bank PJSC 1,310.53 24.82
Jahangir Siddiqui & Co. Ltd 1,112.56 21.07
DCD Group 1,028.48 19.47
Mr. Hasan A Bilgrami 5.81 0.11
Chief Justice(R) Mahboob Ahmed 1.31 0.02
Total 3,459 65.50
General Public* 1,821 34.49
Grand Total 5,280 100
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Shariah Supervisory Board
The Shariah Board of BankIslami
consists of three renowned and distinguished
Shariah scholars namely Justice (R) Mufti
Muhammad Taqi Usmani, Prof. Dr. Fazlur
Rahman and Mufti Irshad Ahmad Aijaz.
Mufti Irshad Ahmad is also the Shariah
Adviser of the Bank who works full-time with
the management and guides them in issues
pertaining to the Shariah. Please click on
the following names to view the details of our Shariah Board members:
Justice (R) Muhammad Taqi Usmani
Justice (R) Muhammad Taqi Usmani is the Chairman of Shariah Supervisory Board of the
Bank. He is a renowned Islamic Scholar of Pakistan and has held a number of positions in board of
prestigious Islamic institutions.
Presently, he is the Permanent member of International Islamic Fiqh Academy, Jeddah,
Vice President of Darul Ulloom Karachi, Chairman International Shariah Standard Council of
Accounting and Auditing Organization of Islamic Financial Institutions (AAOFI), Bahrain;
Chairman of Shariah Board Bahrain Monetary Agency (BMA), Bahrain; Chairman of Shariah
Board, Abu Dhabi Islamic Bank, UAE; Chairman of Shariah Board, Meezan Bank, Pakistan;
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Chairman of Shariah Board, Islamic House of Britain plc, UK; Chairman of Shariah Board, HSBC
Amanah Finance, Dubai.
Muhammad Taqi Usmani obtained his 'Takhassus' (Specialization in Islamic Fiqh and
Fatwa) degree, equivalent to PhD, from Darul Ulloom Karachi in 1961. He also holds a Master's
degree from Punjab University in Arabic Literature and LLB degree from Karachi University.
Muhammad Taqi Usmani has served as a Judge of Shariat Appellate Bench, Supreme Court
of Pakistan from 1982 to 2002 and Judge of Federal Shariat Court of Pakistan from 1980 to 1982.
He has written a number of books and articles on Islamic Banking and Finance in Arabic, Urdu
and English.
Professor Dr. Fazlur Rahman
Professor Dr. Fazlur Rahman is the member of Shariah Supervisory Board of the Bank. He
is a renowned scholar and has over 30 years of teaching experience in various countries of the
world including Malaysia and Saudi Arabia.
Presently, he is the Director of Islamic Guidance Trust and Shariah Adviser of Atlas Asset
Management's Atlas Islamic Fund. He is also a faculty member of Sir Syed University in Karachi.
He has contributed several articles on interest, Muslim personal laws, and human rights etc.
Moreover, one of his writings, "a study of commercial interest from the point of view of Fiqh and
History", is of great repute in literary circles and has been extensively quoted by Federal Shariah
Court in its Judgment in 1991 and again in 1999.
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Mufti Irshad Ahmad Aijaz
Mufti Irshad Ahmad Aijaz is appointed as the full time Shariah Adviser to the Bank. He
comes from a leading family of scholars. His father, Maulana Muhammad Ashfaque Ahmad, is
better known for translating in English the famous ‗Tafseer e Usmani‘. He graduated from Jamia
Uloom Islamiyyah, Binnori Town, Karachi and he has done his Shadat-ul-Aalamia (Masters in
Arabic and Islamic Studies) from there as well. Afterwards, he completed his Takhassus fi al-Iftaa
(Specialization in Islamic Jurisprudence and Fatwa) from Jamia Darul Uloom, Karachi.
Mufti Irshad Ahmad is well versed in Islamic economics. Mufti Irshad has passed an Islamic
economics course ―Contemporary Business and Banking and its critical evaluation in the light of
Shariah‖ from the Centre for Islamic Economics, Jamia Darul Uloom, Karachi. Mufti Irshad has
also recently completed his MBA program from (AMI) Iqra University, Karachi. He is also
presently associated with Iqra University as Lecturer in Islamic Studies and is enrolled in the
MPhil program with specialization in Islamic Finance at (AMI) Iqra University, Karachi.
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Bank Islami Areas of Working
Retail Banking
We offer you a range of saving and investment
alternatives to help you grow your money in safe
and secure manner.
Consumer Banking
We offer you superior financing products and
quality service to help you own your home or car
for a better quality life.
Corporate Banking
We are your financial partners to help you meet
your business needs with timely and cost effective
financial solutions.
Value Added Services
We provide state of the art banking services and
channels to help you access your funds with utmost
ease and convenience.
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Financial Highlights
Amounts in Rs. Million Mar07 Jun 07 Sept07 Dec 07 Mar08 jun 08 Sept08 Dec 08 Mar09
Total Deposits 2,717 4,196 6,246 9,934 9,806 11,353 11,242 12,478 16,514
Total Assets 6,268 7,824 9,985 14,447 14,827 16,581 17,231 19,089 22.935
Total Financing 1,470 2,188 3,486 3,963 4,592 5,387 6,827 6,528 6,704
Total Investments 399 645 1,920 3,864 4,155 3,841 5,018 5,020 7,089
Asset to Deposit Ratio 54% 52% 56% 40% 47% 47.45 60.73 52 29
Return on Assets -0.30% -0.48% -0.36% -0.26% -0.50% -0.06 0.04 -0.28 -0.37
Return on Equity -0.59% -1.17% -1.14% -0.96% -1.81% -0.23 0.15 -1.02 -1.65
Earnings Per share (Rs.) -0.09 -0.13 -0.14 -0.13 -0.08 -0.02 0.02 -0.12 -0.16
No. of Employees 300 413 471 563 708 723 825 1,188 1,430
No. of Branches 10 14 16 36 36 36 40 102 102
Total Deposits Total Investment Total Financing
Total Assets Branch Network Employee Per Branch
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Credit Rating
Credit Rating:
The Bank has been assigned a long term entity
rating of 'A' and short term rating of 'A 1' by Pakistan
Credit Rating Agency Limited (PACRA), reflecting
BankIslami well conceived business strategy and
establishment of an effective operating platform to execute
the business strategy. (Rating as of June 2008 review)
Assessment of PACRA:
BankIslami, capitalizing on its expanded outreach, experienced substantial growth in
finances in 2008. This enabled BankIslami to register a significant increase in its net interest
revenue. Other operating income witnessed an upsurge on account of higher fee and commission.
Meanwhile, there was a sizeable increase in personnel and other expenses, owing to the ongoing
network expansion. Moreover, BankIslami made a net provision of PKR 130mln, due to sizeable
increase in the classified portfolio. This resulted in doubling the pre-tax loss of the bank. The
performance trend remained the same in 1Q09 with a slight addition in NPLs.
Going forward, BankIslami intends to leverage its expanded outreach to enhance both its
deposit base and finances portfolio. Although the bank has plans to penetrate the retail segment, no
significant lending is expected over the near-term, owing to currently weak credit environment.
BankIslami would continue with its recent strategy of focusing the corporate segment, though
cautiously here as well. The bank, with a view to reduce its cost of funds, plans to focus more on
Long Term A
Short Term A1
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demand deposits. BankIslami, to augment further its retail franchise, has entered into agreements
with different organizations to launch new products and services. Meanwhile, BankIslami, with
surplus liquidity and support of strong sponsors, eyes acquisition of banks as a strategy to achieve
sizeable growth. These initiatives exhibit clarity of direction but the extent to which they materialize
remains to be seen.
BankIslami's core banking software is iMal, developed by Path Solutions, a software house
in the Middle East. Based on Shariah stipulations and compliant with Basel II, iMal provides an
integrated solution for all operational requirements. The implementation of the software is to be
completed by end-09.
The target is to take consumer financing, over the medium term, upto 10%-15% of the total
advances. With expansion in outreach, the bank intends to rationalize its deposit mix by substituting
a portion of term deposits with current deposits. Nevertheless, deployment of excess liquidity would
remain a challenge in the absence of an active Shariah compliant money market. Earnings from
investment banking business are expected to grow significantly.
The deal pipeline is currently healthy. Meanwhile, BIPL plans to lay down requisite
infrastructure for offering wealth management services, going forward. BankIslami, due to initial
stage of operations, maintains ample liquidity and has a very low deposit concentration, which
clearly stands out among close peers. The bank‘s investment portfolio is modest in size (end-08:
PKR 207mln) – mainly dominated by strategic investment (PKR 191mln). The bank recently
expanded its exposure to the sukuk market. There is a revaluation surplus, though slight, available
on this investment (PKR 16 mln).
BankIslami, mainly due to un-utilized resources, has a relatively high level of capitalization
(CAR), which offers significant room for credit expansion. However, with restricted internal
generation, the bank would remain dependent on its sponsors meeting
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Risk Management:
Risk Management is the process of managing uncertainties that arises in the normal course
of business activities. It also encapsules risk/reward trade-off. The function of risk management is
one of the most important areas of the banking business, and covers a wide spectrum of financial
business risk categories; including Credit, Market, Liquidity, Operational etc. The Group follows
an effective risk governance which commensurate's well with our current size and structure.
During the last couple of years risk management has weathered a lot of criticism with
relations to its effectiveness in the global financial markets. While financial managers at the time
were clearly divided from the center on the role of risk management in the global crisis of the
recent past, the division now is at the furthest from the equator. More and more significance is
being attached to an effective and integrated risk management.
The Group is also committed to the full and a timely implementation of Basel II (B2) which
would effectively provide for a risk-based capital approach. Currently, the Bank adheres to the
regulatory requirement in this respect, and conducts its business accordingly. Risk-exposure limits
in compliance with regulatory and banks own internal policies have also been defined for each
asset class.
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Risk Management Framework:
The Risk management function
has now taken its root within the
financial institutions on a world-wide
basis, and is as critical in fulfilling
the institutes‘ financial objectives as
the objectives themselves. Its not just
a function to foretell and manage an
adverse future event, but it brings about the basic function of being informed; being informed of
what can or may happen, being informed of what steps/controls need to be taken to reduce/mitigate
the level of risk and to be informed and to be reasonably prepared to deal with any undesired event/
circumstances. Decisions emanating from this basic understanding form the cornerstone of our
Risk Management Framework.
A strong organizational set-up, with clearly defined roles and responsibilities permits a
higher level of articulation of the banks' risk mandate, establishment of a structure that provides for
authority, delegation, accountability, and the development of a control framework. Risk
management cannot live in a vacuum; in order to be effective, it has to be run on an enterprise
level. Our framework comprises of a separate department, with a dedicated and growing team,
which share our core strategic values including an effective Sharia‘h compliance. Committees
related to the management of risks at BIPL form the main layer of the framework, the
inflow/outflow of information is through the dedicated function of risk management. The Head of
Credit / Risk, Operations, Finance, Treasury and other related functions review the critical risk
areas of operational, credit and market risk as well as other risks being faced by the organization,
along with the magnitude of their impact and likelihood of occurrence.
BIPL perceives the management of risk not to be limited to a department or a function, but
rather should readinto our daily business routine. Ideas and decisions are heavily based on the
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risk/ reward trade-off some of the ideas which never see the light of the day are usually the ones
which have been shelved due to an unacceptable risk level. The risks when identified and analyzed
are further weighed against the applicable risk weights and its impact reviewed on a periodic basis.
This pro-active approach helps in outlining the organization‘s risk tolerance level vis-a-vis BIPL's
risk appetite in relation to its size, current position and market standing, with a view to refine
processes, controls and guidelines to not only mitigate, but also to effectively manage risk.
A well formulated policy and procedure is critical for an effective risk management
framework; it than needs to be reinforced through a strong control culture that promotes sound risk
governance. Our Risk Management Framework has been developed keeping in mind, that:
- To be effective, strong monitoring and control activities should be integral to the Bank.
- Critical Decision Making should be based on relevant research, proper analysis and effective
communication within the Bank.
- Every loss or near miss event should provide some KLO (Key Learning Outcome), developing a
better risk analysis ability.
Strategic Level:
At strategic level, the risk related functions are approved by the senior management and the
Board. These include; defining risks, setting parameters, ascertaining institutions risk appetite,
formulating strategy and policies for managing risks and establishing adequate systems and
controls to ensure that overall risk remains within acceptable level and the reward compensates'
for the risk taken.
Macro Level:
It encompasses risk management within a business area or across business lines. Generally
the risk management activities performed by middle management or units devoted to risk reviews
fall into this category. Periodical sensitivity / scenario analysis, stress testing is performed, to
review sensitivity and resilience of the portfolio.
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Micro Level:
Risk management at micro level, is of critical importance. This function if performed with diligence
and understanding, can be of maximum benefit to the organization. Micro level risk management
includes the business line acquisition, strong adherence to the credit and other related criteria.
Capital Management:
Our objectives for a sound capital management are: 1)
to ensure that the Group complies with the regulatory
Minimum Capital Requirement (MCR) 2) maintain a strong
credit rating 3) maintain healthy capital ratios to support
business and to maximize shareholder value and 4) to operate
with a Revolving Planning Horizon and be able to take
advantage of new investment opportunities when they appear.
The State Bank of Pakistan through its BSD Circular No.07 dated April 15, 2009 requires
the minimum paid up capital (free of losses) for Banks / Development Finance Institutions to be
raised to Rs.10 billion by the year ending December 31, 2013. The raise is to be achieved in a
phased manner requiring Rs.6 billion paid up capital (free of losses) by the end of the financial
year 2009.
The paid up capital of the Bank (free of losses) as of December 31, 2009 amounts to Rs
4.706 billion. However, the Bank has been granted an exemption till March 31, 2010 to meet the
Minimum Capital Requirement by the SBP, vide its letter BSD/BAI-3/608/191/2010 dated March 3,
2010. The Board of Directors, in order to comply with the enhanced capital requirement, is
considering various options including but not limited to issue of right shares and acquisition
options. In this connection, the Bank has already made an announcement to Karachi Stock
Exchange about its decision to enter into a Memorandum of Understanding (MoU) with another
Islamic Commercial Bank in relation to its merger/acquisition into/by the Bank. The Board is
confident that it will meet the Minimum Capital Requirement within the stipulated time.
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In addition, the Group was also required to maintain a minimum Capital Adequacy Ratio
(CAR) of 10% of the risk weighted exposure of the Group. The Group CAR as at December 31,
2009 was 20.87% of its risk weighted exposures.
Compliance with Code of Corporate Governance:
The requirements of the Code of Corporate Governance
set out by the Karachi Stock Exchange in its listing regulation
relevant for the year ended 31st December 2009 have been
adopted by the Bank and have been duly complied with. A
statement to this effect is annexed with the report.
Bank Islami is in complete complience with the Code of Corporate Governance contained in
the regulations G-1 of the Prudential Regulations for Corporate/Commercial Banking issued by the
State Bank of Pakistan for the purpose of establishing a framework of good governance, whereby a
listed banking company is managed in compliance with the best practices of corporate governance.
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Milestones
24 March 2004 Concept paper of Islamic Bank presented to Sponsors; JS Group and DCD Group
26 May 2004 Application for the license of an Islamic Bank was submitted to SBP
19 August 2004 BankIslami received the No Objection Certificate from SBP
18 October 2004 BankIslami became a legal entity after SECP granted it an incorporation certificate
31 March 2005 SBP Governor, Dr. Ishrat Hussain issued Islamic Banking license to BankIslami
26 September 2005 Dubai Bank became founding shareholder of BankIslami by investing 18.75% in the
total Capital
26 February 2006 BankIslami share debuted on the Karachi Stock Exchange
6 March 2006 BankIslami's three day Initial Public Offering (IPO) was initiated and got
oversubscribed by 9 times
17 March 2006 State Bank of Pakistan declared BankIslami Pakistan Limited as a Scheduled Bank
7 April 2006 BankIslami started commercial operations from its 1st branch at SITE, Karachi
7 April 2006 BankIslami became the First bank in Pakistan & Asia and the Second Bank in the
World to install BIOMETRIC ATM
7 April 2006 BankIslami became the First bank in Pakistan to launch Internet banking from start
of operations
28 April 2006 BankIslami's second and third branch opened simultaneously in Clifton and Korangi
Industrial Area in Karachi
9 June 2006 The Fourth branch of BankIslami located on 26th Street of Phase V, D.H.A opened
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its doors for customers
7 July 2006 The official inauguration of BankIslami was conducted at the Governor House,
Sindh
14 July 2006 BankIslami's Shaheed -e- Millat branch located at Adam Arcade, BMCHS, Shaheed-
e-Millat Road, Karachi starts operations
31 August 2006 State Bank's Director of Islamic Banking, Mr. Pervez Said inaugurated the induction
ceremony of the first Trainee Officers batch of BankIslami
4 September 2006 Phone Banking services were launched by BankIslami
8 September 2006 Sixth branch of BankIslami opened on Rashid Minhas Road, Karachi
8 December 2006 BankIslami's North Nazimabad branch started operations. It was the 7th branch
opened by the Bank
15 December 2006 BankIslami formally inaugurated its eighth branch located in Gulshan-e-Maymar
22 December 2006 BankIslami went nationwide with the opening of its 9th branch on Jinnah Road,
Quetta. This was BankIslami's first branch outside Karachi
29 December 2006 BankIslami opened its 10th Branch in Baqai Medical University, Karachi
3 March 2007 BankIslami signed ORIX network for its '1 Card'
30 April 2007 BankIslami became the first Bank in Pakistan to sign contract with Haydrian for
'XM3", a state of the art Anti Money Laundering (AML) software
3 May 2007 BankIslami launched home financing product "MUSKUN"
11 May 2007 BankIslami's Islamabad branch opened in Blue Area, Islamabad
25 May 2007 Wah Cantt Branch of BankIslami was opened
15 June 2007 Karachi Stock Exchange Branch of BankIslami was opened
21 June 2007 BankIslami signed agreement for a state of art Shariah compliant Banking system
software "iMAL" with Path solutions
29 June 2007 Mirpur (Azad Kashmir) Branch of BankIslami was opened
6 July 2007 BankIslami deployed its Deposit ATM machine. Based on GBNA technology, the
ATM is capable of accepting 100 notes at a time
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18 August 2007 BankIslami bought JS Finance Limited, a Modaraba management company and
renamed it as BankIslami Modaraba Investments Limited
31 August 2007 BankIslami opened its branch in Lahore. This was the 15th Branch of BankIslami
and its first in Lahore
7 September 2007 16th branch of BankIslami opened in Jodia Bazar, Karachi
25 September 2007 BankIslami completed its First Investment Banking transaction by issuing privately
placed SUKUK of Rs. 1.2 Billion for PEL
16 November 2007 17th branch of BankIslami opened in Pishin
26 November 2007 18th branch of BankIslami opened in Sukkur
28 November 2007 19th branch of BankIslami opened in DHA, Lahore
2 December 2007 21st branch of BankIslami opened in Hyderabad
3 December 2007 20th branch of BankIslami opened in Chaman
10 December 2007 BankIslami led managed a Consortium to successfully achieved the financial close
of a landmark Investment Banking deal of SSGC Sukuk of Rs. 5 Billion
18 December 2007 22nd branch of BankIslami opened in Muslim Bagh
18 December 2007 23rd branch of BankIslami opened in Qila Saifullah
19 December 2007 24th branch of BankIslami opened at Cloth Market, Karachi
24 December 2007 25th branch of BankIslami opened in Multan
26 December 2007 26th branch of BankIslami opened at Bank Square Road, Larkana
27 December 2007 27th branch of BankIslami opened in Faisalabad
31 December 2007 Nine branches of BankIslami opened in different cities of Pakistan. The branch
network grew to 36 branches in 23 Cities of Pakistan
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13 February 2008 BankIslami's branch network expansion plan of opening 30 branches and 32 sub
branches in 2008 approved by State Bank of Pakistan
14 February 2008 BankIslami installed the first ever ATM in an Islamic School at Darul Uloom,
Karachi
22 August 2008 37th branch of BankIslami opened at DHA, Phase IV, Karachi
29 August 2008 BankIslami's Response to Fatwa against Islamic Banking. (Download)
27 August 2008 BankIslami posted an operating profit of Rs. 19.210mn in 2nd quarter of 2008
27 August 2008 BankIslami announces right issue of 23.36% subject to SECP approval.
12 September 2008 38th branch of BankIslami opens on UP More Road, Karachi
26 September 2008 BankIslami opens branches at Kotli, Islamgarh and Sharea-e-Faisal Road,
Karachi.
17 October 2008 BankIslami opens its sub branch in Shadman Town No.1, North Nazimabad
Karachi.
18 October 2008 Sub Branch of BankIslami opens in Khyber Bazar, Peshawar
31 October 2008 BankIslami opened its 50th Branch today. It has been the fastest growth by any
Bank in Pakistan.
31 October 2008 BankIslami opens seven new branches nationwide.
November 1 2008 Bankislami crosses 50 branches mark by opening its branch at Nazimabad Block A
Karachi.
November 30 2008 BankIslami opens ten Online branches this month.
December 5 2008 BankIslami signs strategic cooperation with Pak Qatar Takaful Company for
Takaful cover to BankIslami Auto Ijarah customers.
December 31 2008
BankIslami ceates history by becoming the first bank to open 100 plus branches in
less than three years and with this complete its yearly expansion plan of reaching to
102 Online branches in 49 cities nationwide.
March 31 2009 BankIslami witnesses phenomenal increase of 32% in Deposits and 39% increase in
Customer base over the same period last year.
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Branch Network
Our Network:
BankIslami offers its products and services through a wide network of branches and ATMs
in different cities of Pakistan. Currently it has the following branches and ATMs:
Corporate Headquarters
BankIslami Pakistan Limited
11th Floor, Executive Tower One
Dolmen City, Marine Drive
Block 4, Clifton, Karachi, Pakistan
UAN: (021)- 111-BIP-111 (111-247-111)
Fax: (021)-5378373
E-mail: [email protected]
SWIFT Code: BKIPPKKA
Our Branches:
Punjab
Blue Area Branch, Islamabad Blue Area Branch, 5-6, Chenab Center, Block-104-E
F-7/G-7, Jinnah Avenue
Tel.: 051-2804271-74
Fax.: 051-2804275
I-9 Branch, Islamabad Plot No-2 E, I-9 Markaz
Islamabad.
Tel.: 051-4858403-08,4445851
Fax.: 051-4445852
F-10 Islamabad plot- No 06-C Markaz F-10 Islamabad.
Tel.: 051- 2222961-66
Fax.: 051- 2222965
I-8 Branch, Islamabad Plot No 24 Executive Centre I-8 Markaz Islamabad.
Tel.: 051-4861017,4861029,4861117-18,4861038
Fax.: 051-4861060
Turnol Sub Branch, Islamabad Satellite Town Branch, Rawalpindi
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Muhammad Ayub Plaza
Main G.T Road Turnol, Islamabad
Tel.: 051-2217022
Fax.: 051-2217021
69/B, 4th Road, Satellite Town,
Rawalpindi, Pakistan.
Tel.: 051-4572001-4
Fax.: 051-4572005
Chaklala Scheme III, Rawalpindi
Plot# 11, Commercial Bazar,
Chaklala Scheme III Rawalpindi.
Tel.: 051-5766140-43
Fax.: 051-5766144
Saddar Branch, Rawalpindi Survey No-367/25 Compound bungalow, No-60
Bank Road Cantt Rawalpindi.
Tel.: 051-5120381-4
Fax.: 051-5120385
Jail Road Branch, Lahore
Plot No. 5-A, House No.5, Main Gulberg Road, near
EFU Building, Jail Road, Lahore, Pakistan.
Tel.: 042-5790571-88
Fax.: 042-5790573
DHA Branch, Lahore 153 Block "Y"
DHA, Lahore
Tel.: 042-5692598-9, 5692637
Fax.: 042-5692499
Badami Bagh Branch, Lahore 23-peco Road Badami Bagh Lahore.
Tel.: 042-7723865-68,7723881
Fax.: 042-7723882
Ferozepur Road, Lahore 174- Ferozepur Road Lahore.
Tel.: 042-7524321,7524324,25,7524327
Fax.: 042-7524331
DHA G Block Sub Branch, Lahore 47-G,Commercial Area, Phase I
Block - G, Stadium Road, D.H.A, Lahore
Tel.: 042-5691066-72
Fax.: 042-56910673
Akber Chowk, Lahore 883-D, Peco Road, Faisal Town
Akber Chowk, Lahore.
Tel.: 042-5221731-37
Fax.: 042-5221738
Azam Cloth Market, Lahore F-1207 Azam Cloth Market Lahore.
Tel.: 042-7670188,7658602,7670256
Fax.: 042-7658232
Darogha wala gate Branch, Lahore
326 G.T.Road(Link Shalimar Road)
Tel.: 042-6530512-16
Fax.: 042-6530517
Thokar Niaz Baig Branch, Lahore 3/D- Nawab Town, Rawind Road,Thokar Niaz Baig,Lahore
Johar Town Branch, Lahore M-Block, Johar Town, Lahore
Airport Road Branch, Lahore Plot no 595/8, Airport Road,Main Defence Road,
Lahore Cantt ( Adjacent to Phase VIII ), Lahore
Tel.: 042-5701160-65
Circular Road Branch, Lahore Circular Road , Near Mochi Gate, Lahore
Tel.: 042-7374009-15
Fax.: 042-7374016
Walton Road Branch, Lahore Plot 48-E Super Town, Walton
Road Lahore, Cantt.
Susan Road Branch, Faisalabad Plot No S-8 Madina Town Main
Susan Road Faisalabad.
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Tel.: 042-6603701-2 Tel.: 041-8728626-8, 8728631-08-31
Fax.: 041-8728671
Kotwali Road Branch, Faisalabad P-16, Kotwali Road, Faisalabad
Tel.: 041-2412123-29
Fax.: 041-2412130
Gujranwala Branch Gujranwala BX-11-75-7S-10+12, GT Road,
Gujranwala, Pakistan.
Tel.: 055-3820511-16
Fax.: 055-3820517
Abdali Road Branch, Multan Abdali Road, Chowk Nawan Sher, Multan
Tel.: 061-4500356-59
Fax.: 061-4500360
Vehari Road Branch, Multan Vehari Road, Multan.
Tel.: 061-6761900-6
Fax.: 061-6761907
Gulgusht Branch, Multan Jalal Masjid Chowk,
Multan
Sargodha Branch 65/2 Railway Road, Sargodha.
Te.: 048-3768264-68
Fax.: 048-3768269
D.G. Khan Branch Jampur Road Dera Ghazi Khan
Tel.: 064-2473201-07
Fax.: 064-2473208
Mian Channu Branch Ghazi Mor G.T Road Mian Chunnu
Tel.: 065-2664001-7
Fax.: 065-2664008
Rahimyar khan Branch Model Town Branch 21-A, Model Town,
Rahim Yar Khan, Pakistan.
Tel.: 068-588691-77
Fax.: 068-5886978
Sadiqabad Branch Allama Iqbal Road,
Opp. Ghalla Mandi, Sadiqabad
Te.l: 068-5700594-7, 068-5800591-3-5
Fax.: 068-5800598
SIE 1 Branch (Gujrat) Danish Metal Work, SIE-1, Gujrat
Te.: (053)3538010 -15
Fax.: (055) 3538016
Bhawalpur Branch Block No. 915, Circular Road, Bahawalpur.
Tel.: 062-2732235-38
Fax.: 062-2732239
Okara Branch 69/1 M.A.Jinnah Road, Okara.
Tel.: 044-2522901-6
Fax.: 044-2552907
Kashmir Road Branch, Sialkot B-III-116/99/2 Kashmir Road, Sialkot.
Tel.: 052-4270419-20, 4270429-30,4270439-40
Fax.: 052-4270426
Mainwali Branch Mouza urra khel Pacca,Main Sargodha Road,Mianwali
Tel.: 0459-237531
Fax.: 0459-237532
Jhang Branch 95-A College Chowk , Jhang.
Tel.: 047-7651401-05
Fax.: 047-7651406
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Sahiwal Branch 418 High Street, Sahiwal.
Tel.: 040-4228284-88, 4467688,4461688
Fax.: 040-4462688
Chakwal Branch Khasra # 4516 Jhelum, Road Chakwal.
Tel.: 0543-552739,42,44,45,56
Fax.: 0543-552760
Jehlum Branch Tehsil Road, Near Shandar Chowk, Jehlum
Tel.: 0544-620503-4 & 8, 620584 & 88
Fax.: 0544-620498
Wah Cantt. Branch A-12, Shahwali Colony, Mall Road, Wah Cantt,
Tel.: 051-4539046-7
Fax.: 051-4539044
Taxila Branch
Fasial Shaheed Road, Taxila
Ph: 051-4535055 - 58
Fax.: 051- 4534985
Hazro Branch Circular Road, Hazro
Tel.: 057-2310048-51
Fax.: 057-2310019
Sindh
Main Branch Clifton, Karachi 11th Floor, Executive Tower, Dolmen City,
Marine Drive, Block-4, Clifton, Karachi.
Tel.: 021- 5839906
Fax.: 5378373
26th Street D.H.A. Branch, Karachi 26th Street Branch, 31-C, Badar Commercial
Street No.1 Phase V, D.H.A. Karachi.
Tel.: 021 5349244-5
Fax.: 5349243
Al Hilal Society Branch, Karachi Shop No,1 Ground floor, Jawwad Court Plot No,
SC-11, KDA Scheme No#7 Main
University Road, Chandni Chowk,Karachi.
Tel.:021-4860713-16,4860728
Fax.: 021-4860704
Baloch Colony Branch, Karachi Plot No, SA-2/1 Block-3 Administrative
Society, Karachi.
Tel.: 021-4300036-42
Fax.: 021-430004
Baqai Medical University Branch, Karachi 51-DHTOR, Baqai Medical Centre,
Super Highway,North Bond).Karachi.
Tel.: 021- 4410220-4410201
Fax.: 4410294.
Burns Road Sub Branch, Karachi Land Survey, Sheet No. AM 51
Burns Road, Karachi
Ph: 021-2215505, 2215527, 2215689
Fax.: 021-2215480
Cloth Market Branch, Karachi Cloth Market Branch Shop-05
Cochinwala Market Laxmidas Street Karachi.
Tel.: 021-2469031-35
Fax.: 021-2469030
DHA Phase IV Branch, Karachi Plot # 36-C Sunset Commercial
Street # 2 D.H.A Phase 4 Karachi.
Tel.: 021-5313191-7
Fax.: 5313190
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Dhoraji Sub Branch, Karachi Al Madina Heights, Plot Survey No. 35 C/449
C. P Berar Cooperative Housing Society
Tel.: 021-4860407-10,4860566-68
Fax.: 021-4860569
F.B Area Sub Branch, Karachi Plot No.C-6, Block 4, KDA Scheme #16
F.B. Area, Karachi
Tel.: 021-6827783-87
Fax.: 021-6364659
Gulshan-e-Maymar Branch, Karachi Gulshan-e-Maymar Branch,
Areeba Heaven, SB-3, Sector X-II Karachi.
Tel.: 021-6833354-5
Fax.: 6833445
Jodia Bazar Branch, Karachi Jodia Bazar Branch Ibrahim Manzil,
Jodia Bazar Darya Lal Street Karachi.
Tel.: 021-2462488-9, 2462831-4
Fax.: 2416368
Karachi Stock Exchange Branch, Karachi Room No. 520, 5th Floor,
KSE Building Karachi
Tel.: 021-2462861-67
Fax.: 021-2462490
Korangi Branch, Karachi Korangi Branch, Plot No. 51/9-B
Sector 15 Korangi Industrial Area, Karachi.
Tel.: 021-5114488-91
Fax.: 5114494
Malir Cantt Branch, Karachi Plot No. 35, Block-5 Cantt Bazar,
Malir Cantt Karachi.
Tel.: 021-4491481-82
Nazimabad #7 Sub Branch Plot No-4 Row No-1 sub block,iii
Situated at Nazimabad, Karachi.
Tel.: 021-6707492-96 Fax.: 6707497
North Nazimabad Block A, Branch, Karachi Shop No. 3A, 3B, 3C, 2B Unique Centre,
Blcok A, North Nazimabad, Karachi
Tel.: 021-6722504-6
Fax.: 6722507
North Nazimabad Branch, Karachi North Nazimabad Branch, D-5,
Block-L, North Nazimabad Karachi.
Tel.: 021-6676474-75
Fax.: 6676488
Orangi Town Branch, Karachi Plot No. LS 55 & 56, ST 11-A Sector 1,
Block D, Orangi Town,Karachi.
Tel.: 021-6664031-34,6692257-59
Fax.: 021-6662257
Power House Branch, Karachi
St-3 As-28 Comm. Area Sector 5-H
Power House, New Karachi.
Tel.: 021-6901356 - 9, 6901362
Fax.: 021-6901364
Rashid Minhas Road Branch, Karachi Rashid Minhas Road Branch, Plot No. FL-3/13 & 14,
Block-5, Gulshan-e-Iqbal Karachi.
Tel.: 021-4818227-9
Fax.: 4818135
S.I.T.E. Branch, Karachi Shop Nos. 8 & 9, Anum Trade Center, E-31-B,
Ghani Chowrangi, S.I.T.E., Karachi.
Tel.: 021-2587661-2
Fax.: 2587510
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Shadman Town Branch, Karachi Shadman Town Sub Branch, Shop No. 1-5 KDA
Flats Phase # 3, Sector 14/B Shadman Town No. 1,
North Nazimabad Karachi.
Tel.: 021-6950027-33
Fax.: 021-6950034
Shah Faisal Colony Branch, Karachi Shah Faisal Colony Branch Shop No 1 & 2
Plot No A/6, Shop No 1 & 2 Plot No A/7 Surrey No,
135, Deh Drigh Colony Shah Faisal Colony Karachi.
Tel.: 021-4686121-25
Fax.: 021-4686126
Shaheed-e-Millat Branch, Karachi Shop No. 15 & 16, Adam Arcade, B.M.C.H.S.
Shaheed-e-Millat Road, Karachi.
Tel.: 021-4145305-9
Fax.: 4145310
Shahra-e-Faisal Branch, Karachi
Shahra-e-Faisal Branch, Shop No. 1,
Faisal Tower. Plot No. 25/3 Survey Sheet No. 35/1
Block 7 & 8 Maqbool CHS Ltd.
Tel.: 021-4555985-87 Fax.: 021-4555991
Saddar Branch, karachi Plot no 7/17 saddar bazar quarter Bohri bazar
raja ghanzaefar ali khan road saddar karachi
Tel.: 021-5219891-94 Fax.: 021-5219895
University Road Branch, Karachi Shop No. 1, Ground Floor, Jawwad Court, Plot No.
SC-11, KDA Scheme No.7, Main University Road
UP More Branch, Karachi UP More Branch, LS-7, Street No. 8 Sub Sector 11-I,
North Karachi Town Ship Karachi.
Tel.: 021-6950158-59-61-64-66 Fax.: 6950167
Gulistan-e-Jauhar Branch, Karachi
Shop No. W-9, 10 8 11 Eastern Print Appt.
Sub Plot No: Fl-23/4 On Plot No. Fl-23/4 Block 15,
KDA Scheme 36 Gulistan-e-Johar Karachi.
Auto Bahan Branch, Hyderabad Hyderabad Branch Plot # C-10-8, C-10- 3
Block C Auto Bhan Road. Hyderabad, Pakistan.
Tel.: 022-3820301-2-3-4-5-6-7
Fax.: 022-3820308
Heerabad Branch, Hyderabad A/113-261, Jail Road,
Heerabad, Hyderabad.
Tel.: 022-2636768-70, 2636862 -3
Fax.: 022-2636864
Tando Allahyar Branch Tando Allahyar Branch Mir Pur Khas Road,
Tando Allahyar
Tel.: 022-3891114, 3892424, 3891442, 3892443
Fax.: 022-3891699
Mirpurkhas Branch
Station Road Mirpur Khas Branch New Town Station
Road, Mirpur Khas, Pakistan.
Tel.: 0233-874287
Fax.: 0233-875802
Sukkur Branch Sukkur Branch, Umar Welding Store City
Survey No. 3/21 Station Road Sukkur.
Tel.: 071-5617322-8 Fax.: 071-5617329
Larkana Branch Larkana Branch City Survey # 1806
Word-A Bank Square Road Larkana.
Tel.: 074-4059833-6 Fax.: 074-4059887
Nawabshah Branch Nawab Shah Branch City Survey No. 225
Ward A Masjid Road Nawab Shah.
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Tel.: 0244-330920-4, Fax.: 0244-330928
Balochistan
Jinnah Road Branch, Quetta Jinnah Road Quetta, Pakistan.
Tel.: 081-2821743-28-46
Fax.: 081-2821650
Iqbal Road Branch, Quetta Shop No 605 Khewat No. 200 Khatooni No 234
Ward No 18 Urban No 1 Sharah-e-iqbal Quetta
Tel.: 081-2866510-13-36 Fax.: 081-2829739
Airport Road Branch, Quetta Alam Khan Chowk Airport Road Quetta.
Tel.: 081-2864627-29, 081-2840114, 081-2840121
Fax.: 081-2840135
Kucklak Branch, Quetta Chaman Raod Quetta, Quetta
Tel.: 081-2891591-2
Fax.: 081-2891580
Muslimbagh Branch Muslimbagh , Baluchistan
Tel.: (0823) 669823-29
Fax.: (0823) 669830
Pishin Branch Pashin Branch Bund Road,
Opp Madina Hardware, Pasheen
Tel.: 0826-421384 Fax.: 0826-42187
Chaman Branch Trench Road,Chaman.
Tel.: 0826-618032-37 Fax.: 0826-618039
Zhob Branch Market Road
BranchZhob.
Loralai Branch Bhagi Bazar Branch, Loralai.
Dukki Branch Masjid Road, Dukki Baluchistan
Qila Saifullah Branch Main Junction Road, Qila Saifullah. Tel.: 0823-610895,610804-05 Fax.: 0823-610806
NWFP
Jamrud Road Branch, Peshawar Near Hotel Grand, Jamrud Road,Peshawar
Tel.: 091-5711482-4 Fax.: 091-5711489
Khyber Bazaar Branch, Peshawar Shop No. 6 & 7 Haji Khan Building
Tel.: 091 2590341-7 Fax.: 091 2590348
Chitral Branch Attalique Bazar,Chitral
Tel.: 0943-414501,414530,414550
Fax.: 0943-414591
Mansehra Branch Swati Arcade, Abbottabad Road, Tehsil & District
Mansehra
Tel.: 0997 – 307761 – 4 Fax.: 0997 – 303479
Dera Ismail Khan Branch West Circular Road, Near Taank Adda, Dera Ismail
Khan. Tel.: 0966 – 715018-9 Fax.: 0966-715021
Gilgit Branch Askari Bakers, Gilgit Cantt
Tel.: 05811 – 57832 – 6 Fax.: 05811 – 57837
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Abottabad Branch Business Complex Khasra No. 2302 To 2305
Aamir Shaheed Road Abbottabad.
Tel.: 0992-343959 - 64 Fax.: 0992-343957
Haripur Branch Circular Road, Haripur.
Tel.: 0995-613570-73
Fax.: 0995-613574
Azad Kashmir
Islamgarh Branch, Azad Kashmir Ground Floor Main Kotli Road,
Islam Garh Tehsil Distric Mirpur(AJK)
Tel.: 058612 - 43971-7 Fax.: 058612 - 43970
Mirpur Branch, Azad Kashmir Plot No # 2- B/3 Sub Sector A/2 Mian Muhammad
Road Mirpur Azad Kashmir.
Tel.: 058610-39701-4 Fax.: 058610-39705
Our ATM Network:
BankIslami branches are installed with BIOMETRIC ATMs. All BankIslami Customers can use their 1 Card
(ATM/Debit Card) on 1Link & MNET Networks and Orix Network.
Punjab
Blue Area Branch Islamabad.
I-9 Branch (Islamabad)
I-8 Branch (Islamabad)
F-10 Markaz Branch (Islamabad)
Turnol Branch
Satellite Town Branch (Rawalpindi)
Saddar Branch (Rawalpindi)
Chaklala Scheme No. 3 (Rawalpindi)
Jail Road Branch (Lahore)
Akbar Chowk Branch (Lahore)
Azam Cloth Market Branch (Lahore)
Badami Bagh Branch (Lahore)
Darogha wala gate Branch (Lahore)
D.H.A.Y Block Branch (Lahore)
Ferozepur Road Branch (Lahore)
G-Block, D.H.A. Branch (Lahore)
Thokar Niaz Baig Branch (Lahore)
Johar Town Branch (Lahore)
Airport Road Branch (Lahore)
Walton Road Branch (Lahore)
Circular Road Branch (Lahore)
Gujranwala Branch
Abdali Road Branch (Multan)
Vehari Road Branch (Multan)
Gulgusht Branch (Multan)
SIE 1 Branch (Gujrat)
Jhang Branch
Mian Channu Branch
Susan Road Branch (Faisalabad)
Kotwali Road Branch (Faisalabad)
Kashmir Road Branch (Sialkot)
Sahiwal Branch
Sargodha Branch
Mainwali Branch
Okara Branch
Bhawalpur Branch
Sadiqabad Branch
Rahimyar khan Branch
Jehlum Branch
Hazro Branch
Wah Cantt. Branch
Taxila Branch
Chakwal Branch
D.G. Khan Branch
Sindh
Main Branch Clifton (Karachi)
26th Street D.H.A. Branch (Karachi)
Al Hilal Society Branch (Karachi)
Baloch Colony Branch (Karachi)
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Baqai Medical University Branch (Karachi)
Burns Road Branch (Karachi)
Cloth Market Branch (Karachi)
Cloth Market Branch (Karachi)
Dhoraji Branch (Karachi)
F.B.Area Branch (Karachi)
Gulshan-e-Maymar Branch (Karachi)
Jodia Bazar Branch (Karachi)
Karachi Stock Exchange Branch (Karachi)
Korangi Branch (Karachi)
Malir Cantt Branch (Karachi)
Nazimabad No. 7 branch (Karachi)
North Nazimabad Block A, Branch (Karachi)
North Nazimabad Branch (Karachi)
Orangi Town Branch (Karachi)
Power House Branch (Karachi)
Rashid Minhas Road Branch (Karachi)
S.I.T.E. Branch (Karachi)
Shadman Town Branch (Karachi)
Shah Faisal Colony Branch (Karachi)
Shaheed-e-Millat Branch (Karachi)
Shahra-e-Faisal Branch (Karachi)
Saddar Branch karachi
University Road Branch (Karachi)
UP More Branch (Karachi)
Gulistan-e-Jauhar Branch (Karachi)
Darululoom (Karachi)
Heerabad Branch (Hyderabad)
Auto Bahan Branch (Hyderabad)
Mirpurkhas Branch
Sukkur Branch
Nawabshah Branch
Larkana Branch
Tando Allahyar Branch
Balochistan
Kucklak Branch (Quetta)
Jinnah Road Branch (Quetta)
Airport Road Branch (Quetta)
Iqbal Road Branch (Quetta)
Muslimbagh Branch
Qila Saifullah Branch
Chaman Branch
Zhob Branch
Loralai Branch
Dukki Branch
Pishin Branch
NWFP
Chitral Branch
Khyber Bazar Branch (Peshawar)
Jamrud Road Branch (Peshawar)
Mansehra Branch
Abottabad Branch
Gilgit Branch
Dera Ismail Khan Branch
Haripur Branch
Azad Kashmir
Islamgarh Branch (Azad Kashmir)
Mirpur Branch (Azad Kashmir)
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Mission, Vision and Objectives of Organization
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Our Vision
The Vision of BankIslami is to be recognized as the leading Authentic Islamic Bank.
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Our Mission: The Mission of BankIslami is to create value for our
stakeholders by offering Authentic, Shariah Compliant and technologically advanced product and services.
We differentiate ourselves through:
Authenticity Innovation Understanding our client's needs Commitment to excellence, and Fast, efficient and seamless delivery
of solution. As a growing institution, the foundation for our performance lies on our human capital and BankIslami remains committed to becoming an employer of choice, attracting, nurturing and developing talent in a transparent and performance driven culture.
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Our Core Values
BankIslami is strongly committed towards its core values of:
Product authenticity
Customer focus
Meritocracy
Integrity
Team work
Humility
Innovation
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Objectives of Bank Islami:
The main objective of bank Islami is ―Serving
in the Right way‖
To create value for stakeholders by offering
Authentic, Shariah
To provide compliant and technologically
advanced product and services.
To continue developing and delivering
innovative products and services.
To achieve sustainable growth, maximum market share, and high profitability in all areas of
banking.
To maintain absolute world class service excellence, with a dedicated focus on value and
recognition for our customers.
To build and sustain a high performance culture in accordance with Islamic values and
Shariah principles.
To promote ―Riba free‖ Banking in Pakistan as well as in foreign countries.
To become an employer of choice, attracting, nurturing and developing talent in a
transparent and performance driven culture.
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Corporate, Business and Departmental Level Strategies
Page 83 of 300
Corporate, Business and Departmental Level Strategies:
Despite of testing times, bank Islami is
optimistic about the coming years. BIPL management
team target for the coming years is to consolidate the
operations and bring greater efficiencies in
operations. Specifically, they would like to grow the
balance sheet and wipe off the accumulated losses of
Rs. 577,246,000 which are expected to decrese this
year.
Growing network, a viable and working
depository franchise, growth in the Islamic Banking
industry and technological advantage places them in an ideal position to take advantage of the
opportunities that lie ahead due to State Bank‘s increased capital requirements. The bank is also
unin IT effectively and efficiently to reduce cost ofcommunication and its taking the maximum
posible banefitout of it. The bank is alsoexpectedto takeover another chainofbanks as soon as the
bank recovers from the accumilated loss.
As discussed earlier, the reason for our losses this year is non-absorption of operating costs
due to lower asset volumes. Besides that, BIPL has all the right straits which a successful bank may
wish to have. Our net-work is large and well spread out, deposit base is stable and cost effective,
intermediation cost is within the top quartile in the industry, NPLs are low and that too contained
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and technology base is one of the best. With improving asset deployment, BankIslami achieved
operating break from December. On full year basis, we will inshallah report a profit starting from
first quarter. No large expansion in net-work is envisaged this year.
Due to a heavy expansion in year 2008, the full cost impact of which came in the year 2009,
BIPL is reporting a loss of Rs. 563M before tax and Earning Per Share stood (0.91). This is
approximately Rs. 250M more than what we had budgeted. Due to economic in-stability, we
preferred to conserve the liquidity. At the same time, private corporate credit off take was slow
there by drying up appetite for quality credit. While our closing ADR is still less than 50%, going
forward the signs are very positive. Almost 30% growth came in the last quarter only.
Growth in consumer financing was contained, though the Bank continued to finance good
credit. BIPL has also successfully negotiated with CITI Bank acquisition of its mortgage portfolio
of Rs. 1.5b. This transaction is expected to close in the second quarter. The Book quality remains
good and improving. Most of the non-performing financing consists of quality collateral with a
market. We expect a strong recovery this year. We are aiming to close the year at around 60% ADR
with NPL's contained at less than 5% of the portfolio.
The success story of the year was the growth in deposits, which came almost entirely from
retail segment. BIPL is one of the few banks in Pakistan which has a genuine deposit franchise.
Instead of targeting large, rate sensitive accounts, BIPL as strategy focused on retail customer
which are stable, less rate sensitive and loyal.
Current and Saving Accounts recorded impressive growth. Even growth in Fixed Deposits
was propelled by our five and ten depository products which now accounts for 21% of the deposit
base. Despite of 124% increase in deposits, cost of funds actually declined. BIPL will continue to
follow the same strategy – strong focus on retail deposits, a further 5% to 10% reduction in cost of
fund coupled with at least 50% increase in the deposit base.
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Our technology infra-structure was further strengthened during the year with full
deployment of state of art sharia compliant core banking system, iMal. We remain the largest user
of Linux in Pakistan which has helped us to have a stable, cost effective platform compared to our
peers. Our market share in ATM transactions has improved to 11th position amongst 1-LINK
members. We are aiming to complete deployment of the next phases of iMal during 2010.
Head count in 2009 increased by almost 24%. Most of the hiring took place in the branches.
Head count/branch of BIPL remained impressive at around 14, which is one of the best in the
industry. The highlight of this year was our focus on Training. BIPL is strictly following mandatory
training hours for all employees which in some cases is as high as 80 hours. The first batch of
trainee officers has graduated and assumed responsibility in the branches. We plan to induct a few
more batches this year in Karachi, Lahore, Islamabad, and Balochistan where we have a strong
presence.
BIPL also continued with focus marketing initiatives. Our greatest asset today is probably
our brand name 'BankIslami'. Going forward, we plan to maintain presence in selected media
segments.
BankIslami, capitalizing on its expanded outreach, experienced substantial growth in
finances in 2008. This enabled BankIslami to register a significant increase in its net interest
revenue. Other operating income witnessed an upsurge on account of higher fee and commission.
Meanwhile, there was a sizeable increase in personnel and other expenses, owing to the ongoing
network expansion. Moreover, BankIslami made a net provision of PKR 130mln, due to sizeable
increase in the classified portfolio. This resulted in doubling the pre-tax loss of the bank. The
performance trend remained the same in 1Q09 with a slight addition in NPLs.
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Going forward, BankIslami intends to leverage its expanded outreach to enhance both its
deposit base and finances portfolio. Although the bank has plans to penetrate the retail segment, no
significant lending is expected over the near-term, owing to currently weak credit environment.
BankIslami would continue with its recent strategy of focusing the corporate segment, though
cautiously here as well. The bank, with a view to reduce its cost of funds, plans to focus more on
demand deposits. BankIslami, to augment further its retail franchise, has entered into agreements
with different organizations to launch new products and services. Meanwhile, BankIslami, with
surplus liquidity and support of strong sponsors, eyes acquisition of banks as a strategy to achieve
sizeable growth. These initiatives exhibit clarity of direction but the extent to which they materialize
remains to be seen.
The target is to take consumer financing, over the medium term, upto 10%-15% of the total
advances. With expansion in outreach, the bank intends to rationalize its deposit mix by substituting
a portion of term deposits with current deposits. Nevertheless, deployment of excess liquidity would
remain a challenge in the absence of an active Shariah compliant money market. Earnings from
investment banking business are expected to grow significantly. The deal pipeline is currently
healthy. Meanwhile, BIPL plans to lay down requisite infrastructure for offering wealth
management services, going forward. BankIslami, due to initial stage of operations, maintains
ample liquidity and has a very low deposit concentration, which clearly stands out among close
peers. The bank‘s investment portfolio is modest in size (end-08: PKR 207mln) – mainly dominated
by strategic investment (PKR 191mln). The bank recently expanded its exposure to the sukuk
market. There is a revaluation surplus, though slight, available on this investment (PKR 16 mln).
BankIslami, mainly due to un-utilized resources, has a relatively high level of capitalization
(CAR), which offers significant room for credit expansion. However, with restricted internal
generation, the bank would remain dependent on its sponsors meeting
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Organizational Structure
Page 88 of 300
Organizational Structure of BankIslami Pakistan Limited:
Central Hub
Southerenren Hub
Northeren Hub
Blochistan Hub
Interior Sindh Hub
Lower Central Hub
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Organogram of a BIPL Branch:
Chief Executive
Officer
Section Head
Regional Genral
Manager
Hub Manager
Branch Manager
Customer Service
Manager
Customer Service
Executive
Customer Service Officer
5 Sub Members
Wealth Manager
Business Executive
5 Sub Members
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Organogram of Bank Islami Bahawalpur Branch:
Mr. Hafiz Aqeel (BM)
Mr. Khurram Rasheed (CSM)
Khalil Ahmed
(Cashier)
Mina Faisal (Cashier)
Mr. Burhan Ahmed (CSE)
Mr. Asad Mehmood Khan Ali Zai (CSO)
5 Sub Members (vacent)
Wealth Manager (vacent)
Mr. Qaiser Nawaz (BE)
5 Sub Members (vacent)
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Corporate Information:
Board of Directors
Chief Justice (Retd.) Mahboob Ahmed Chairman
Mr. Ahmed Goolam Mahomed Randeree
Mr. Ali Raza Siddiqui
Mr. Hasan A. Bilgrami Chief Executive Officer
Mr. Hisham Hammoud
Mr. Mohamed Amiri
Mr. Shabir Ahmed Randeree
Sharia'h Supervisory Board
Justice (Retd.) Muhammad Taqi Usmani Chairman
Professor Dr. Fazlur Rahman Member
Mufti Irshad Ahmad Aijaz Member & Sharia'h Adviser
Audit Committee
Mr. Hisham Hammoud Chairman
Mr. Ali Raza Siddiqui Member
Mr. Shabir Ahmed Randeree Member
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Executive Committee
Chief Justice (Retd.) Mahboob Ahmed Chairman
Mr. Ahmed Goolam Mahomed Randeree Member
Mr. Hasan A. Bilgrami Member
Mr. Hisham Hammoud Member
Risk Managemnt
Mr. Ahmed Goolam Mahomed Randeree Chairman
Mr. Hasan A. Bilgrami Member
Mr. Mohamed Amiri Member
Human Resource & Compensation Committee
Mr. Ali Raza Siddiqui Chairman
Mr. Ahmed Goolam Mahomed Randeree Member
Mr. Hisham Hammoud Member
Mr. Hasan A. Bilgrami Member
Company Secretary
Syed Shah Sajid Hussain
Auditors
Ernst & Young Ford Rhodes Sidat Hyder
Chartered Accountants
Page 93 of 300
Legal Adviser
Haidermota & Co.
Barrister at Law
Management (in alphabetical order)
Mr. Adnan Hamid Ali Head, Administration & General Services
Mr. Ahmed Mustafa Head, Branch Operations
Mr. Arsalan Vohra Head, Risk Policy & Analytics
Mr. Asad Alim Head, Information Systems
Mr. Farooq Anwar Head, Operations
Mr. Hasan A. Bilgrami Chief Executive Officer
Mr. Khawaja Ehrar ul Hassan Head, Compliance
Mr. Muhammad Faisal Shaikh Head, Product Development
Mr. Muhammad Furqan Head, Credit Administration
Mr. Muhammad Imran Head, Consumer & Retail Banking
Mr. Muhammad Shoaib Khan Head, Treasury & Financial Institutions
Mr. Rehan Shuja Zaidi Head, Internal Audit
Mr. Shamshad Ahmed Head, Trade Finance
Ms. Sheba Matin Khan Head, Human Resources
Mr. Syed Akhtar Ausaf Head, Risk Management
Mr. Syed Mujtaba H. Kazmi Head, Corporate Finance
Mr. Syed Shah Sajid Hussain Head, Finance
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Working of Various Divisions/Departments
Page 95 of 300
Working of Various Departments of A Branch:
The purpose of banks is to provide some services to the
general public. And for this purpose different banks provide
different services to the people in diverse forms.
For proper functioning and the overall bank has been
divided in different departments. These departments handle
different jobs so that division of work is there for improvement
of functions and it also makes it easy to control the situation.
The general divisions in the branch are as follows:
Operations Department
Libality Department
Trade Department
Sales Department.
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Products & Servicves
Before discussing the working of various devesions and department lets have a look at the
products and services that Bank Islami offers to its customers.
Consumer Banking Investment Banking
MUSKUN Home Financing
Advisory
Islami Auto Ijarah-New Vehicle
Private Placement
Islami Auto Ijarah-Used/Imported Vehicle
Sukuk Arrangment
Syndication
Retail Banking
Underwriting
Islami Current Account
Trusteeship
Islami Foreign Currency Account
Structured Finance
Islami Bachat Account
Listing on Capital Markets
Islami Dollar Bachat Account
Project Financing
Islami Mahana Munafa Account
Mergers & Acquisitions
Islami Amadni Certificate
Rates & Weightages Value Added Services
Online Banking
Corporate Banking
Inter Bank Fund Transfer
Account Services
Internet Banking
Trade Services
ATM/Debit Card
Working Capital Finance
Biometric ATM
Project Finance
24/7 Phone Banking
Musharakah Financing
eStatement
Mudarabah Financing
Self Service Phone Banking
Lockers
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Operations Department
Page 98 of 300
Operations Department consists of:
Account Opening Department
Remetance
Collection
Cash
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Account Opening Department
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Account Opening Department:
Borrowing funds from different
sources has become an essential feature of
today‘s business enterprises. But in the
case of bank borrowing funds from
outside parties is more vital because the
borrowed capital of a bank is much
greater their own capital. Bank deals in
money and they are merely mobilizing funds within the economy. They borrow from one person and
lend to another, the difference between the rate of borrowing and lending forms their spread or
gross profit. Islamic banks do the same but in compliance with sharia principles.Banks borrowing
is mostly in the form of deposits. These deposits are invested into different investment pools. Such
deposit creation is done through opening an account in the bank.
As these deposits are the basis on which the bank lendds out funds therefore we can rightly
state that deposits are the life blood of the bank which causes the body of an institution to work.
Like without blood the body can not work the same way without deposit bank can not work
irrespective of a conventional comercial bank or an islamic bank or any other form of bank.
Without sufficient deposits no bank can survive. These deposits are the liability of the bank so from
point of view of bank we refer to them as liabilities.
All types of accounts of customers are managed and maintained in this section. All the
money deposited and withdrawn is properly recorded in a specific account number which is
allotted to every account holder. Banks has different kinds of deposit schemes in order to induce
deposits. Account opening is an agreement in which customer gives his funds and bank accepts
these funds, therefore the nature of relation between a banker and customer is of contractual one
and all the conditions applicable to this are applicable in the same way as the contract act.
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The department that is responsible for opening and closing an account assumes immense
significance and holds a central place in the basic banking operations. The Account opening
department was the very first experience of my practical life being working with a bank, during my
internship with Bank Islami Pakistan Limited.
This department is the best way to start with the banking career or training. This is because
the ways you deal with the customers give a lot exposure to you for the coming days in banking
because the bankers are always in contact with customers as customers are the biggest source of
assets for the bank. I really enjoyed my stay at this department as I got to interact with the
customers directly for the first time. I was given under the supervision of Mr. Asad Mehmood Khan
Ali Zai (Customer Services Officer), who is the Incharge of Accounts Opening.
The banking history is full of various examples of fraud largely due to incorrect opening of
accounts. These frauds could have been avoided if the branch mangers and other designated
officers had taken due care and exercised precautions at the time of opening of accounts.one of the
most important thing that I learned during my internship was that account opening is the base of all
frauds. As our branch manger said ―fraud starts when an account is opened‖. This is the reason
that 3 out of 6 weeks of my internship were focussed on account opening department. I was
introduced to each and every aspect of account opening and was thoroughly trained and tested. I
focussed a lot on know your customer (KYC) form.
I also learned that at the time of opening of an account, officers should tactfully obtain as
much information as possible about the integrity and character of the person, his correct name and
address and occupation. This infect will be the only opportunity they will be able to talk to the
prospective customers in a friendly and frank environment. This is the time when we have a slight
edge over the customer. He/she at this point in time is willing to divulge as much information about
his or her personal status and business etc. to the bank officer. It is therefore necessary that due
care and proper procedure be followed for opening of any account for any customer.
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During my stay at this department I got to fill the forms of individuals who wanted to get
their accounts opened at Bank Islami, fill the cheque and deposit slips of customers who were not
literate enough or needed instructions, and I also got the opportunity to give advice to the
customers regarding the type of account they should open requirements of account opening and the
benefits of opening an account with Bank Islami Pakistan Limited.
I myself filled the Account Opening Forms of almost all the customers I encountered
because many customers get confused when they see the huge form and many don‘t understand
sevral things in the form. Another reason for me or the bank staff to fill the form was that no cutting
or over writing is allowed in the AOF and incase of cutting or any over writing either the customer
must sign at the place of the cutting or over writing with the stamp of cutting cunfurm or a new
form has to be filled. Another reason for us filling the AOF is that customers are more relaxed and
avoid the trouble of filling the form and expect a smooth service that is effortless.
This is important to avod any suspecian or ambiguity and to eliminate even the minutest
chances for anyone to edit the customer‘s AOF. We also stamp the empty parts of AOF with the
stamp void to make sure that this part of the AOF should not be used to do any fraudelent
transection. Although these things seem minute but as Mr. Hafiz Aqeel said ―small things, mistakes
or neglegencies can become really big problums in the future‖. Thus we try to avoid even the
minutest chance of fradulent alteration or transection. That is the reason that auditers pin pointed
everything even the smallest mistake of an incorrect date.
Before filling an AOF and while filling an AOF we must somehow get all the required
information from the customer in a detailed interview and it should be sufficient to fill his KYC
Form accorately and realistically. This is the place where fraud starts. If you do not guess the right
monthly and yearly ternover of the customer‘s account then this may lead to a fraud or money
londering. Banks today are more careful about money londering then anything ever before.
Money londering is the same like normal londering in which dirty clotes go into a londery
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and are cleaned the same way illigal or black money goes into the bank as a big laundry machine
and then comes out clean. If someone is depositing more then the expected monthly deposit then we
have to cunfurm to the head office about where the money came from.
Working with the Accounts Opening Department gave me a lot of courage and confidance
as it taught me the way that you should deal with the customers of the bank.
Fatwa:
BankIslami's commitment to Shariah is strict and absolute. We have the distinction of being
the only Bank to have a full time Shariah adviser as well as having a prestigious local Shariah
board of global repute. All types of accounts and TDR Certificates are approved and verified by our
Shariah Board. Please see Anaxture 2 to view our Shariah Board's approval.
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Types Of Accounts:
Bank Islami provides its customers mith four
types of accounts and two types of Term Deposit
Recipt (TDR) Certificates with a bonus of a lot of
our Value Added Services.
Three Types of Accounts:
1. Islami Current Account
2. Islami Foreign Currency Account
3. Islami Bachat Account
4. Islami Dollar Bachat Account
Two Types of Term Deposit Recipt (TDR) Certificates:
1. Islami Mahana Munafa Account
2. Islami Amadni Certificate
Rates & Weightages
Value Added Services
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Islami Current Account
Features:
With our Islami Current Account, you can
have complete peace of mind that your funds are
safe and utilized in Halal avenues only. Islami
Current Account is ideal for customers who have
frequent transaction needs and require unlimited
access to their account to meet their personal or
business expenses. Also, you have access to our entire online network of 102 Branches in 49 Cities
for convenience of instant and secure intercity transactions. So enjoy full control over your funds in
a Shariah compliant manner.
The Islami Current Account offers you the following Key Salient Features:
A minimum balance of Rs. 1,000/- only to open the account
Joint Account facility up to four joint account holders
Access to the entire online branch network 102 Branches in 49 Cities
Free unlimited online intercity transactions
Free 1 Card, BankIslami's ATM & Debit card
Access to all ATMs linked to MNET and 1 Link throughout Pakistan
InterBank Funds transfer facility through ATM
Facility of making instant payments at Orix terminals for grocery, fuel ,dining, etc.
Free Internet Banking service
Round the clock phone Banking through 111-ISLAMI (475-264) or 111-BIP (247)-111
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Personalized service from Customer Relationship Officers
Free Account statement facility
Hold mail and Stop payment facility
Safe deposit lockers (subject to availability)
How It Works:
BankIslami's Islami current account is based on the Islamic principle of Qarz (loan)
whereby you are the lender and the Bank is the borrower. These funds are invested in halal
business ventures only so that you are 100% sure that your funds are managed in a Shariah
compliant manner. The funds are payable to you on demand as and when required with neither any
addition nor penalty.
Brochure
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Islami Foreign Currency Account
Features:
BankIslami Islami Foreign
Currency account is ideal for
businesses and individuals who
would like to diversify their
investment in different currencies
to ensure security against
currency fluctuations or want to keep foreign currency account to meet their business needs. Also,
you can have easy access to foreign currency with no hassles of foreign exchange conversion when
you have to travel abroad or remit funds abroad to meet education, leisure or business needs.
Key Features:
Safe Deposit Lockers
Hold Mail & Stop payment facility
Available in USD, GBP & EURO
A minimum balance of USD 100/-or equivalent in GBP or EURO to open the account
Joint Account facility up to four joint account holders
Free Account statement facility
Free Internet Banking service
Round the clock phone Banking through 111-ISLAMI (475-264) or 111-BIP (247)-111
Personalized service from Customer Relationship Officers
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How It Works:
BankIslami's Islami foreign currency account is based on the Islamic principle of Qarz
(loan) whereby you are the lender and the Bank is the borrower. These funds are invested in halal
business ventures only so that you are 100% sure that your funds are managed in a Shariah
compliant manner. The funds are payable to you on demand as and when required with neither any
addition nor penalty.
Islami Bachat Account
Features:
Our Islami Bachat account is a
bundle of benefits. It helps you keep up
with your tradition of savings with the
convenience and safety of a professional
and understanding bank. Also, you earn
highly attractive profits on your savings
with the flexibility of making as many
transactions on your account as you
want. Islami Bachat Account is ideal for customers who need to draw money for monthly expenses
but would also like to earn on your hard earned savings. Corporate Employers can also avail this
account to provide convenience, flexibility and halal profits to their employees by opening their
salary accounts with us.
The Islamic Bachat Account offers you the following Key Salient Features:
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Monthly profit/loss payment on daily product basis
Differential and specific pool allocation possible for large deposit holders
Profit announcement at the end of every month
A minimum balance of Rs. 5,000/- only to open the account
Joint Account facility up to four joint account holders
Access to the entire on line network of 102 Branches in 49 Cities
Unlimited over the counter deposits and withdrawals, free of charge
No restrictions on intercity transactions
Free 1 Card, BankIslami's ATM & Debit card
Access to all ATMS linked to MNET and 1 Link throughout Pakistan
Facility of making instant payments at Orix terminals for grocery, fuel, dining, etc.
Free Internet Banking service
Round the clock phone Banking through 111-ISLAMI (475-264) or 111-BIP(247)-111
Personalized service from Customer Relationship Officers
Free Account Statement facility
Hold mail and Stop payment facility
Safe deposit lockers (subject to availability)
How It Works:
BankIslami's Islami Bachat account is a profit bearing account developed on the basis of
the modes of Mudarabah. This is how it works. You provide funds to the Bank on Mudaraba basis
for investment in the Bank‘s Shariah Compliant Assets. In this arrangement, you will function as a
Rabbul Maal (investor in Mudaraba) and the Bank will act as the Mudarib (Manager of the
Mudaraba). The Bank will form a pool of customers‘ funds. The pool provides financings to various
individuals, corporate, government and other entities based on various Islamic modes of finance
such as Murabaha, Ijarah, Musharakah, Mudaraba and other modes and would generate income.
This income will be calculated on monthly basis and shared between the Bank and the
Depositors as per a pre agreed profit sharing ratio. The profit share of the Bank is called the
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Mudarib's share. This profit sharing ratio between the Bank and the Depositors is determined at the
beginning of each month.
The profit share of the depositors is based on the predetermined weightages assigned at the
beginning of the month. A weightage based profit distribution mechanism ensures that the return
paid to any Customer in a Profit & Loss sharing contract is proportionate to the risk taken. In the
case of a loss, as per the rules of Mudaraba, the loss will be borne solely by the Rabbul Maal. The
loss will be distributed between various categories of customers on a pro rata basis. Bank also
suffers loss as no income is generated against its efforts.
Brochure
Islami Dollar Bachat Account
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Features:
The Islami Dollar Bachat account is ideal for
individuals and businesses who are eager to save in
US Dollar. This saving scheme is both for Residents
and Non residents who need to either save in US
Dollars or remit money from or abroad for personal
or business transactions. The Islami Dollar Bachat
account is a profit/loss bearing account in USD
based on the principle of Mudaraba where the Bank invests your funds in a Shariah compliant
manner. The profit and loss from the investment is then shared between you and the Bank.
The Islami Dollar Bachat Account offers you the following Key Salient Features:
Free Internet Banking service
Safe Deposit Lockers facility available
100% interest free
Monthly profit/loss payment on daily product basis
A minimum balance of USD 100/- in cash or through USD clearing cheque or valid
instructions of remittances from abroad
No Zakat or Withholding tax applicable
Joint Account facility up to four joint account holders
Access to the entire online branch network 102 Branches in 49 Cities
No restrictions on intercity transactions
Round the clock phone Banking through 111-ISLAMI (475-264) or 111-BIP (247)-111
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Personalized service from Customer Relationship Officers
Free Account statement facility
Hold mail and stop payment facility
How It Works:
BankIslami's Islami Dollar Bachat account is a profit bearing account developed on the
basis of the modes of Mudarabah. This is how it works. You provide funds to the Bank on
Mudaraba basis for investment in the Bank‘s Shariah Compliant Assets. In this arrangement, you
will function as a Rabbul Maal (investor in Mudaraba) and the Bank will act as the Mudarib
(Manager of the Mudaraba). The Bank will form a pool of customers‘ funds. The pool provides
financings to various individuals, corporate, government and other entities based on various
Islamic modes of finance such as Murabaha, Ijarah, Musharakah, Mudaraba and other modes and
would generate income.
This income will be calculated on monthly basis and shared between the Bank and the
Depositors as per a pre agreed profit sharing ratio. The profit share of the Bank is called the
Mudarib's share. This profit sharing ratio between the Bank and the Depositors is determined at the
beginning of the month.
The profit share of the depositors is based on the predetermined weightages assigned at the
beginning of the month. A weightage based profit distribution mechanism ensures that the return
paid to any Customer in a Profit & Loss sharing contract is proportionate to the risk taken. In the
case of a loss, as per the rules of Mudaraba, the loss will be borne solely by the Rabbul Maal. The
loss will be distributed between various categories of customers on a pro rata basis. Bank also
suffers loss as no income is generated against its efforts.
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Islami Mahana Munafa Account
Features:
Long term investments yield high returns
but delayed profit payment. With our Islami
Mahana Munafa Account you don't compromise
on any. Now you can enjoy the freedom of halal
monthly gains for a prosperous present while
building your wealth for a secure future. Also,
Islami Mahana Munafa Account will provide you with security, convenience and flexibility of
investment tenure to suit your needs.
The Islami Mahana Munafa Account offers you the following Key Salient Features:
Free Internet Banking Service
Hold Mail & Stop payment facility
Safe Deposit Lockers
100% interest free
Available in Pak Rupees
Tenure of investment are 1, 2, 3, 5 & 10 years
Minimum amount of investment is Rs. 10,000/- only
Profit/loss payment on monthly basis until the maturity date
Payment of amount of investment on the maturity date
Differential and specific pool allocation possible for large deposit holders
Profit announcement at the begining of every month
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Facility of premature encashment available. In such a case, the corresponding period rate
would apply, unless stated otherwise
Free facility of transfer of profit and invested funds in nominated Islami Current or Islami
Bachat Account
Monthly profit/loss payment on daily product basis
Round the clock phone Banking through 111-ISLAMI (475-264) or 111-BIP (247)-111
Personalized service from Customer Relationship Officers
Free Six monthly Account Statement facility
How It Works:
BankIslami's Islami Mahana Munafa Account is a profit bearing account developed on the
basis of the modes of Mudarabah. This is how it works. You provide funds to the Bank on
Mudaraba basis for investment in the Bank‘s Shariah Compliant Assets. In this arrangement, you
will function as a Rabbul Maal (investor in Mudaraba) and the Bank will act as the Mudarib
(Manager of the Mudaraba). The Bank will form a pool of customers‘ funds. The pool provides
financings to various individuals, corporate, government and other entities based on various
Islamic modes of finance such as Murabaha, Ijarah, Musharakah, Mudaraba and other modes and
would generate income.
This income will be calculated on monthly basis and shared between the Bank and the
Depositors as per a pre agreed profit sharing ratio. The profit share of the Bank is called the
Mudarib's share. This profit sharing ratio between the Bank and the Depositors is determined at the
beginning of each month.
The profit share of the depositors is based on the predetermined weightages assigned at the
beginning of the month. A weightage based profit distribution mechanism ensures that the return
paid to any Customer in a Profit & Loss sharing contract is proportionate to the risk taken. In the
case of a loss, as per the rules of Mudaraba, the loss will be borne solely by the Rabbul Maal. The
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loss will be distributed between various categories of customers on a pro rata basis. Bank also
suffers loss as no income is generated against its efforts.
Brochure
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Islami Amadni Certificate
Features:
Why take interest when you
can earn Halal profit on your
investment. With Islami Amadni
Certificate your hard earned
investment works harder to yield high
expected profits so you can build your
wealth for a prosperous future. You
get the best of both worlds in a safe, secure and flexible package to perfectly meet your needs.
If you are a salaried individual, a businessperson or a corporate entity with some long term
investment funds to spare, our Islami Amadni certificate is an ideal solution for you. With our
Islami Amadni Certificate, the higher your investment the higher will be your return and that too in
a Shariah compliant manner. Also, you have the flexibility to choose amongst various investment
tenures to suit your personal or business needs.
Islami Amadni Certificate offers you the following Key Salient Features:
Available in Pak Rupees
Investment can be done for 1, 3, 6, 12, 24, 36 or 60 months
Minimum amount of investment is Rs. 10,000/- only
Payment of profit/loss and amount of investment on the maturity date
Quarterly profit payment for investment of 12 months and above
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Differential and specific pool allocation possible for large deposit holders
Profit announcement at the end of every month
Facility of premature encashment available. In such a case, the corresponding period
weightage would apply, unless stated otherwise
Free facility of transfer of profit and invested funds in nominated Islami Current or Islami
Bachat Account
Free Internet Banking service having free Term deposit enquiry facility
Round the clock phone Banking through 111-ISLAMI (475-264) or 111-BIP (247)-111
Personalized service from Customer Relationship Officers
Free Account statement facility
How It Works:
BankIslami's Islami Amadni Certificate is a profit bearing account developed on the basis of
the modes of Mudarabah. This is how it works. You provide funds to the Bank on Mudaraba basis
for investment in the Bank‘s Shariah Compliant Assets. In this arrangement, you will function as a
Rabbul Maal (investor in Mudaraba) and the Bank will act as the Mudarib (Manager of the
Mudaraba). The Bank will form a pool of customers‘ funds. The pool provides financings to various
individuals, corporate, government and other entities based on various Islamic modes of finance
such as Murabaha, Ijarah, Musharakah, Mudaraba and other modes and would generate income.
This income will be calculated on monthly basis and shared between the Bank and the
Depositors as per a pre agreed profit sharing ratio. The profit share of the Bank is called the
Mudarib's share. This profit sharing ratio between the Bank and the Depositors is determined at the
beginning of each month.
The profit share of the depositors is based on the predetermined weightages assigned at the
beginning of the month. A weightage based profit distribution mechanism ensures that the return
paid to any Customer in a Profit & Loss sharing contract is proportionate to the risk taken. In the
case of a loss, as per the rules of Mudaraba, the loss will be borne solely by the Rabbul Maal. The
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loss will be distributed between various categories of customers on a pro rata basis. Bank also
suffers loss as no income is generated against its efforts.
Brochure
Historical Deposit Rates & Weightages
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Rates:
Islami Bachat Account
Tiers Feb' 10 Jan' 10 Dec' 09 Nov' 09 Oct' 09 Sep' 09
0 - 999,999 5.01% 5.00% 5.01% 5.00% 5.00% 5.00%
1,000,000 - 9,999,999 5.01% 5.00% 5.01% 5.00% 5.00% 5.00%
10,000,000 - 49,999,999 5.01% 5.00% 5.01% 5.00% 5.00% 5.00%
50,000,000 - and above 6.48% 6.47% 6.48% 6.47% 6.47% 6.48%
The above rates are applicable only from the month of August 2009 to January 2010. The
above rates should not be taken as a prediction, projection or forecast as to the future or likely
performance of the accounts.
Islami Dollar Bachat Account
Feb' 10 Jan' 10 Dec' 09 Nov' 09 Oct' 09 Sep' 09
USD 0.01% 0.00% 0.00% 0.00% 0.00% 0.01%
The above rates are applicable only from the month of August 2009 to January 2010. The
above rates should not be taken as a prediction, projection or forecast as to the future or likely
performance of the accounts.
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Islami Amadani Certificate
Term Deposits with Quarterly profit payments
Tiers Feb' 10 Jan' 10 Dec' 09 Nov' 09 Oct' 09 Sep' 09
One Year Rs. 1-9,999,999 9.62% 9.61% 9.62% 9.61% 9.61% 9.62%
Two Years Rs. 1-9,999,999 9.71% 9.70% 9.71% 9.70% 9.70% 9.71%
Three Years Rs. 1-9,999,999 10.15% 10.14% 10.15% 10.14% 10.14% 10.15%
Five Years Rs. 1-9,999,999 11.06% 11.05% 11.06% 11.05% 11.05% 11.07%
Term Deposits with profit payments at Maturity
One Month Rs. 1-9,999,999 6.48% 6.47% 6.48% 6.47% 6.47% 6.48%
Three Months Rs. 1-9,999,999 7.43% 7.42% 7.43% 7.42% 7.42% 7.43%
Six Months Rs. 1-9,999,999 7.97% 7.96% 7.97% 7.96% 7.96% 7.97%
One Year Rs. 1-9,999,999 9.98% 9.97% 9.98% 9.97% 9.97% 9.98%
Two Years Rs. 1-9,999,999 10.07% 10.06% 10.07% 10.06% 10.06% 10.06%
Three Years Rs. 1-9,999,999 10.555% 10.54% 10.55% 10.54% 10.54% 10.55%
Five Years Rs. 1-9,999,999 11.53 % 11.52 % 11.53 % 11.52 % 11.52 % 11.52 %
The above rates are applicable only from the month of August 2009 to January 2010. The
above rates should not be taken as a prediction, projection or forecast as to the future or likely
performance of the accounts.
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Islami Mahana Munafa Account
Feb '10 Jan '10 Dec' 09 Nov' 09 Oct' 09 Sep' 09
1 Year 9.54% 9.53% 9.54% 9.53% 9.53% 9.58%
2 Year 9.63% 9.62% 9.63% 9.62% 9.62% 9.69%
3 Year 10.07% 10.06% 10.07% 10.06% 10.06% 10.21%
5 Year 10.96% 10.95% 10.96% 10.95% 10.95% 12.01%
10 Year 12.48% 12.47% 12.48% 12.47% 12.47% 12.49%
The above rates are applicable only from the month of August 2009 to January 2010. The
above rates should not be taken as a prediction, projection or forecast as to the future or likely
performance of the accounts.
Weights:
Weightages of March 2010
Customer's Share
Islami Bachat Account
0 49,999,999 0.388
50,000,000 - & above 0.502
Islami Amadni Certificate
Profit Payment At Maturity
One Month 0.502
Three Months 0.576
Six Months 0.618
One Year 0.774
Two Years 0.781
Three Years 0.818
Five Years 0.894
Profit Payment Quarterly
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One Year 0.746
Two Years 0.753
Three Years 0.787
Five Years 0.858
Equity 0.968
Islami Mahana Munafa Account
One Year 0.740
Two Years 0.747
Three Years 0.781
Five Years 0.850
Ten Years 0.968
Islami Dollar Bachat Account
Customer's Share 0.282
Bank's Share 1.000
The Bank and the Depositors will have equal share in income of the Mudaraba pool. The
share of the Depositors will be distributed based on the above weightages. Profit will only be paid
on deposits which remain with the Bank for a period of at least one month.
Attention: Special Deposit Holders,
We are pleased to inform all special deposit holder that the profit calculation mechanism
has been changed from Musharakah based system to Mudarabah based system with effect from
September 01, 2009. The process will simplify profit calculation mechanism with no major impact
at customers' end.
Weighatges of the corresponding deposit tenure will applied to the special deposit from
September 2009 onwards.
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Requirements For Account Opening:
The general procedure for account opening is same
but the document required to open the account is different
according to the types of accounts. The bank officer must
assure that the customer has the following characteristics:
The customer must have the the age of maturity
The customer must be of sound mind
The customer must not be insolvent and bankrupt
The customer must not be in the prohibited list of
SBP/NAB etc.
Account Opening Form (AOF):
A person who wants to open an account has to fill an account opening form which is
provided by the bank, free of cost. It is a form that contains the account number, date, title of the
account, applicant name and address, special instructions (if any) information about zakat
deduction, and any other information about whether the person wants to get online facility or ATM
Card etc.Then this filled form is submitted to bank, the bank officer verifies the signatures of the
applicant and while another bank officer admits the signature of the applicant.
Then these forms are fead into the system and then scaned and photocopied and then they
are sent to the headoffice which after doing the world check, issues the account number to the
applicant. In case of any discripency or some documents missing or any ambiguity the head office
sends the form back with the objections sheet (sheet is enclosed in anaxture 2). Then that
discripency has to be removed or the required documents are to be added and then sent again to the
head office. Till the time the head office is satisfied and letter of thanks has been delivered to the
customer the account remain debit blocked.
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The signatures of the applicent are admited by an officer of the bank with the stamp of
Signature Admited. Two signatures of the CSM (Customer Services Manager) are done on the AOF
with his stamp one signature of CRO (Customer Relationship Officer) and Branch Manager is also
done with their stamps. The empty spaces of the AOF are marked void with the stamp of VOID.
Specimen Signature Card:
This card contains the account number, title of the account, and the specimen signature of
the account holder. It is card on which specimen of applicant‘s signature are taken for future
reference. Every time a cheque is presented for payment, the signature on the cheque is verified by
comparing it with S.S Card. In case of joint account two applicants can sign on one SS card. In
case of more than two joint account holders more than one SS card are required.
Two copies of this card are required one is kept with the branch inside the branch in a fire
proof cabinet and the other sent to the head office for record and signature scanning purpose. It is
a centralized activity. The scanned signatures are recorded in the database of the system and are
promptly considered for future transactions of the customer. When this form is submitted in bank,
the bank officer admits the signatures of the applicant with the stamp Signature Admitted and signs
and CSM signes the SS Card with his stamp.
Terms And Conditions:
Applicant signs are taken on each and every page of Terms and Condition Form before
opening an account. A total of 7 signatures are taken 6 signatures on the 6 pages of the Terms and
Condition Form and one on the Authorised Signatories Section which is part of the Terms and
Condition Form. (Form is enclosed in appendix 1)
The signature on the Authorised Signatories Section is/are admitted by the officer of the
branch and are stamped with Signature Admitted while the 6 signatures on each page of the Terms
and Condition are varified by the bank officer with the stamp Signature Varified.
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Attested Copy of Computarized National Identity Card (CNIC) of the Customer:
While opening an account the first thing we ask the customer to provide us in the Attested
copy of Computarized National Identity Card (CNIC). The first thing we check on the CNIC is the
expiry date. For expired CNIC‘s, customer has to submit copy of expired CNIC and a NADRA
receipt in evidence of having applied for renewal of CNIC. The bank officer checks the number of
CNIC is correctly recorded in the AOF and a Attested copy of Computarized National Identity Card
(CNIC) of the Customer is kept in record by the bank.
Third Party Mandate:
This form is used when a applicant wants to authorize any third party to sign and deal
transactions with the bank. The customer signes it and authorises the bank to allow the therd party
to operate the account deal transactions with the bank while indemnifying the bank from any loses
the customer bears due to the third party.
Confidential Customer Profile Form (KYC Form):
At the time of opening of an account, officers should tactfully obtain as much information as
possible about the integrity and character of the person, his correct name and address and
occupation. This infect will be the only opportunity they will be able to talk to the prospective
customers in a friendly and frank environment. This is the time when we have a slight edge over the
customer. He/she at this point in time is willing to divulge as much information about his or her
personal status and business etc. to the bank officer.
Before filling an AOF and while filling an AOF we must somehow get all the required
information from the customer in a detailed interview and it should be sufficient to fill his KYC
Form accorately and realistically. This is the place where fraud starts. If you do not guess the right
monthly and yearly ternover of the customer‘s account then this may lead to a fraud or money
londering. This form is filled for checking the credibility of the applicant by the bank officer. The
CRO and CSM have to sign this form with their stamps.
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Undertaking For Difference In Signature On CNIC And AOF:
In case of difference in signature on NIC and AOF an undertaking is taken from the
applicant so that the customer has changed his signature and bank is not and will not be liable for
anything or any loss incured to customer due to his change in signature.
Biometric Thumb Impression:
In all types of accounts thumb impression is taken from the applicant. Thumb Impression is
used for ATM.
Verisys NADRA:
The CNIC‘s of the customers are verified through the NADRA‘S specialized software which
is called as ―VERISYS‖. This software is being used in BIPL, for all type of account, for the
purpose of verification of NIC number, place of birth, mother name, and for checking validity of
NIC. In case of any variation we have to ask the customer to provide us with a correct CNIC. If the
date of expiry or issuance does not match on the CNIC and the NADRA Varisis then the customer is
asked to provide the CNIC in which the date matches perfectly.
Zakat Declaration Form
If the customers do not want the deduction of the zakat charges from his account then he
will provide the bank officer zakat declaration form stamped with Registrar Notary Public.
Cheque Book Requisition Slip:
This is the request made by the client to the bank to issue him a cheque book containing
number of leaves mentioned (25, 50, 100). It enables a customer to make a withdrawal from their
account or make payments of various parties by issue of cheque. Customer‘s signature on the face
of the Cheque Book Requisition Slip are varified by the bank officer with his signatures and the
stamp of Signature Varified and signatures at the back of the Cheque Book Requisition Slip are
admitteded by another bank officer with his signatures and the stamp of Signature Admitted.
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Source Of Income
The following Source of income is taken from applicant:
In case of agriculturist
Visit report
Fard-e-malkiat
In case of shop
Source of income
Visiting card
Letter Head
In case of salaried person (Pvt or govt)
Salary slip
Appointment card
Service card
In case of housewife/student/retired officer without pension
On whom they will be dependent, that person‘s source of income is required.
In case of retired officer with pension
Retirement letter
Pension book
In case of petroleum station/CNG/Industry
On letter Head their proof of source of income is taken
Letter Of Thanks:
Letter of thanks is the letter issued by the head office of the bank to the customer for two purposes:
First purpose is to say thanks to the customer for opening the account in their bank.
Second purpose is to confirm the address provided by the customer while opening the
account.
Photo Account:
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Photo account is opened for the following reasons:
Urdu Signatures
Shaky Signatures
Illiterate Person (Thumb Impression)
Extra Documents Required Incase Of Photo Account Are:
Vernacular Form:
In case of shaky sign this form is filled and signed by the applicant. This way customer
indemnifies the bank from any loses the customer bears due to shaky signature.
Photographes:
3 photographes of the customer are to be obtained with the account opening form for a
photo account.
Application for Urdu Signatures:
An application for opening an photo account due to urdu signature must be signed by the
customer.
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Type of Relationship Account:
Individual account
Joint account
Sole proprietorship account
Partnership
/Club/Society/Association/NGO/Trust account
Limited company accounts
Minor account
Opening of Individual Account/Joint Account:
―When a single man or woman opens an account in his or her own name and has the right
to operate, it is called individual A/C.‖
―When two or more persons neither partners nor, trustees, open an account in their name is
joint account."
When different people want to or need to share a single account it is called joint account.
The names of persons are written on the title of A/C and on S.S. card. Joint A/C cannot be opened
by single person. Both persons have to sign on cheque.
Documentation:
Filled Account Opening Form
Computerized National Identity Card (CNIC)
Passport (for Non-residents only)
Employment proof (Pay slip, Employment letter etc)
Letter Head (if doing business of any type.)
Operation:
The person place in the type of account and type of operation required in the account
opening form.
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He/she fills in part 1 of the form, a fix his/her either two of four similar signature (or thumb
expression in the signature space)
The person fills his or her father, mother, husband/wife or any other relative‘s name, his/her
address, phone number, his or her sign to certify this requirement. This requirement is
needed because in his/her absence bank can have correspondence with a specific person.
The person deposits the initial amount for opening account onto the cash counter. The
person put his signature on form on two places in ―authorized Signature‖ and fills in the
―Title of Account‖ space by writing his name.
The person fills the Part-1 and Part-II (In case of joint account)
In the title of account space names of all persons maintained (In case of joint account)
Account holders specified in the form that they will operate the form singly or jointly (In
case of joint account)
The next day is opening of account
Opening of Sole Proprietorship Account:
When the owner of the firm operating singly, open an account in his firm name.
Documentation:
Filled Account Opening Form
Computerized National Identity Card (CNIC)
Passport (for Non-residents only)
NTN Certificate
Letter Head
Operation:
All operation remains the same, except that the firm name is written in ―title of account‖
area and Signature of the proprietor in the specified area.
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Opening of Partnership/Club/Society/Association/NGO/Trust:
The account is opened in the firm name and all partners designate one or two persons to act
behalf of the partnership firm all acts of the firm jointly and severely.
Documentation:
Certified Copy of Partnership/ Trust Deed
Certificate of Registration
Signatures of all Partners on letter of Partnership
Certified copy of rules
Certified copy of resolution
Minuts of Meeting
Letter Head
Copy of by-laws
Copy of NTN Certificate
CNICs of all Partners
Passports (for Non-residents only)
Operation:
All other requirements are same except that all partners dully sign the form, cards are
signed by all of those partners who will act on behalf of the firm.
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Opening of Limited Company Account:
Limited company account includes the private limited and public limited companies
Documentation:
Certificate of Incorporation
Certificate for Commencement of Business (PLC only)
Memorandum of Association
Articles of Association
Current list of Directors
Copy of Board Resolution
Minuts of Meeting
Letter Head
CNICs of all Directors
Copy of NTN Certificate and Form 29
Operation:
The person authorized in the resolution of the board of directors put their signature on the S.S
Card.
Next of Kin requirement is not need in a case of Private Limited Company. Other procedure is
same.
After completing each and every formalities are signed by all partners who will act on behalf
of the firm.
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Minor’s Account
In respect of an account opened in the name of a minor, the bank shall be entitled to act on
the instructions received from the guardian name on the account opening form, irrespective of
whether the minor account holder continues to be a minor or not unless the bank receives written
instructions from the guardian or a notice to the contrary from an appropriate authority. The title
of the account will be Miners‘s Name (M) Gardian‘s Name (G). source of fund of the gardian are
required with the attested copy of his CNIC and incase of blood relative a court certificate. B form
of the miner is also required.
Dorment Account:
If there is no debit transection in an account for 12 montes then that account is
autimatically marked dorment by the centralized operating system. We will keep the SS Cards of the
dorment accounts seprate from other cards with the words ―Dorment A/c Last transection dated ‖.
a letter is sent to the customer informing him that his account has become dorment.
Deceised Account:
When bank receives intemation from an authentic and reliable source of the death of an account
holder then bank imediately deceases the account.
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Account Number:
Bank Islami has acquired a new centralized banking system named ―iMal‖ where all the
branches are directly connected to Head office. When customers give all the information about him,
this information is entered into centralized data base. When this procedure is completed, the system
automatically generated the account number of that customer. Due to this system the process of
account opening becomes fast and also there is no chance of any mistake.
The account no of any bank islami branch starts with its 4 digit numarical branch code like
the branch code for bahawlapur branch is 2019. Then comes the 7 digit numarical account no that
can be for example 0000001 and then the last part is the Sufex Code that tells about the type of the
account like for current account it is 0001 and savings account it is 0201. So if I use the example I
geve an complete account no can be 2019-0000001-0001. This is a pakistani rupees current
account.
The Sufix Code of various types of accounts of BIPL are as follows:
Account title Sufix Code
Current account 0001
Saving account 0201
Account title Sufix Code
Current Account Savings Account
Dollar (US$) 0031 0231
Pound (GBP£) 0252
Euro (EU€) 0065 0999
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Issuance of Cheque Book:
Cheque book is issued to the customer after sending the letter of thanks when the customer
comes with the letter of thanks the requests for the issuance of the cheque book which he had signed
earlier is separated from the rest of the requests. A cheque book (usually having 25 leaves) is issued
to the customer. The customer can also ask for a 50 leaves or 100 leaves cheque book. The cheque
book is charged @ Rs. 2/for every leaf. Every cheque book also contains one leaf that is used for
another issue of a Cheque book
The procedure in this manner is to complete the cheque book requisition containing title of
account, account number, type of currency and signature of the customer. Signature of the customer
on the cheque book requisition is verified through the system. Particulars are entered in the cheque
book issuance register. After verifying signatures from the system, the account opening person signs
and stamps the cheque book requisition and hands over the cheque book after taking signatures of
the account holder on the cheque book acknowledgement as a proof that he/she has taken the
cheque book.
Entry Of cheque book:
Before issuance of a chequebook, the employee performs certain functions. They include:
Stamping every leaf with specific A/C number.
Stamping every leaf with stamp ―Payable at any BIPL Branch‖.
Enters it in the chequebook issue register.
Check whether or not a senior officer has verified the signatures, if no then first he gets
them verified.
If the check book is of photo account then be sure that each and every leaf of cheque
book should carry photo account stamp
After entry in the manual register, the employee issues the chequebook to the A/C holder
after taking his/her signature on the acknowledgement leaf.
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Stop Payment Of Cheques:
Here the bank stops the cheque of their own branch because of following reasons:
The customer does not want to make the payment due to any reason.
If the cheque book is lost or stolen.
If the customer has lost a few or one cheqe.
So the bank stops the payment of the cheque on the request of customer. In this turn around
time is 5 minutes and it is not done in the given time, then there will be the problem in the audit
committee and its charges are Rs. 200. After the payment is stopped, the concerned client is
informed about that through a letter of stoppage of payment.
Closing of Account:
Here the customer gives the application of closing the account. Its charges are Rs. 200. The
bank takes back the cheque book. If there is some money in the account, the bank makes pay order
and then courier to that person‘s address. If the person has left her house and bank is unable to
approach that person then the amount is transferred to the unclaimed deposit accounts. Usually
those accounts are closed that have a cash balance of Rs. 0. In prectice bank askes the customer to
draw a cheque of the total amount except the account closing charges and then closes the account.
Procedure Followed In Order To Close An Account:
Now, coming towards the procedure for the closing of an account at Bank Islami, the following
steps will be followed.
The client who wishes to close an account first has to give an application, duly signed on the
pre-printed application of the bank. The client can also give an application on a plain
paper, but correct signatures are very necessary.
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If a client wishes to close a account then the bank charges Rs.200, so at the time of closing
the balance should be Rs.200.
Along with the application to close the account client‘s Chequebook and ATM Card are also
received from him and then they are destroyed in order to prevent any misuse in the future.
All the cheques are first stamped ‗Account Closed‘ then torn from the center. The ATM
Card is also broken from the middle.
the account opening department then enters in the system and markes it as ‗account closed‘.
One thing has to be taken into immediate consideration that the account number allotted to
the client (who has closed his account), after closure of the account becomes useless and is
not allotted to any one in the future.
the specimen signature card are brought to the account-opening department and are
stamped ‗Account Closed‘ and the AOF and related documents are also stamped ‗Account
Closed‘.
Then all these documents along with the cheque book and the ATM Card are sent to the
head office.
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My Experiences During Internship In Accounts Opening Department:
During my internship at Bank Islami Pakistan Ltd, Bahawalpur Branch, my experience was
outstanding while working in the Accounts Opening Department. This was the first ever experience
of my life regarding working in any professional environment with practical people working around
me. I was young and new so I also did make mistakes an my seniors corrected me and helped me a
lot.
Mr. Asad Mehmood Khan Ali Zai (Cusmomer Service Officer and Incharge of Account
Opening) was very much fanatical in giving me indepth insight of all the workings of that Accounts
Opening Department. I was being supervised by Mr. Asad Mehmood at all times. He was a very
ebullient person and made me feel easy and relaxed to a greater extant. He was a very hardworking
and supportive type of a colleague, menter, trainer and teacher to me. He taught me each and every
situation that one can face while being in the accounts opening department. He also directed me
about the procedures of other banks dealings. Whenever he was busy in doing a work regarding the
accounts opening things he never forgot to tell me what he is doing and what is the purpose of
doing that thing.
During my stay at the accounts opening department, I got a chance to open some accounts
after the approval and due verification from my supervisor Mr. Asad Mehmood Khan Ali Zai. He
showed and explained the purpose of each of the stamps which have to be incorporated in the
Account Opening Form. I did mistakes as well while opening of accounts regarding writing account
titles but my stamping was perfect always. But he never ever said a word to me regarding that. I
observed that employees at Bank Islami are very cooperative and supportive. This is the reason why
the customer satisfaction is provoking in all the branches of the bank.
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VALUE ADDED SERVICES
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Features:
BankIslami's has a wide network of 102 Branches in 49 Cities all of which provide Online
Banking services. Online Banking means that all our 102 Branches in 49 Cities are connected with
each other so that you can instantly access your account and make transactions at any BankIslami
Branch. The following are the key benefits that you get out of using our Online branch network:
Cash Deposit for immediate credit to a remote branch.
Remote Cheque Encashment from any Online branch.
Instant Funds Transfer between any 2 Online branches.
Balance Enquiry and Statement of Account from any Online branch.
Branch Timing:
Monday - Thursday 9:00AM-5:00PM
Friday 9:00AM-12:30 PM & 3:00-5:00PM
Saturday 9:00AM-12:30 PM
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Features:
Do you want to provide ease and convenience to your friends, family, colleagues and
business associates. With our Interbank funds transfer (IBFT) facility you can easily transfer funds
in their accounts via your ATM. Now, when dealing with you they can ensure hasslefree funds
transfer in their accounts. No nuisance of waiting for Cheque clearance or going to the branch to
deposit Cash or Cheque.
IBFT facility enables you to send and receive funds Online from and to any Account holder
of 1Link IBFT participating member Banks. Following are the key benefits that you will get out of
using our IBFT facility:
Convenience
Easy to use
Instant Transfer i.e. Online
Secure
7x24 Facility- Round the Clock
IBFT totally eliminates the use of cheques and the transactions can be processed Online
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How To Use:
Insert the Card in the ATM
Wait for Authentication - using Biometric or PIN
Select "Funds Transfer" from Main Menu
Select "IBFT" from Funds Transfer Menu
Select the From Account from which Funds will be transferred.
Select Bank where Funds are to be transferred
Input the Beneficiary Account Number
Input the Amount to be transferred
Verify the Beneficiary Name retrieved Online from the Beneficiary Bank
Confirm the Transaction
Banks Linked to Inter Bank Fund Transfer Facility:
Allied Bank Limited
Askari Bank Limited
Bank Al-Habib
BankIslami Pakistan Limited
Habib Bank Limited
Soneri Bank
United Bank Limited
NIB
RBS - Royal Bank of Scotland
Tameer Micro Finance Bank
Standard Chartered Bank
Bank Al Falah
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Features:
Now you can access your account information and view your transactions history at home
or office on your personal computer/Laptop. BankIslami Internet Banking provides you the facility
to access and manage your accounts and transactions securely via Internet 24 hours a day, 7 days
a week.
BankIslami Internet Banking provides you the following Key Features:
Access to your Account mini/full statement
Funds transfer from one BankIslami account to another
Access to transaction history.
Transaction enquiry by Cheque No., transaction amount or date.
Complaint registration.
Request feature for updating contact information.
Activity log to track your transactional activities performed on Internet Banking
Personalization of Internet Banking
Term Deposit enquiry.
How It Works:
Please provide your email address at the given location on your Account Opening form.
Your email address acts as your login ID. This ensures that your login details are unique and hence
cannot be copied. You will receive a system-generated email at your assigned address. The email
will contain a URL which will take you to BankIslami's Internet Banking website. You will be asked
to log in by entering your User ID, which is your email address (in full). You will be prompted to
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set your password. You can do so by choosing at least 6 alphanumeric characters. Once password
has been specified, you will be able to log on to BankIslami Internet Banking.
Registering For Internet Banking:
New Customer:
You will have to provide your email address at the given location on your Account
Opening form.
Your email address acts as your login ID. This ensures that your login details are unique
and hence cannot be copied.
You will receive a system-generated email at your assigned address.
The email will contain a URL which will take you to BankIslami Internet Banking website.
You will be asked to log in by entering your User ID, which is your email address (in full).
You will be prompted to set your password. You can do so by choosing at least 6
alphanumeric characters.
Once password has been specified, you will be able to log on to BankIslami Internet
Banking.
Existing Customer:
Please contact our Phone Banking at 111-ISLAMI to help you register for this service. You
will need to provide your customer details and email address. You will get an email that will
help you generate your password.
The System Requirements To Use Internet Banking:
All you need to start Banking on line is a BankIslami's account and a PC with Internet
access. In a continued effort to safeguard on line Banking transactions, BankIslami requires full
128-bit encryption for Personal Internet Banking use. The following are BankIslami -supported
browsers that offer this highest level of encryption:
Internet Explorer - versions 5.5, and 6.0
Netscape - versions 7.1, and 7.2
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Safari version 1.2
Mozilla/FireFox version 1.0
If your browser does not support 128-bit encryption, you will need to download the latest
version in order for you to use Personal Internet Banking. You should also be sure your browser
options are set to accept cookies and is JavaScript enabled. There is no special software needed to
access Internet Banking. Once you sign up, you will be able to access Internet Banking anytime
from BankIslami's Internet Banking.
The Precautions That Should Be Taken While Using The Internet Banking Service:
Your Internet Banking account can be misused if your password and login id are
compromised. the the following precautions must be taken to avoid any fraudulent activity on your
account:
DO NOT reveal your ID and password to anyone, write down or use it where someone else can
see.
Change your password IMMEDIATELY, using the 'Change of Password' service, if you
suspect it has been revealed.
DO NOT use easily recognized numbers such as your telephone number etc. as your password.
REMEMBER TO LOG OUT of the system and close your browser whenever you leave your
computer, even for a short while.
Clear your browser's cache on regular basis so that your account information is removed. This
is particularly important if you are using a shared PC. You should clear it after each session.
Always use the latest recommended Internet browser so that you are using the most updated
security features available.
Call our Phone Banking immediately if you notice any unusual transactions on your account.
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Features:
OneCard is a Shariah compliant ATM/Debit card, all in one, which acts as a complete
replacement for cash. Now you have the freedom to access your Bank account 24 hours a day to
make instant and cashless payments at a multitude of shops, outlets and restaurants in addition to
its use on our ATM network.
OneCard - Your ATM Card:
You can withdraw cash anytime and anywhere from around 2,500 ATMs countrywide linked
to both the M-Net and 1-Link switches.
OneCard - Your Debit Card:
You can buy grocery, fill fuel, dine-out and make purchases at over 3,600 retail outlets
linked to the Orix Network countrywide.
Fund Transfer:
ATM: You can carry out three kinds of instant fund transfers through BankIslami ATMs
& Kiosks from your BankIslami account:
Into any of your own BankIslami Account
Into any other BankIslami Account
Into any participating I Link Bank through BankIslami's interBank funds transfer facility
Phone & Internet Banking: You can carry out two kinds of instant fund transfers through
Phone and Internet Banking from your BankIslami account:
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Into any of your own BankIslami Account
Into any other BankIslami Account
Self Service Phone Banking:You can carry out instant fund transfer into any of your own
BankIslami account
No Interest:
You do not entail any interest or credit on the payment of your transactions on OneCard because you spend from the money available in your BankIslami account.
Security:
You have maximum security withOneCard since it uses finger or thumb impression for
identification purposes apart from PIN code. (see anaxture 2, card holder SBP guidlines.)
Free Balance Enquiry & Mini Statement:
You can avail free Balance enquiry and Mini statement service to help you make fund
management simple and effective and maintain a formalized record of all the purchases and
payments you have made during a month.
No Liability:
You are protected against fraudulent transactions made on your OneCard, in case your
card is stolen or lost. Simply report your card as lost or stolen immediately by calling our 24
hour Phone Banking service at 111-ISLAMI (475-264).
24 Hour Customer Assistance:
You can contact our 24 hour Phone Banking service at 111-ISLAMI (111-475-264) if you
need any assistance.
The Transaction Limit on a One Card:
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Currently, BankIslami offers two card variants to its customers, namely, Blue and Gold
Card. Following are the various transaction limits as per delivery channel
Delivery Chanel Transaction Card Type
Blue Gold
ATM
Cash Withdrawal 20,000 50,000
Fund Transfer - Own Account Unlimited Unlimited
Fund Transfer - Trird Party BIPL Account 150,000 250,000
Inter Bank Fund Transfer (IBFT) 150,000 150,000
Fund Transfer - Own Account Unlimited Unlimited
Phone Banking Fund Transfer - Own Account Unlimited Unlimited
Internet Banking Fund Transfer - Own Account Unlimited Unlimited
KIOSK Fund Transfer - Trird Party BIPL Account 150,000 250,000
Inter Bank Fund Transfer (IBFT) 150,000 150,000
TPIN:
Your Telephone Personal Identification Number (TPIN) is your identification for Phone
Banking services and therefore should remain confidential. Please do not share it with anyone. If
you think someone has discovered your TPIN, change it immediately. It is a good idea to change
your TPIN at regular intervals.
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Features:
Enjoy secure and safe ATM transactions with BankIslami‘s Biometric ATM based on
BankIslami‘s One Card, which provides maximum security since it uses the most authentic way to
verify your identity. How? Apart from a pin-code, you can also use your finger or thumb impression
for identification purposes. After all, your fingerprints are yours and they cannot be copied.
Amazing! Isn't it?
Built with the state-of-the-art technology, these ATMs are the first of its kind in Pakistan.
How to get your Biometric Registration:
While opening an Account with BankIslami, customer will be asked to register his Biometric
identification against his/her CNIC. As per BIP standard, customer's left & right Thumb will be
used for registration purposes.
Once customer's Account opening request gets approved, his/her Biometric record will be
linked with his/her account through CNIC.
How to get One Card:
One Card will be mailed to your address in your "Welcome Pack".
Personal Identification Number "PIN" will be mailed to you at your preferred mailing address
given in the account opening form.
You will call 111-ISLAMI (475264) to activate your One Card.
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How to Use Biometric ATM:
Insert your One Card in the Biometric ATM machine
Place your Right/Left thumb impression on the space provided at the right side of the machine.
Select the type of account from which you want to withdraw funds
Select the amount to withdraw
Take your One Card
Take your Cash
Take your Receipt
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Features:
We are just a call away!!! We are there for you 24 hours a day, 7 days a week. We don't
even take breaks on Holidays and Sundays. If you need any information on any of our Products &
Services, If you need to lodge a complaint or if you just need to give feedback on any of our
Products or Services, just dial 111-ISLAMI (475-264).
We promise you will get the same level of personalized service and attention that you would
expect from our branches.
You may choose to speak to us at anytime, Just Dial 111-ISLAMI (475-264).
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Features:
eStatement is a facility that not only helps you in viewing their statements whenever and
wherever required but also brings an end to filing the Statements and keeping a paper stack. It is a
convenience that offers you ease of use along with a worldwide access to your banking
transactions.
How to Register?
Call 111 ISLAMI (111-475-264)
Speak to a Phone Banking Officer
Request for eStatement Activation
Specify the Account
Specify the Statement Frequency
Available Statement Frequencies:
Daily
Weekly
Monthly
Semi Annually
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Features:
BankIslami offers Banking at your finger tips. Forget about rushing off to the Bank during
office hours or waiting in queues - switch to Banking that's quick, secure and so very convenient.
BankIslami Self Service facility provides you the convenience and ease of making transactions or
getting your account details by just making a call to 111-Islami (475-264).
You can avail the following Phone Banking self service facilities by following a series of
simple menu choices.
Balance Inquiry
Transaction details
Pak Rupee Fund transfer
How To Use:
Call 111-ISLAMI
For Services in Urdu Press 1
For Services in English Press 2
For Self service banking Press 1
You will be asked to enter the following to proceed:
16 DIGIT 1 Card number
4 Digit TPIN (Telephone Personal identification Number)
For Balance enquiry Press 1
For Transaction details Press 2
For Pak Rupee fund transfer Press 3
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Features:
Let us make this world safer and secure for you and your family. Our Safe Deposit Locker
facility enables you to store your valuables in strong heat resistant steel lockers with 24 hour
security. Be it jewellery, passports, share certificates or title deeds, you can rest assured that your
valuables are not prone to loss, fire or theft. You can also nominate/authorize your dear and loved
ones to operate the Locker. Now you can live a carefree & stress free life while we take care of your
valuables while retaining your privacy.
Following are the key benifits that you will get out of using safe deposit locker facility:
Utter privacy to operate your locker in a comfortable, centrally air-conditioned environment.
Protection against weather conditions & power failures with smoke-sensor's, backed by fire
fighting equipment and 24 hour manned security.
A Locker custodian to offer friendly and personalized assistance.
Maximum of four (4) deposit operators per Locker.
Safety of your valuables from loss, fire and theft.
Unlimited free visits to your Locker.
Availability of different Locker sizes (Small, Medium and Large) to suit & accommodate your needs.
Takaful coverage of up to Rs. 25,000 for medium Lockers and Rs. 100,000 for large Lockers.
Locker Rent payable annually and in advance (as per schedule of charges).
Key Deposit payable in advance as a condition for Locker facility.
Eligilibility:
Individuals, firms, limited companies, associations, clubs, trusts, societies, etc may hire a locker.
An account must be maintained with the Bank.
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Remetance Department
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Remetance Department:
Remittance means transfer of funds from one
place to another this department perform the function
of transfer of money. The need of remittances is
commonly felt in today‘s business. The main function
of remittance department in a bank is the transfer of
funds. Mr. Asad Mehmood Khan Ali Zai in BIPL is the
officer for Remittances Department.
Parties To A Remittance:
Remitter
One who make a remittance. He comes to the issuing or originating branch, ask for
a remittance to be made, and deposits the money to be remitted. The bank charges him for
the remittance. He may or not be the bank‘s customer.
Remitee
Also sometimes called the beneficiary, or the payee (the person to whom the
remittance is made/ the one who receives the payment.)
Issuing Bank
The bank that affect the remittances, through the Demand Drafts, Telegraphic
Transfer, or Mail Transfer.
Paying Bank
Also known as the drawee branch (The branch on which the instrument is drawn. It
has to make the payment). Usually located in a different city or country.
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Types of Remittance:
Local Remittance
When funds are transferred within the country from one city to another city or within
the same city it is called local remittance.
Foreign Remittance
When funds are transferred outside the country it is called foreign remittance.
Modes of Remittance:
Demand Draft (D.D.)
Pay Order (P.O.)
Internal Transfer (I.T.)
Foreign Demand Draft (F.D.D.)
Foreign Telegraphic Transfer (F.T.T.)
Travlers Cheques (T.C.)
Pay Order:
A pay order is a written order issued by a bank, drawn upon & payable by itself, to pay a
specified sum of money to or to the order of a specified person. In simple words payorder is an
order to pay. Pay order abbreviated as ―P.O‖ is a negotiable instrument (such as a draft) which
instructs a payer bank to pay a certain sum to a third party within the city. It is a payment
instrument which is used by the banks to settle payment obligations on behalf of their customers.
This instrument is guaranteed by the bank for its full value and is similar to a demand draft. pay
order can only be paid at a branch of BIPL and is not payable at non BIPL Branches. pay order is
payable at any BIPL Branch all over PAkistan. At BIPL pay order is made free of cost to
customers.
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Payment through pay order is a confirmed payment. The reason is that when pay order is
made, the applicant who has an account with the Bank Islami is debited and the amount is added to
the pay order account. And from that account, the beneficiary account is credited for the amount of
pay order. BIPL only issues ―Payee Account Only‖ pay orders.
Validity:
Pay order is valid for 6 months after the date of issue. If the customer does not claim the
payment within 6 months of the issue then the amount of the pay order is included in the
―Unclaimed Account‖ and the amount stays there for 10 years.
Demand Draft
Demand Draft is issued at customer‘s demand for perticular city. Demand Draft is drawn
on a specific city and on a specific branch. A demand draft referred to as ―DD‖ is a banker‘s own
draft drawn upon another banker as per agency arrangement. BIPL issue Demand Draft only for
that city in which there is no branch of BIPL. Then BIPL will link in that city to other banks for
example HBL. BIPL will issue demand draft to the name of HBL and then the funds will transfer
through HBL to beneficiary account. BIPL DOES NOT ISSUE Demand Drafts as Pay Order and
Demand Draft are same in BIPL so a Pay Order is issued instead of Demand Draft. Demand Draft
is only issued for clearance purposes for the settlement of funds between the cities.
Procedure for the Issuance of Pay Order / Demand Draft:
The procedure for dealing with all these under local as well as foreign currency in BIPL is
that according to bank Islami pay order and demand draft concept is same. It is an online transfer
of funds. When a customer comes for the issuance of pay order, the processing steps are:
The customer is given the ―Funds Transfer- Application Form‖.
The customer fulfills the application form which includes the following details:
Transaction Details.
It includes Amount in Figures and Words.
The desired Currency.
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Mode of Payment.
Beneficiary Details (In whose favor P.O is issued).
Applicant‘s Detail (Who Requests for P.O).
The filled form along with the cheque is given to the remittance officer who verifies the form
through the following stamps:
Sign Verification (Where the customer has done the Signatures) on the application form.
Transfer Posted (Means amount is transferred from the Applicants account to the
Beneficiaries Account).
Time Stamp (Contains the Date and the Time of Receiving of Application).
Application form is given to the applicant to fill. Account Application form is then given to
the Remittances Incharge for issuance of instrument. He enters all the particulars of the application
form in the system and computer gives an Auto Control Number to the instrument. Printout is taken
on the block of payment Order. Two authorized officers of the branch then sign it. Instrument is
then protect graphed, and given to the customer. After filling the application form bank will issue
the pay order/demand draft to the applicant.
Funds will transfer to the applicant bank‘s Pay order general account and then the
customer handover that pay order or demand draft to the third party in whose name he made the
pay order/ demand draft. Then that third party will present that pay order/demand draft in his
correspondent‘s branch form where this will present to the nearest BIPL branch from where the
funds will transfer to the beneficiary account.
BIPL issue demand draft only for that city in which there is no branch of BIPL Then BIPL
will link in that city to other banks for example HBL Ahmedpur branch. BIPL will issue demand
draft to the name of HBL and then the funds will transfer through HBL to beneficiary account.
Internal Transfer:
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This type of transfer is simple in which funds are transfer from one account to second
account may be of same branch or other branch of same bank. One cheque can be credited in more
then one one accounts. The form is more then enough to transfer funds without any cheque. There
are two ways for this transfer:
With Cheque:
If money transfer by cheques and transfer in the account of concerned person then
he will bring the cheque from that branch
Without Cheque:
In which customer give a request for funds transferring from his account to the
concerned person.
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Foreign Demand Draft (FDD):
Foreign currency demand drafts are issued in BIPL. Foreign DD is the banker‘s own draft
drawn upon another bank/ correspondent bank in a country other than the country from where it is
issued and drawn and payable in currency of the country in whose bank/ branch it is drawn. For
this purpose, the bank has maintained its ―Nostro A/c‖ with different banks world wide for demand
draft Purposes. BIPL does its remittance in abroad with HBL. Through Nostro account, outward
remittance in FDD takes place. I will explain the term Nostro A/C for outward and Vostro A/c for
inward remittances as follows:
Nostro A/c
To best remember it is ―Our account with them in their currency‖. Nostro accounts
are usually in the currency of the foreign country. This allows for easy cash management
because currency does not need to be converted.
Vostro A/c
To best remember it is ―Their account with us in our currency‖. These accounts are
maintained by the correspondent banks in the currency of the country in which the account is
opened. These accounts are also known as ―Loro Account‖.
Telegraphic Transfer Through SWIFT:
It is largely the obsolete method of transferring funds through a telegraph or telex link from
one country to another. With the help of this service a customer can transfer money to the bank
account of a beneficiary in most foreign countries of the world also called wire transfer; it has been
replaced by secure cable and wireless telecommunications networks. In BIPL, the transfer of funds
through this medium is implemented through SWIFT which is the standard in all banks of the
industry. The telegraphic transfer is of two types:
Local TT.
Foreign TT.
Local TT:
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In local Telegraphic Transfer, the funds are transferred from one city to another. The local
transfer system is not been used in BIPL. The method was that the customer who wanted to avail
this facility was given the funds transfer application. The person who wanted to remit the money
used to provide the details of the receiving person. The transaction was done between the banks.
The bank remitting the money used to credit the account of the person sending the money and the
paying bank used to debit such account and made payment to the receiving person. The payments
were done on the counters. The NIC of the persons were taken in that kind of transactions. This
system is not in use today because the SBP has started restricted the counter payments due to the
fraudulent nature of the transaction.
Foreign TT:
The foreign telegraphic transfer means the transfer of funds to a foreign country. Both
inward and outward is done at BIPL. The Foreign Telegraphic Transfer is done through SWIFT
which is acting as a quickest mode for the transfer of funds to abroad. The FTT is only done
account to account in BIPL. The procedure for the Foreign Telegraphic Transfer followed by the
remittance officer is explained as:
The customer comes to the bank for the purpose of FTT.
The customer is given the Funds Transfer Form on which the customer provides these details:
Amount of the Transaction in Words and Figures.
The Desired Currency.
Beneficiary Details to whom the funds are to be transferred.
Beneficiary Bank‘s details in the abroad.
Applicant‘s Details.
After filling out the information, the customer signs the form and hands it over to the
remittance officer along with the cheque.
The remittance officer makes sure that the purpose of remittance is provided by the customer.
The charges of TT are deducted from the account which is flat 10 US dollars.
The stamping is done on the form and the remittance officer signs the form.
The form also gets signed by the operations manager.
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The completed form along with the cheque is sent to the BIPL Head Office where all the
SWIFT operations are taken place. The Head Office makes all the dealing with the
correspondent banks in abroad for the purpose of FTT.
The Role of SWIFT In Telegraphic Transfer:
SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication, a
member-owned cooperative through which the financial world conducts its business operations
with speed, certainty and confidence. Over 8,300 banking organizations, securities institutions and
corporate customers in more than 208 countries are the members of SWIFT and every day
exchange millions of standardized financial messages.
Its role is two-fold. They provide the proprietary communications platform, products and
services that allow its customers to connect and exchange financial information securely and
reliably. They also act as the catalyst that brings the financial community together to work
collaboratively to shape market practice, define standards and consider solutions to issues of
mutual interest.
SWIFT enables its customers to automate and standardize financial transactions, thereby
lowering costs, reducing operational risk and eliminating inefficiencies from their operations.
By using SWIFT customers can also create new business opportunities and revenue streams.
SWIFT has its headquarters in Belgium and has offices in the world's major financial centers
and developing markets.
SWIFT is solely a carrier of messages. It does not hold funds nor does it manage accounts on
behalf of customers, nor does it store financial information on an ongoing basis. As a data
carrier, SWIFT transports messages between two financial institutions. This activity involves
the secure exchange of proprietary data while ensuring its confidentiality and integrity.
Services Provided by SWIFT
SWIFT Network Provides The Following Services To The Banks:
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The exchange of real-time messages using XML standards.
The exchange of bulk messages (e.g. non-urgent and low value payments).
A secure browser for accessing account information.
Joining SWIFT:
In Pakistan banks get the membership of SWIFT through State Bank of Pakistan. The
Financial documents along with the registration application are submitted to SBP and from there
they are transferred to the SWIFT. After verification, SWIFT gives the membership to the Bank.
Following are steps to join SWIFT, connect to the SWIFT network and become fully operational.
Procedure:
Every client has its own SWIFT BIC code, in order to identify Financial Institutions. BIC
stands for Bank Identifier Code. To transfer messages securely and efficiently, the client bank
connects through SWIFTNet network by the assigned SWIFT BIC code. SWIFT clients can
configure their existing email infrastructure to pass email messages through the highly secure and
reliable SWIFTNet network instead of the open Internet. SWIFTNet Mail is intended for the secure
transfer of sensitive business documents, such as invoices, contracts and signatories, and is
designed to replace existing telex and courier services, as well as the transmission of security-
sensitive data over the open Internet.
SWIFT Code:
The SWIFT code is 11 characters made up of:
4 characters: Bank code (only letters).
2 characters: 3166-1 alpha 2 country code (only letters).
2 characters: location code (letters and digits).
3 characters: Branch code, optional (xxx for primary office) (letters and digits).
Procedure For International Clearing:
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Outward Transfer
For the purpose of outward transfer, as the foreign bank branch receives the SWIFT
message, the Nostro account is debited for the bank‘s record. The transferee has account
with the foreign bank, the funds simply transfers to the transferee‘s account.
Inward Transfer
For the purpose of inward transfer, as the domestic bank branch receives the SWIFT
message, the Vostro account is debited for the bank‘s record. The transferee has account
with the domestic bank, the funds simply transfers to the transferee‘s account.
Travelers Cheques:
Traveler cheques (TC) is form of currency cheques for travelers which is convenient to
carry and incase of misplace or lost one can easily have their cash again. In previous years
businessmen were mostly carrying their cash in form of currency notes, usually they were worried
about their cash, and it shouldn‘t be stolen or lost by them. For those reasons and for the comfort
of the business community internationally countries decided to issue them travelers‘ cheques, and
now a day‘s business community could use it easily without any fear of lost and steal.
This is not a product of BIPL. These are the banks instruments issued to only major account
holders of a bank. TC‘s are issued to the facilities the customers during the travel. Travelers
Cheques are just like cheques which contains 2 counter signatures of the customer who made these
cheques and one authorized signature name. They can be made in local as well as foreign currency.
Travelers Cheques can be made for Rs. 1,000, Rs. 5,000, Rs. 10,000 and Rs. 20,000.
Withholding tax of 3% is charged for encashment of Travelers Cheques and are payable at any
branch of any bank.
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Collection Department
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Clearing Department
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Clearing Department:
Clearing is a system by which bank exchange cheques and other negotiable instruments
drawn one each other within specified area and securing the payment for their clients through the
clearing house. Clearing stands for mutual settlement of claims made in among member banks at
an agreed time and place in respect of instruments drawn on each other. Clearing is the way
through which Bank Islami clears cheque of other banks and clear the cheques of its own bank from
other banks.
Every bank acts in two ways:
Paying Bank
Collecting Bank
A large part of this work is carried out through the bankers clearing house wherever it is
established.
Functins of Clearing Department:
To accept transfer, clearing and collection cheques from the customers and to arrange for
their collection.
Transfer Cheques: are the cheques, which are collected and paid by the same branch of
the bank.
Clearing Cheques: are those cheques which are drawn on the branches of some other
bank of the same city or of another city which are covered by a particular clearing house.
Collection Cheques: are those cheques which are drawn on the branches of other banks
for the cities which are not coming in their clearing house.
Clearing House:
Clearing house is the place where representatives of all the banks of the city get together for
the purpose of settlement of payments and receipts of cheque drawn on each other. Clearing House
is an arrangement under which member banks agree to meet, through their representatives, at the
appointed time and place to deliver instruments drawn on the other and in exchange to receive
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instruments drawn on them. Normally clearing is carried out in State Bank of Pakistan but in the
areas where there is no branch of SBP National Bank work as subsidiary of SBP. Clearing cheques
received from other banks are sent to branches, which will clear the cheques and instruments to
respective amount. The net amount payable or receivable as the case may be is settled through an
account kept with the controlling bank, in pakitan it is the State Bank of Pakistan.
For a bank, following are the requirement of being a member of clearing house:
It must be scheduled Bank i.e. It is registered is State Bank of Pakistan.
50 cheques per day must be drawn on it for continuously three months.
It must have account with State Bank of Pakistan.
Sufficient balance should be in this account.
Types of Clearing:
Inward Clearing
In inward clearing the cheques received from other banks are collected and sent to
branches for their payment. It means the instruments received by a bank of its own branch
for clearing from other banks. When a particular branch receives instruments, which are on
themselves and sent by other member bank for collection are treated as Inward Clearing of
that branch. This branch is known as paying branch.
Outward Clearing
It is an instrument that is sent by the originating bank to the other banks for the
collection of funds. As the customer deposits cheques and other instruments of other banks
for collection from other bank, the bank sends the cheques in outward clearing. When a
particular branch receives instruments drawn on the other bank within the clearing zone
and sends those instruments for collection through the clearing arrangement is considered
as Outward Clearing for that particular branch. This branch is known as collecting branch.
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Instruments Used In Clearing:
Demand Draft/Pay Order
Call Deposit Receipt (Same City)
Cheques
Bills for Collection(All types of cheques of SBP and Treasury cheques)
Role of NIFT in Clearing:
NIFT stands for National Institutional Facilitation Technologies Pvt. Limited. The
institution was incorporated in September 1995 as joint venture between a consortium of six banks
and entrepreneurs from the private sector. All banks in Pakistan, a total of 42, are participating
members of NIFT with branches spread throughout the country. Six equity holder banks are:
Habib Bank Limited.
MCB Bank Limited.
National Bank of Pakistan.
United Bank Limited.
Allied Bank Limited.
First Women Bank Limited.
As of June 2007, 40 commercial banks and their 4500 branches in 100 major cities utilize
NIFT‘s services. NIFT has signed an agreement with the central bank for provision of automated
clearing services to all banks and their branches; SBP has a monitoring role in the clearing
operations of NIFT. NIFT has setup elaborate data centers geared to provide automated services
for document processing particularly in the payment arena.
NIFT is responsible for the establishment and management of automated clearing house
facilities in Pakistan. NIFT is actively involved in the modernization of payment systems in the
country. All commercial banks in Pakistan are members of NIFT‘s clearing system and bank plays
monitoring role on the clearing operations of NIFT.
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Payment and settlement systems are crucially important to the smooth functioning of the
economy. It is the responsibility of a central bank to promote sound and efficient payment and
settlement systems.
Financial institutions use payment systems to settle financial market transactions. State
Bank of Pakistan has made incredible efforts for improving the efficiency of the payment system.
Being an operational arm, the SBP facilitates in maintaining an efficient, safe and reliable payment
and settlement system. During the period under review, payment instruments of commercial banks
have been standardized to facilitate the automated clearing facilities provided by the National
Institutional Facilitation Technologies (NIFT).
In major cities, the functions of the SBP clearing house have been handed over to NIFT to
the extent of sorting of payment instruments and preparing clearing schedules. The agent of NIFT
directly collects the cheques from each branch of the bank instead of collecting from head office.
Now the process of segregation and sorting the cheques is done by the NIFT rather commercial
banks through the automated system. NIFT also keeps the record of cleared cheques and also
provides the net position to the banks.
Services Provided by NIFT:
Its main responsibility is to pick and drop instruments from one bank and realize it from
other banks and report to State Bank of Pakistan. NIFT deduct charges of its duty. The services
provided by NIFT includes collection and delivery, inter-branch settlement, reconciliation, return
(un-paid) cheques processing, the same day clearing (express) two-hours, clearing services and
inter-city clearing to all commercial banks and their branches in Karachi, Lahore, Rawalpindi,
Islamabad, Hyderabad, Faisalabad & Peshawar. NIFT services cover over 90 percent of all
cheques clearing transactions that take place in the country.
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Explaining the procedure, the NIFT collects the outward clearing directly from every
branch and arranges processing, presentment and processing of returns, providing the net position,
etc to the banks and their branches.
Procedure of Clearing:
Before 9.00 am authorized representatives of all the bank of the city get together in State
Bank of Pakistan for 1St clearing, where in clearing house register bank wise entry is made and
exchange of cheques takes place, here 1st clearing ends.
In outward clearing if customer want to transfer his funds from Bank Al-Falah to Bank
Islami then the customer will make a cheque from Bank Al-Falah‘s chequebook and cross this
cheque and deposit this cheque in Bank Islami. After receiving, instruments should be crossed with the
bank’s “Crossing Stamp” immediately. The Bank Islami will make a deposit slip against the cheque
deposited and paste its crossing stamp with its clearing stamp and an endorsement stamp behind
the cheque that reads ―Payee‘s Account Will Be Credited‖ upon the cheque. Deposit slip is handed
over to customer as a proof then Bank Islami will handover that instrument to NIFT as outward
clearing for Bank Islami at almost 3:00 pm that day. The Bank Islami will fulfill three
requirements:
Bundle cover
Summary/delivery receipt
Manual statement of list of instruments
Now NIFT role come into existance. NIFT member will received these above things from
Bank Islami and will go to SBP for exchange of instruments where members of NIFT for each bank
sit together and each member receive the instruments of his concerned bank and in the next day
before 9.00 am, after recording it in their computer systems, NIFT will handover the cheque of
Bank Al-Falah to its respective branch. Bank Al-Falah will receive these instruments as inward
clearing for itself.
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After 2:00 pm all the representatives again get together for second clearing where payment
& receipt of passed cheques takes place and dishonored cheques are delivered back to the
representatives of respective banks. No physical payment or receipt of cash takes place, actually
every clearing house agent (bank) have account with SBP which is debited or credited or debited
respectively; with an amount equal to the diffrence in payments and receipts of each bank.
Before 2.00pm Bank Al-Falah will pass the entry in the system and check the account of that
person, will clear it and report to NIFT of nill returns. Incase the instruments or cheques are
reeturned/dishonoured then a memo showing the reason of dishonor is attached with them and are
reported to NIFT. At this time Bank Al-Falah will also hand over those cheques of other banks,
which it has collected during the day for clearing, to NIFT as outward clearing for itself. Then
NIFT will go to SBP and then after feeding it in system the cheque is returned to the respective bank
with the cheques drawn on that bank for clearing.
In inward clearing if Bank Al-Falah received a cheque of Bank Islami during the working
day then it would be crossed with the bank’s “Crossing Stamp” immediately. The Bank Al-Falah will
make a deposit slip against the cheque deposited and paste its crossing stamp with its clearing
stamp and an endorsement stamp behind the cheque that reads ―Payee‘s Account Will Be
Credited‖ upon the cheque. Deposit slip is handed over to customer as a proof then Bank Al-Falah
will handover that instrument to NIFT as outward clearing for Bank Al-Falah at almost 3:00 pm
that day. The Bank Al-Falah will fulfill three requirements:
Bundle cover
Summary/delivery receipt
Manual statement of list of instruments
Now NIFT role come into existance. NIFT member will received these above things from
Bank Al-Falah and will go to SBP for exchange of instruments where members of NIFT for each
bank sit together and each member receive the instruments of his concerned bank and in the next
day before 9.00 am, after recording it in their computer systems, NIFT will handover the cheque of
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Bank Islami to its branch. Bank Islami will receive these instruments as inward clearing for itself.
After 2:00 pm all the representatives again get together for second clearing where payment
& receipt of passed cheques takes place and dishonored cheques are delivered back to the
representatives of respective banks. Before 2.00pm Bank Islami will pass the entry in the system
and check the account of that person, will clear it and report to NIFT of nill returns. Incase the
instruments or cheques are reeturned/dishonoured then a memo showing the reason of dishonor is
attached with them and are reported to NIFT. At this time Bank Islami will also hand over those
cheques of other banks, which it has collected during the day for clearing, to NIFT as outward
clearing for itself. Then NIFT will go to SBP and then after feeding it in system the cheque is
returned to the respective bank with the cheques drawn on that bank for clearing.
Types of Returns:
Outward Return: Clearing returns (outward) include those cheques that are presented to us
by other banks but we have to return them unpaid to the collecting banks due to various
reasons.
Inward Return: Clearing returns (inward) consists of those instruments which are presented
by us to other banks for payment but have been returned and unpaid by them due to specified
reason through the clearinghouse.
Advantages of Clearing:
1. Since clearing does not involve cash and all the transactions take place through entries in the
computer, the number of transactions can be unlimited.
2. No cash is needed as such the risk of robbery and embezzlement is totally eliminated.
3. Systematic arrangement for collection and clearance of cheques.
4. Speedy and economic collection and clearance of cheques.
5. Clearance of cheques and other instruments of different branches of different banks in a
systematic manner without any flaw and mistake.
6. The collection and clearance of government bills, instruments and cheque.
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7. The collection of government revenue through cheque, pay orders and drafts payable through
State Bank of Pakistan and National Bank of Pakistan.
8. It avoids the difficulties and cumbrances faced by the branches if they collect the instruments
directly from branch to branch.
9. Confidence among the clearing members is produced.
Stamping on the Cheques and Deposit Slips:
For Cheques, Two Stamps Are Affixed:
―Payee‘s Account Will Be Credited‖ on the back of the cheque.
―Clearing Stamp‖ on the front of the cheque.
For Pay Orders, Two Stamps Are Affixed:
―Disbursement Guaranteed‖ on the back of the cheque.
―Clearing Stamp‖ on the front of the cheque.
For Deposit Slips, Only One Stamp Is Used:
Clearing Stamp.
The stamps are duly signed by the authorized officer of the bank. The date on the clearing
stamp is always one day ahead, because the cheques are presented in the concerned branches the
next day for payment.
Same Day Clearing:
The practice of issuing SBP cheque on behalf of the customers for the purpose of same day
adjustment adopted by the banks have been dis-continued and a system has been introduced for
same day clearing through NIFT.
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Pre- Requisites for Same Day Clearing:
The following are the requirements for availing this facility:
Same day clearing is restricted to instruments valued at a minimum of Rs. 100,000/- and
above and received by 10:00 AM.
The depositor must make specific request to the branch for Same Day Clearing.
The Same Day Clearing is restricted to the branches that are designated only, which will
ensure that the timings in this respect are strictly followed.
Cheques Returned in Outward Clearing:
The cheques which are sent for local clearing may be returned for the following reasons:
Funds Insufficient
Signatures Differs
Dormant Account
Stop Payment by the Drawer etc.
The returned cheques are entered in the separate register called ―Returned Cheques in
Outward Clearing‖ the day when they received. After making the entries, the client is called for the
collection of such cheques. If the client does not come to the bank after the reasonable time period,
the cheque is then dispatched to the customer along with the letter containing the details of the
cheque like cheque date, cheque number and the reason for return of the cheque. The photocopy of
both the cheque and the letter is kept in a file called ―Returned Cheques Dispatched‖.
If the client comes to collect the cheque, photocopy of the cheque and the return memo is also kept
and then receiving of the client is taken on the cheque return register and the photocopies of both
the cheque and the return memo are kept in a file named as ―Returned Cheques‖.
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OBC:
OBC stands for Outward Bills for Collection. The instrument out of station i.e. beyond
clearing house area are called Outward Bills for Collection (OBC). A schedule is prepared for
OBC where mentioned the proceed remitted. OBCs instrument must always be endorsed. The
endorsement of the instrument is always endorsement –3. OBCs are recorded in a register with
date, serial number, drawee‘s bank, amount. It is done through the following 3 ways:
Inter City Clearing
Through Our Branch
Direct To The Relevent Bank
IBC:
IBC stands for Inward Bills for Collection. The instrument sent to us from the outstation
branches of the banks for collection are called Inward Bills for Collection (IBC). Such instruments
may be drawn on us or on other branches /banks of the city. On receipt of the IBC the same is to be
inserted in the IBC register and IBC No. is to be written on the forwarding letter of the same by
fixing rubber stamp. It is done through the following 3 ways:
Inter City Clearing
Through Our Branch
Direct To The Relevent Bank
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Inter City Clearing:
Other checques of another city are called Inter City Clearing and is delt under OBC/IBC. It
is also done by NIFT.
Stamping for OBC:
On The Face:
Clearing Stamp With the Date of Next Day
Inter City Clearing Stamp
OBC Stamp
On The Back
Payee‘s A/C Will Be Credited For Cheque
Disbursement Garanteed For DD or PO
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Cash Department
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Cash:
This is very important department because
cash is the most liquid asset and mostly frauds are
made in this department. Here the individuals that
are authorized to go in this department have to be
very careful because when at the end of day the cash
is balanced, a little more or little less balance can
cause problem and then they have to see where they have made mistake. So extra care is taken in
this department and nobody is allowed to enter in this department except authorized persons only.
When cash is received at the counter, this entry is recorded in the computer by the cashier.
At the close of the day, these entries are balanced with each other and cash shown in system is
balanced with physical cash.
When the cheque or any negotiable instrument is presented at the counter for payment, the
cashier at first ask for the photocopy of CNIC of the person who has come, instead of actual
account holder, with the cheque and then they record the transaction in the computer and then
payment is made to the payee. At the end of the day, the entries the cashier has made are balanced
with the entries that have been made by the assistant manager.
The consolidated figure of the receipt and payment of the cash is entered in the cash
balance book (in the computer) and drawn closing balance of cash.
Opening Balance + Receipts – Payments = Closing Balance
Here they have to maintain the cash regulatory requirement (reserve) that a maximum cash
reserve requirement that a bank should possess is 50 millon and at every day end the cash details
are e-mailed to the head office which uses this information to insure the cash at a branch.
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Utility bills are also accepted at this department while unsorted, reissuable notes, defective
(numbers mismatch) or soiled notes etc are also accepted at this department. The bank is also
authorized by the State Bank of Pakistan to replace these notes with the new ones i.e. Fresh Cash or
Sorted Cash. Here the online charges, consisting of only withholding tax, are charged from those
who want to avail the facility of online banking for a amount more then Rs. 25,000.
Things used at the Cash Departmnet are:
1. Counting Machine
This machine is used to count cash. It is helpful in counting large sums of money instently
thus reducing service time.
2. Binding Machine
It is used to bind cash into bundles of 100 Notes.
3. Ultravoilet Rays Or Note Detector
It is a machine that uses ultravoilet rays to detect that the note is orignal or fake.
4. Boards
These are boards suplied by the State Bank of Pakistan to the bank to display near the Cash
Counter. These bords include the Mohtasib Board and the Cash Bords that describe the
feachers in the currency notes that are used to check that the currency note is orignal or
fake.
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Liability Department
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Consumer Banking
Page 184 of 300
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Home Construction:
So you want to build your Dream home rather than buy a ready made one? You make the
design, we''ll help you build it.
Construction Tenure Maximum 2 Years
Financing Tenure Minimum 2 Years (excluding construction period)
Maximum 20 Years (including construction period)
Financing Range Rs. 200K – 10M
Page 185 of 300
Bank Investment Ratio
Salaried / Selected SEPs*:
• Up to 80% for financing upto Rs. 10M.
• Up to 70% for financing > Rs. 10M.
Businessmen/NRPs: Up to 70% for all financing amounts.
Prepayment Option
available
No Penalty apply after one year.
In case Customer applies for purchase of early units or pre-payment
within 12 months after disbursement, additional Musharakah Units will be
revalued at 5% higher than face value.
Home Renovation:
Thinking of remodelling your kitchen to fulfill your wife's long awaited wish, or build a
study area for your kids, or a cozy library for your parents, or just want to give your home a new
look? you plan it, we'll help you renovate it.
Construction Tenure Maximum 6 months
Financing Tenure 2-7 Years
Financing Range Rs. 150K – 10M
Bank Investment Ratio
Maximum 50% for Salaried / Selected SEPs*
Maximum 50% for Businessmen/NRPs
(* Doctors, Engineers, Architectures, Chartered Accountants)
Prepayment Option
available
No Penalty apply after one year.
In case Customer applies for purchase of early units or pre-payment
within 12 months after disbursement, additional Musharakah Units will be
revalued at 5% higher than face value.
Home Replacement:
Don't lay the foundation of your Dream home on interest. If you already have a
Conventional Mortgage loan and want to switch to Shariah compliant means of Financing, we'll
help you transfer it.
Financing Tenure 2-20 Years
Financing Range Rs. 200K - 10M
Page 186 of 300
Bank Investment
Ratio
Salaried / Selected SEPs (Doctors, Engineers, Architectures, Chartered Accountants):
Up to 80% for all financing
Businessmen/NRPs:
Up to 70% for all financing amounts.
Prepayment Option
available
No Penalty apply after one year.
In case Customer applies for purchase of early units or pre-payment within
12 months after disbursement, additional Musharakah Units will be revalued
at 5% higher than face value.
The MUSKUN Home financing facility is based on the principle of Diminishing
Musharakah and Ijarah. The Diminishing Musharakah transaction is based on Shirkat-ul-Milk
where you and the Bank participate in ownership of a property. The share of the bank is then leased
to you on the basis of Ijarah and is divided into a number of units. It is then agreed that you will
buy the units of the bank periodically, thereby increasing your own share till all the units of the
Bank are purchased by you which will make you the sole owner of the property. Till that time, you
pay the Bank rent for its units leased to you. The rent keeps on decreasing as your ownership in the
property increases and that of the Bank decreases.
Benefits:
Quick Processing
Financing up to 50% of the value of the property
Financing limit Rs. 10 Million
Tenor up to 20 years
No pre payment additional price charged after one year
Flexible & Affordable installments with Sahulat payment schedule
Clubbing of family income
No Negative Area
How It Works:
Page 187 of 300
You will approach BankIslami and inform about your needs of financing for Home
Purchase, Construction, Renovation or Balance transfer facility. You will then submit the filled
Application Form along with the required documents and a cheque for processing fee. Our
Business Executive will guide you during the whole process. The Bank will conduct verification of
your residence & office addresses as well as those of the references provided by you. The Bank will
then conduct your Income estimation to determine the maximum financing that can be provided to
you. In case you are Self Employed, our agent will approach you for the necessary income details
and documents. In case you are Salaried, we will approach your employer for this purpose. A legal
opinion is then obtained by the Bank on the property documents submitted by you.
Valuation of the property is done to determine its Market value. The Bank then issues you an
offer letter for the financing amount you qualified for based on your evaluation. After your
acceptance, a Shirkat-ul-Milk (Musharaka) Agreement is signed between you and the Bank,
whereby, the Bank and you will become joint owners (partners) in the Musharakah property.
A Pay Order is issued in the name of the seller in case of MUSKUN Home purchase by the
bank. Your Business Executive and our in house / Externa lawyer will accompany you for the
transfer of property in your name. The Pay Order is then handed over to the seller. In case of
MUSKUN Home Construction / Renovation / Replacement Cases, the financing amount is simply
credited to your account. It is ensured through Shariah-compliance checks that the funds are
utilized only for construction/renovation/replacement.
You and the Bank now jointly own the home. You and the Bank also execute a Monthly Payment
Agreement whereby you agree to pay a monthly payment to the Bank for the use of the bank's
ownership in home. Undertaking to Purchase is given by you, under which you undertake to
purchase the Musharakah Units (representing Bank's undivided ownership share in the property)
from the Bank periodically. On monthly basis, you purchase Musharakah units from the Bank.
When you have purchased all units of Bank, you become the sole owner with a free and clear title to
your home.
Page 188 of 300
Fatwa:
BankIslami's commitment to Shariah is strict and absolute. We have the distinction of being
the only Bank to have a full time Shariah adviser as well as having a prestigious local Shariah
board of global repute. Muskun Home financing products are approved and verified by our Shariah
Board. To view our Shariah Board's approval of Muskun Home Financing products please see
Anaxture:
MUSKUN Property Purchase
MUSKUN Replacement
MUSKUN Property Construction & Renovation
Eligibility:
Citizenship Pakistani
Cities Karachi , Lahore and Islamabad/Rawalpindi
Age Limit
Salaried/Businessmen/Selected Professionals:
Primary Applicant: 25-65 Years
Co- Applicant: 21-70 Years
NRPs:
Primary Applicant: 25-60 Years.
Co- Applicant: 21-70 Years.
Employment Tenor
Salaried:
Minimum 6 months at current employment and 2 years continuous
employment experience in the same industry/field.
Businessmen:3 years of business / practice.
Minimum Income
Salaried: Rs. 35,000/-
Business man: Rs. 50,000/-
NRPs: Rs. 100,000/-
Additional Criteria
for NRPs
An NRP needs to have a Co-applicant residing in Pakistan as an Authorized
Person on behalf of the NRP.
Only Salaried NRPs can avail MUSKUN Home Financing.
Documents Required:
General:
Page 189 of 300
Copy of CNIC (Applicant and Co-applicant)
2 passport size photographs (Applicant and Co-applicant)
Completely filled Application form with Applicant's Profile Report
Copies of Last 6 months paid utility bills
Property Documents:
Copy of chain of all title documents
Approved Building plan
Public notice
For Salaried Persons:
Employment certificate issued by employer
Last three Salary Slips
Bank Statement of last 12 months
Detail of other financing along with its repayment
For Businessmen:
Income tax return for last three years ,
Proprietorship Letter/Partnership ded/ Memorandum and Articles of Association
Company Bank Statment of last 12 months
Detail of other financing along with its repayment
For NRPs:
We offer NRPs (only Salaried segment) purchase/construct/renovate/balance transfer
facility of a House/Property only in Pakistan only
Last three months Salary Slip
Copy of Passport
Copy of NICOP
VISA/residential status proof
Tax deduction details
Employment Certificate and Contract Copy
Bank Letter and Banks Statement of last 12 months
2 passport-sized colored Photographs of Applicant / Co-Applicant
All the above mentioned documents relating to NRP should be duly attested by Pakistani
Consulate
Page 190 of 300
broshure
Brochure
New Vehicle
Page 191 of 300
Features:
Drive your Dream Car-the right way with Islami Auto Ijarah. Now you can avail Auto
finance facility for a Car of your choice in a completely Shariah compliant manner.
BankIslami's Auto Ijarah facility is based on the concept of Ijarah. It is a Shariah compliant
alternative to Conventional leasing where Bank acts as a Lessor and you act as a Lessee. The Bank
requires you to pay a monthly rent for the use of the Vehicle. In this while, the ownership of the
vehicle remains with the Bank, only the rights of use is transferred to you. At the end of the Ijarah
Agreement, you will be given a choice whether to return the vehicle to the Bank and receive back
the initial security deposit you paid* or to purchase it at a price as low as the security deposit.
Ijarah facility for New Vehicles
Tenure of Ijarah Min- 3 Years, Max-5 years
Minimum Cost of Vehicle Rs. 250,000
Security Deposit Min -30%, Max-50%
Processing Charges Rs. 4,500/- (Rs. 1,000 Pre Processing is part of the Rs. 4,500/-
Amount)
Tracker Installation All Vehicles costing above Rs. 600,000 are required to be installed
with tracker
Takaful Takaful coverage on all vehicles is compulsory and is provided by
Takaful Pakistan
*conditions apply
Concept of Ijarah:
Page 192 of 300
Ijarah means 'to give something on rent'.It is a Shariah compliant alternative to
Conventional leasing where Bank acts as a Lessor and you act as a Lessee. The Lessor (Bank)
allows the Lessee (You) to use the vehicle owned by the Lessor in return for a monthly rent. The
following are rights and responsibilities of the Lessor and Lessee in an Auto Ijarah arrangement:
The Lessee has the right to use the vehicle whereas the ownership rests with the Lessor.
All liabilities resulting from the ownership (Islamic insurance, transportation, duties etc) shall
be borne by the Lessor and all the liabilities relating to use of the vehicle shall be borne by
the Lessee.
The vehicle will remain in the risk of the Lessor throughout the lease period. Any damage or
loss caused by factors which are beyond the control of the Lessee shall be borne by the
Lessor.
The Lessee is liable for any damage to the vehicle caused by any misuse or negligence on
his/her part.
The period of lease must be determined in clear terms and the vehicle must be fully identified
and quantified by both parties.
The Lessor cannot increase the rent unilaterally.
The Lease period will commence from the date on which the vehicle is delivered to the Lessee
whether the Lessee has started using it or not.
If the leased vehicle has lost its function and no repair is possible, the lease shall terminate on
the day on which such loss occurred. However, if the loss is caused due to misuse or
negligence of the Lessee, he/she will be liable to compensate the Lessor at a value that was
prevailing in the market immediately before loss.
The Lessee will bear the maintenance and operating costs of the vehicle during the lease
period.
The Lessor will bear the cost of Takaful of the vehicle and its annual renewals during the
lease period.
All ownership related expenses (registration, Takaful) shall be borne by the Lessor.
Rent will start after delivery of vehicle to the Lessee.
Page 193 of 300
After completion of the tenor of lease, the Lessor will go for any of the four options with the
mutual consent of the Lessee:
Give an option to the lessee to purchase the vehicle at a pre agreed price.
Take the vehicle back from the Lessee
Renew the Lease contract for another tenure.
Lease it out to another party.
The Differences between Conventional Lease & Auto Ijarah:
Conventional Lease Auto Ijarah
Lease commences the very day on which the
price is paid by the Bank, whether the Customer
has taken the delivery or not
At BankIslami, rentals start after the delivery of
asset, not from the day the price has been paid
by BankIslami
Expenses incurred in the process of purchase of
asset are paid by the Customer
BankIslami is the owner of the asset therefore it
is liable to pay all expenses incurred in the
process of its purchase
Lease does not differentiate between wear &
tear or losses caused by the negligence of
Customer and Customer is liable for cost
incurred due to natural disasters
The Customer is responsible only for misuse and
negligence, but not for events beyond control. In
Auto Ijarah, each situation is treated separately
Penalty charges are taken from Customer on
late payment. They are taken as income by the
Bank
If the Customer fails to pay rental on due date, a
certain amount will be taken from the Customer
and given to charity by BankIslami
In a lease agreement it has been noticed that
unrestricted power has been given to Bank to
terminate the lease unilaterally whenever it
wishes
If the Customer breaks any term of the
agreement, BankIslami has a right to terminate
Auto Ijarah unilaterally. However, if there is no
contravention at Customer‘s end Auto Ijarah
cannot be terminated without mutual consent
Page 194 of 300
How It Works:
You will approach BankIslami and identify the vehicle you want on Auto Ijarah. You will fill
in the Application Form and submit the required documents. BankIslami will process your
application and approve or reject the credit application, depending on how you fit the bank‘s risk
criteria. If the application is approved, you will sign an Undertaking to Ijarah whereby you will
undertake to lease the vehicle. This document is signed in booking cases only once it arrives at the
dealer. After the vehicle arrives at the dealer and is purchased by the Bank, you will sign an Ijarah
agreement with the bank, whereby the Bank will rent out the vehicle to to you subject to the terms
and conditions of the Ijarah Agreement.
Under the Ijarah Agreement, you will undertake to pay a monthly payment for the right to
use the vehicle in line with the Terms & Conditions of the Agreement. Under the Ijarah Agreement
the customer also signed the undertaking to purchase document. Under the Agreement, all the cost
associated with the ownership of the vehicle will be borne by the Bank, while you will be
responsible for all usage-related expenses of the vehicle. At the end of the Ijarah period, you will be
offered to buy the Vehicle at a pre-agreed value from the Bank or get your security deposit refunded
to you by returning the vehicle to the Bank.
Elijibility:
Citizenship Pakistani
Cities Karachi, Lahore and Islamabad/Rawalpindi
Income Minimum Rs. 20,000 (Net Disposable)
Age Limit
For Salaried:
Minimum 23 Year (at the time of Maturity)
Maximum 60 Years (at the time of Maturity)
For Self employed:
Minimum 23 Years (at the time of Maturity)
Maximum 65 Years (at the time of Maturity)
Fatwa:
Page 195 of 300
BankIslami's commitment to Shariah is strict and absolute. We have the distinction of being
the only Bank to have a full time Shariah adviser as well as having a prestigious local Shariah
board of global repute. Islami Auto Ijarah is approved and verified by our Shariah Board. To view
our Shariah Board's approval of Islami Auto Ijarah please see Anaxture 2.
Documents Required:
Salaried Individual:
Last six months Bank Statement
Copy of CNIC
2 Photographs
Copy of N.T.N Certificate( if available)
Paid Utility/mobile/card bills-within last 2 months
Salary Slip
Employment letter ( should be from HR and should disclose the tenure of employment,
designation, salary breakup)
Businessmen/Self Employed Professional:
Last one year Bank Statement
Copy of CNIC
2 Photographs
Copy of N.T.N Certificate or Proprietorship letter
Visiting Card
1 month current and paid Utility /mobile/card bill
3 years Business Proof
Page 196 of 300
Used / Imported Vehicle
Features:
Drive your Dream Car-the right way with Islami Auto Ijarah. Now you can avail Auto
finance facility for a Car of your choice in a completely Shariah compliant manner.
BankIslami's Auto Ijarah facility is based on the concept of Ijarah. It is a Shariah compliant
alternative to Conventional leasing where Bank acts as a Lessor and you act as a Lessee. The Bank
requires you to pay a monthly rent for the use of the Vehicle. In this while, the ownership of the
vehicle remains with the Bank, only the rights of use is transferred to you. At the end of the Ijarah
Agreement, you will be given a choice whether to return the vehicle to the Bank and receive back
the initial security deposit you paid* or to purchase it at a price as low as the security deposit.
Ijarah facility for New Vehicles
Tenure of Ijarah Min- 3 Years, Max-5 years
Minimum Cost of Vehicle Rs. 250,000
Security Deposit Min -30%, Max-50%
Processing Charges Rs. 4,500/- (Rs. 1,000 Pre Processing is part of the Rs. 4,500/-
Amount)
Tracker Installation All Vehicles costing above Rs. 600,000 are required to be installed
with tracker
Takaful Takaful coverage on all vehicles is compulsory and is provided by
Takaful Pakistan
*conditions apply
Concept of Ijarah:
Page 197 of 300
Ijarah means 'to give something on rent'.It is a Shariah compliant alternative to
Conventional leasing where Bank acts as a Lessor and you act as a Lessee. The Lessor (Bank)
allows the Lessee (You) to use the vehicle owned by the Lessor in return for a monthly rent. The
following are rights and responsibilities of the Lessor and Lessee in an Auto Ijarah arrangement:
The Lessee has the right to use the vehicle whereas the ownership rests with the Lessor.
All liabilities resulting from the ownership (Islamic insurance, transportation, duties etc) shall
be borne by the Lessor and all the liabilities relating to use of the vehicle shall be borne by
the Lessee.
The vehicle will remain in the risk of the Lessor throughout the lease period. Any damage or
loss caused by factors which are beyond the control of the Lessee shall be borne by the
Lessor.
The Lessee is liable for any damage to the vehicle caused by any misuse or negligence on
his/her part.
The period of lease must be determined in clear terms and the vehicle must be fully identified
and quantified by both parties.
The Lessor cannot increase the rent unilaterally.
The Lease period will commence from the date on which the vehicle is delivered to the Lessee
whether the Lessee has started using it or not.
If the leased vehicle has lost its function and no repair is possible, the lease shall terminate on
the day on which such loss occurred. However, if the loss is caused due to misuse or
negligence of the Lessee, he/she will be liable to compensate the Lessor at a value that was
prevailing in the market immediately before loss.
The Lessee will bear the maintenance and operating costs of the vehicle during the lease
period.
The Lessor will bear the cost of Takaful of the vehicle and its annual renewals during the
lease period.
All ownership related expenses (registration, Takaful) shall be borne by the Lessor.
Rent will start after delivery of vehicle to the Lessee.
Page 198 of 300
After completion of the tenor of lease, the Lessor will go for any of the four options with the
mutual consent of the Lessee:
Give an option to the lessee to purchase the vehicle at a pre agreed price.
Take the vehicle back from the Lessee
Renew the Lease contract for another tenure.
Lease it out to another party.
The Differences between Conventional Lease & Auto Ijarah:
Conventional Lease Auto Ijarah
Lease commences the very day on which the
price is paid by the Bank, whether the Customer
has taken the delivery or not
At BankIslami, rentals start after the delivery of
asset, not from the day the price has been paid
by BankIslami
Expenses incurred in the process of purchase of
asset are paid by the Customer
BankIslami is the owner of the asset therefore it
is liable to pay all expenses incurred in the
process of its purchase
Lease does not differentiate between wear &
tear or losses caused by the negligence of
Customer and Customer is liable for cost
incurred due to natural disasters
The Customer is responsible only for misuse and
negligence, but not for events beyond control. In
Auto Ijarah, each situation is treated separately
Penalty charges are taken from Customer on
late payment. They are taken as income by the
Bank
If the Customer fails to pay rental on due date, a
certain amount will be taken from the Customer
and given to charity by BankIslami
In a lease agreement it has been noticed that
unrestricted power has been given to Bank to
terminate the lease unilaterally whenever it
wishes
If the Customer breaks any term of the
agreement, BankIslami has a right to terminate
Auto Ijarah unilaterally. However, if there is no
contravention at Customer‘s end Auto Ijarah
cannot be terminated without mutual consent
Page 199 of 300
How It Works:
You will approach BankIslami and identify the vehicle you want on Auto Ijarah. You will fill
in the Application Form and submit the required documents. BankIslami will process your
application and approve or reject the credit application, depending on how you fit the bank‘s risk
criteria. If the application is approved, you will sign an Undertaking to Ijarah whereby you will
undertake to lease the vehicle. This document is signed in booking cases only once it arrives at the
dealer. After the vehicle arrives at the dealer and is purchased by the Bank, you will sign an Ijarah
agreement with the bank, whereby the Bank will rent out the vehicle to to you subject to the terms
and conditions of the Ijarah Agreement.
Under the Ijarah Agreement, you will undertake to pay a monthly payment for the right to
use the vehicle in line with the Terms & Conditions of the Agreement. Under the Ijarah Agreement
the customer also signed the undertaking to purchase document. Under the Agreement, all the cost
associated with the ownership of the vehicle will be borne by the Bank, while you will be
responsible for all usage-related expenses of the vehicle. At the end of the Ijarah period, you will be
offered to buy the Vehicle at a pre-agreed value from the Bank or get your security deposit refunded
to you by returning the vehicle to the Bank.
Elijibility:
Citizenship Pakistani
Cities Karachi, Lahore and Islamabad/Rawalpindi
Income Minimum Rs. 20,000 (Net Disposable)
Age Limit
For Salaried:
Minimum 23 Year (at the time of Maturity)
Maximum 60 Years (at the time of Maturity)
For Self employed:
Minimum 23 Years (at the time of Maturity)
Maximum 65 Years (at the time of Maturity)
Page 200 of 300
Fatwa:
BankIslami's commitment to Shariah is strict and absolute. We have the distinction of being
the only Bank to have a full time Shariah adviser as well as having a prestigious local Shariah
board of global repute. Islami Auto Ijarah is approved and verified by our Shariah Board. To view
our Shariah Board's approval of Islami Auto Ijarah please see Anaxture 2.
Documents Required:
Salaried Individual:
Last six months Bank Statement
Copy of CNIC
2 Photographs
Copy of N.T.N Certificate( if available)
Paid Utility/mobile/card bills-within last 2 months
Salary Slip
Employment letter ( should be from HR and should disclose the tenure of employment,
designation, salary breakup)
Businessmen/Self Employed Professional:
Last one year Bank Statement
Copy of CNIC
2 Photographs
Copy of N.T.N Certificate or Proprietorship letter
Visiting Card
1 month current and paid Utility /mobile/card bill
3 years Business Proof
Additional Docs required for Used & Imported Cars:
Copy of Sales invoice & Sales certificate
Copy of registration book
Import documents if imported
Copy of N.T.N Certificate or Proprietorship letter
Visiting Card
1 month current and paid Utility /mobile/card bill
3 years Business Proof
Page 201 of 300
Brochure
Page 202 of 300
Is it permissible for an Islamic bank to impose penalty for late payment?
In Islamic law it is permissible to penalize a debtor who is financially sound but delays
payment of debt without any genuine reason. Such act of the debtor is unjust as the Prophet
(PBUH) has said, "A rich debtor who delays payment of debt commits Zulm".
A heavy non-performing portfolio and default on part of the clients is a serious problem
confronting the financial institutions all over the world including Pakistan. This problem could be a
threat to success of Islamic banking system. If clients do not honor their commitment in respect of
timely payment of a debt created in installment sale, Murabaha, leasing or do not pay banks‘ share
of profit in participatory modes or do not deliver goods at stipulated time in Salam and Istisna‘a, it
could cause irreparable loss to the system, the banks and financial institutions and ultimately to
savers and the economy.
The jurists allow punishment (T´azir) to such borrower in the form of fine. In the opinion of
some Maliki jurists a delaying borrower would be obliged to pay for charitable activities. In view of
the severity of the problem, all Shariah bodies like Islamic Fiqh Academy of the OIC, Shariat
Appellate Bench of the Supreme Court of Pakistan, etc. have approved the provision of penalty
clause in the contractual agreements that keeps a balance between the requirement in view of
severity of the problem and that of the Shariah conditions/principles to keep the fine difference
between interest and Murabaha profit intact. However, the penalty proceeds would be used for
charity because penalty on default in repayment cannot become an automatic source of income for
the creditor.
Page 203 of 300
Corporate Banking
Page 204 of 300
What We Offer:
You are the major drivers of our economy and we are glad to be at your service. All of your
financial needs are within the reach of our highly qualified professionals who are fully capable and
committed to understand your business and provide timely and effective financial services on an on
going basis.
We offer the following products and services to help you achieve your business objectives:
Account Services
Trade Services
Working Capital Finance
Project Finance
Musharakah Finance
Mudarabah Finance
Ijarah
Page 205 of 300
Account Services:
BankIslami offers all basic banking services to suit your routine business needs.
Current Accounts with zero account maintenance fees
Choice of currency-PKR, EURO, USD, GBP & JPY
Transfer of funds with lowest transaction fees
Access to quick and timely foreign exchange services
Access to the entire online branch network 102 Branches in 49 Cities
Unlimited within city and intercity online transactions
Free Deposit and Withdrawal over the counter services at all BankIslami branches
Trade Services:
BankIslami offers a wide range of export and import services designed to assist you in
building on your strengths, so that your company can seize new business opportunities around the
world. These include:
Bank Guarantee
Services for Exporters
Export Bills for Collection
L/C Advising & Confirmation services
Islamic Export Refinance facility
Financing against Export Sight and Usance Bills (Shariah-compliant alternative for Bill
Discounting)
Pre-Shipment and Post-Shipment financing on Islamic modes of financing
Services for Importers
Letter of Credit
Import Financing (by way of Murabaha/Ijarah)
Financing:
Page 206 of 300
Working Capital Finance: for your short term financing needs.
At BankIsami, we understand that your business needs constant access to low cost
and flexible financing, in order to meet day-to-day funding needs. Our team of experienced
Relationship Managers with wide sector experience offer you effective cash flow
management by way of financing arrangements suitably structured to your needs and your
risk profile.
Cash is the lifeline of your business. Let your business have a blooming &
prosperous life with our Working capital finance facility. To fulfill your working-capital
financing requirements, BankIslami offers a wide range of products as follows:
Murabahah Financing: Murabahah is a type of sale in which the seller discloses the
cost of goods and profit to the buyer. Through this short-term financing mode,
BankIslami can finance the 'asset-purchase requirement' of the Corporate Customers.
The Customer, intending to utilize the Murabahah facility, identifies the
commodities ('assets') it needs to purchase through Murabahah facility. BankIslami
purchases the assets from Supplier and then sells the same to the Corporate Customer
against an agreed price (including disclosed profit portion) on deferred payment basis.
Istisna Financing: Istisna is a contract of sale of specified items to be
manufactured/constructed, with an obligation on the part of the manufacturer/seller to
deliver them to the buyer upon completion.
Istisna can be used for made-to-order commodities where the buyer (BankIslami)
would order a specific good with some specifications to be manufactured by the
Corporate Client in a particular period of time and deliver to BankIslami after
completion.
Page 207 of 300
Salam Financing: Salam is a sale, whereby, the seller undertakes to supply some
specific commodity to the buyer at a future date in exchange for an advanced price fully
paid on the spot. As a matter of principle, the sale of a commodity which is not in the
possession of the seller is unlawful. Thus, the practice of Salam is legalized as an
exception and is allowed under certain terms and conditions.
Salam is allowed for commodities only which are homogeneous and fungible in
nature i.e. every unit of the commodity should be identical and substitutable in nature
e.g. sugar, rice, wheat etc. Therefore, Salam is an ideal mode for financing for
agricultural concerns. Salam financing can also fulfill all working capital requirements
of manufacturers/traders dealing in homogeneous commodities.
Project Finance: for your Medium & Long term financing needs.
BankIslami offers medium and long-term financing facilities for infrastructure, BMR
and industrial projects in all sectors directly or on syndication basis.
Ijarah: Ijarah is a contract, whereby, BankIslami will lease out an asset to the Corporate
Client and receive periodical rentals from the Client for the use of that asset. The asset
will remain in the ownership of the Bank throughout the term of Ijarah. At the end of the
Ijarah term, the asset can be purchased by the Client at an agreed price.
Ijarah is mainly used for long and medium term fixed asset financing for
infrastructure, BMR and industrial projects.
Page 208 of 300
Diminishing Musharakah: The product of Diminishing Musharakah is offered on the
basis of 'Shirkat-ul-Milk'. Shirkat-ul-Milk means partnership of persons in an undivided
property. Process of Diminishing Musharakah financing involves BankIslami taking share
in the ownership of a specific asset along with the Corporate Client and then gradual
purchase of the Client of BankIslami's ownership share in the asset through out the term
of Diminishing Musharakah. At the end of the Diminishing Musharakah term, Client
becomes the sole owner of the asset.
Diminishing Musharakah is mainly used for long and medium term fixed asset
financing for infrastructure, BMR and industrial projects. Diminishing Musharakah is
also an ideal mode for Real Estate Financing.
Musharakah Finance:
In Musharakah, a joint enterprise is formed for conducting some business in which all
partners share the profit according to a mutually agreed pre-determined ratio, whereas, the
loss is shared in the ratio of capital investment. From Shariah perspective, Musharakah is one
of the preferred modes of financing.
The scope of Musharakah is broad. Musharakah can be applied to fulfill project
financing needs as well as working capital financing needs of Corporate Clients. Since
Musharakah transactions are based on pure profit and loss sharing arrangement, therefore,
the risks associated with such transactions are greater as compared to other financing modes.
Due to this reason, Musharakah transactions are executed subject to satisfactory review of
feasibility of the proposed transaction/project.
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Mudarabah Finance:
Mudarabah is a kind of partnership where one partner gives money to another for
investing in a commercial enterprise. The investment comes from the first partner who is
called 'Rabb-ul-Maal' while the management of the business is an exclusive responsibility of
the other, who is called 'Mudarib'. The profits generated are shared according to a mutually
agreed pre-determined ratio, whereas, loss is borne by Rabb-ul-Maal unless the loss is due to
negligence of Mudarib.
The scope of Mudarabah is broad. Mudarabah can be applied to fulfill project
financing needs as well as working capital financing needs of Corporate Clients. Since
Mudarabah transactions are based on pure profit and loss sharing arrangement, therefore,
the risks associated with such transactions are greater as compared to other financing modes.
Due to this reason, Mudarabah transactions are executed subject to satisfactory review of
feasibility of the proposed transaction/project.
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InvestmentBanking
Page 211 of 300
What We Offer:
The external and internal market conditions have had a major impact in certain sectors of
the economy, yet their impact lies short term only. The overall market share of the Investment
Banking activities has remained robust and intact. The Bounce Factors in the equity markets is
seeing improvements which are likely to see activity in IPO offerings and mushrooming of Mutual
Funds. A good pipeline of Capital raising opportunities exists, particularly in Infrastructure,
Textile and Services industry. Amiable investment opportunities for the medium term may provide
leverage into credit and marketing activities. BankIslami Pakistan Limited takes deep pride in
providing Investment Banking to its valued customers, as its core business, revolving around the
concept of Wealth Management.
Products & Services:
BankIslami's Investment Banking Division offers a full range of the comprehensive,
innovative and uniquely structured customer centric advisory solutions to its clients. After
classifying the products and services of low, medium and high risk the product is structured on the
guidelines of Shariah.
Following are the Products and Services:
Advisory Trusteeship Fund Raising Trusteeship for SUKUKs etc Corporate Restructuring Fiduciary Roles in Mutual Funds Mergers & Acquisitions Specialized Roles Infrastructure Development Private Equity Project Financing Special Projects
Ijarah and Musharkah Syndications
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Structuring Underwriting
Securitizations SUKUKs' Distressed Assets Sales Equity Structured Finance Musharakah Certificates Initial Public Offerings
Clients:
Shahmurad Sugar Mills Pak Elektron Limited Three Stars Hosiery
Mills (Pvt.) Limited
New Allied Electronics
Industries (Pvt.) Limited
Eden Housing Limited SSGC Pace (Pakistan) Limited AMTEX Pvt. Limited
Haq Bahu Sugar Mills
(Pvt.) Limted
LESCO (Lahore
Electricity Supply
Corporation) Limited
Fatima Sugar Mills
Limited
Al Noor Sugar Mills
Limited Optimus Limited
Transections:
Privately Placed SUKUK Issue of Shahmurad Sugar Mills Limited amounting to
Rs.500,000,000/-
(rated A- by JCR – VIS)
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Privately Placed SUKUK Issue of Pak Elektron Limited amounting to
Rs.1,200,000,000/-
(rated A+ by PACRA)
Privately Placed SUKUK Issue of Amtex Limited amounting to Rs. 650,000,000/-
(rated A+ by JCR – VIS)
Privately Placed SUKUK Issue of New Allied Electronics Industries (Private) Limited
amounting to Rs. 750,000,000/- (rated A by JCR – VIS)
Privately Placed SUKUK Issue of Eden Housing Limited amounting to
Rs.1,630,000,000/-
(rated A by JCR – VIS)
Privately Placed SUKUK Issue of Eden Developers (Private) Limited amounting to
Rs.200,000,000/-
(rated A- by PACRA)
Privately Placed SUKUK Issue of Sui Southern Gas Company Limited amounting to
Rs. 5,000,000,000/-
(rated AA by PACRA)
Privately Placed SUKUK Issue of Eden Housing Limited amounting to
Rs.730,000,000/-
(rated A by JCR – VIS)
Privately Placed SUKUK Issue of Pak Elektron Limited amounting to
Rs.1,100,000,000/-
(rated A+ by PACRA)
Privately Placed SUKUK Issue of Pace (Pakistan) Limited amounting to
Rs.2,000,000,000/-
(rated AA- by PACRA)
Privately Placed SUKUK Issue of Lahore Electric Supply Corporation Limited
amounting to Rs. 5,000,000,000/- (backed by GoP Guarantee)
Privately Placed SUKUK Issue of Optimus Limited Amounting to Rs. 250,000,000/-
(Rated A - by JCRVIS)
Privately Placed SUKUK Issue of Haq Bahu Sugar Mills Limited Amounting to
Rs.295,000,000/-
Privately Placed SUKUK Issue of Three Stars Hosiery Mills (Pvt.) Limited Amounting
to Rs. 400,000,000/-
(Rated A + by PACRA)
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I.T. Department
Page 215 of 300
IT Department
The rapid advancement in Information
and Communication Technology (ICT) has
had a profound impact on the banking
industry and the wider financial sector over
the last two decades and it has now become a
tool that facilitates banks‘ organizational
structures, business strategies, customer
services and other related functions. The
recent ―IT revolution‖ has exerted far-reaching impacts on economies, in general, and the
financial services industry, in particular.
Within the financial services industry, the banking sector was one of the first to embrace
rapid globalization and benefit significantly from IT development.
Bank Islami is one of the leading banks of the world and it is completely dependent on the
use of technology i.e. it is doing the paperless banking.
Information Technology Department (ITD) is responsible for management and support of
the technology architecture, hardware, software, and the respective resources throughout the
country.
The IT department of Bank Islami is one of the most sensitive departments as the working of
the bank is completely dependent on the computer based and the web based technology and any
problem at any part can negatively impact the whole working of the bank. Thus, great care is taken
in the management of IT Department.
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The whole system of Bank Islami is using two lines of electricity. One is provided by the
WAPDA and the other is the use of UPS. In case the electricity is powered of, the UPS is started
which causes the computers not turn off and in this case there is no case of data loss and keeps the
important systems on for 10-15 seconds after which the generators are powered on which provides
the electricity to the whole bank.
The IT Department of the Bank Islami Bahawalpur Branch consists of the following:
1. Server of HP Company.
2. Router of CISCO Company
3. Dish With Switche of I-Direct Company
4. Switches
5. Biomatrix System
6. DTU Loop
7. Line Condetioner
8. UPS (Uninterrupted Power Supply)
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Duration of My Internship Program
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Duration of My Internship Program:
1st Week:
My internship started on Monday 28th June 2010. I went to the branch and met the branch
manager Mr. Hafiz Aqeel. He told me the basics of banking the structure of the organization the
way recruitment is done the systems used and introduced me to the staff of the branch. He also told
me that the cash counter is the most important part of the bank and it acts as the brain of the bank.
He also told me that we should always remember the past and learn from it and thus he told me
about the doomed fate of BCCI Bank. Then he told me the importance of clearance department.
Then he told me that we are using two system parallel PIBAS and IMal as we are shifting from
PIBAS to IMal. He taught me how to fill a deposit slip. He also took me for a ride to the cent where
he had to collect some deposit of a charitable organization.
The next day Mr. Hafiz Aqeel introduced me to Mr. Asad Mehmood Khan Ali Zai the
Customer Service Officer. I was told that he would be my menter and gide for the next one week. He
gave me the glosery of islamic banking and the policies and procedures manual to read. I read
them for quite a long time. He told me how to fill a deposit slip, a Know Your Customer Form
(KYC)and an Account Opening Forn (AOF). I made a lost of mistakes in them mostly doubling or
cutting mistake and I was asked to fill them again and again. I learned how to get customer
biomatrix and the requirements for account opening. In short I learned the whole process of
account opening. They gave me a complete set of aof to study and Mr Hafiz Aqeel gave me my
Internship Letter.
The third day was a surprise for the whole branch as the auditors had come on a surprise
visit. I met the auditors and then they left the branch and told that they would come for a thorough
audit on Monday. As it was the end of the fiscal year we kept on collecting government cheqes. The
next day was a holi day and the manager told me take a leave for the next day.
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The next day that is the forth day today I studed the zakat exemption form or the declaration
that a person gives us to not deduct zakat from his account. I studied the policies and procedures
manual. As NADRA Varisis was down so we could not open accounts.
2nd
Week:
The 2nd
week was the auditors week so we did not to much then sit observe the auditors and
see what they are doing and then clearing their objections. I learned how to brake a deal and do
premature encashment of islami mahana munafa account. 2 signatures of the customer at the back
is enough to brake the deal. I learned the whole process. I also learned how to issue a cheque book.
We entered the zakat exemption forms on the register and then we kept on coordinating with the
auditors.
I learned how to calculate profit to tell a customer how much profit will he get. I also
dispatched letters to the dormant account holders. I made fresh entries of zakat exemption stam
papers. i also arranged the forms and informed mr asad about the missing stam papers. I learned
how to make entries in IMal. I learned how to issue a TDR(Term Deposit Recipt). I lso lerned how
to stamp an AOF and related documents. I wrote dormant account on back of the dormant account
SS Cards.
3rd
Week:
This 3rd week was of full working and learning. The new internee from my class Ms. Freeha
Nazeer had joined in at the internship. I learned about the majour islamic banks and the way all
types of accounts work at bank islami. I studied how profit was given and how accounts are opened
as the new internee was here so everything had to start from a scratch. Learned aboud withholding
tax. I learned the different staff positions in a branch. We again discussed in detail how to brake a
deal. Learned how to make entry on IMal for deal brake.
We received the profit rates for this month from head office through e-mail. We made fresh
calculations on the basis of new rates. We learned about high risk accounts and how to fill a KYC
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(Know Your Customer) form. Discussed how islamic banking is intrest or riba free. We also
discussed what are the main activities of bank islami and how financing is done in ijarah, murabha
and musharka. We discussed the requirements for each of them. We learned what is product based
financing. Another person from commerce department joined us at internship named Mr. M. Anise.
We studied the products of bank islami and the value added services. We discussed account
types in deatail and the requirements for each of them. We discussed foreign currency accounts and
the Scedual Of Charges (SOC). We also discussed the requirements for foreign currency accounts.
We learned how accounts are declared deceased or dormant or credit block and the requirements
for re opening or payment of funds and closure of accounts. We learned about stop payment. We
discussed miner‘s account and disabled persons account like blind, etc. we learned about BB
Accounts and (CDR) Call Deposit Recipt and with this another week ends.
4th
Week:
In the 4th week we started off with money londering. We studied the Money Londering
manual and then discussed it in detail leraned how money londring is done and how bank tries to
prevent money londering. Learned how to stamp a tdr form. We started remetance department. We
Learned what is a Demand Draft (D.D.), Pay Order (P.O.), Telegraphic Transfer / Foreign
Telegraphic Transfer (T.T / F.T.T.), Internal Transfer (I.T.), Foreign Demand Draft (F.D.D) And
Travlers Cheques (T.C.); how they are made; what are the requirements for them; how are they
cleared and how they work at bank islami and other banks.
We also studied the clearing department. We learned how clearing is done and what is the
process of clearing. Learned about nift and the controle and administration policies of clearing at
bank islami. We read clearing from the policies and procedures manual. Learned about inward and
outward clearing, same day and inter city clearing, and 1st and 2nd clearing.we studied Outward
Branch Clearing (OBC) and all the stamps related to clearing. With this ends the 4th week.
5th
Week:
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This 5th
week was of full working and learning. On the 1st day we studied ATM. I was late
for the cash replanishment of the atm and the other 2 internees had seen how cash replanishment is
done. Then we theoratically studied all the aliments for the ATM including how replanishment is
done. We also studied the functions and working of the letter of credit (LC) for export and inport
purpose.
I discussed the organogram with the Branch Manager Mr. Hafiz Aqeel.we also studied the
cash boards by the SBP. We examined the notes for the 12 signs on the board and we saw the notes
under the ultravoilet light and saw the counting machine. We studied the instructions on the cash
counter and discussed the stamps that are used at the cash counter with the Cashior Mr Mian
Faisal. We also studied the types of cash; sorted reissuable cash and fresh cash are reissuable
while unsorted cash, soil cash and defective cash are not issuable.
We also learned concept and prectical application of mudarbha, ijara, musharka,
istisna,guarantee, letter of credit (LC) and Mudarba. I studied in depth the way these things of
financing are done, what are the requirements for each of them and the situation they are
applicable in.
6th
Week:
In the 6th
and last week of my internship. During this last week we studied the it department
and the accounts department and their working. I learned how cash is handed over to pheonix
armer and how it is received. I also learned about Service Quality Coordinator‘s (SQC) duties and
responsibilities.
I also saw the cash replanishment of the ATM. I was shown the cash cassets reject bin and
the system that operates the ATM Machine. And thus my traning was completed. For the rest of the
days of my internship I studied the policies ad procedures manual. I also filled a lot of Account
Opening Forms. I saw one of the bussiest day in the bank on the 2nd
last day of my internship and it
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taught me how to work in such a busy situation and how to give time to all the customers equally
and how to assign priority to the tasks.
To put it in a nutshell I would lik to say that this internship experience at the Bank Islami
was a uniqe and life changing one. It has taught me a lot about banking and life itself. My
experiences ar unforgetable. I loved the job and the people at the branch. The auditors visit proved
as a bonus for my internship. I learned a lot of things about banking through out my internship. I
also learned how to deal with customers. I have gained in-depth insight into the banking operations
of an islamic bank.. Its been fun working at Bank Islami. I love it. I have gained in-depth insight
into the banking operations of an islamic bank. My experience so far has been fabulous and I hope
what so ever I have learned helps me to develoup my career in future. My experiences have been
splendid and I hope that I would serve my country the Right way!
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Financial Analysis
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Financial Analysis:
1. Break Up Value:
Years 2006 2007 2008 2009
Break Up Value (Rs) 10.01 12.01 9.83 8.98
Interpretation:
The combined market value of a firm's assets if each were sold separately, as contrasted
with selling the firm as an ongoing business. Analysts look for companies with a large break-up
value relative to their market value to identify potential takeover targets. Investors can calculate a
breakup value on a perfectly healthy company as a way to determine a potential floor for the stock,
or a potential entry point for a prospective buyer. In order to accurately calculate a company's
breakup value, detailed data is needed on the revenue, earnings and cash flows for each distinct
operating unit of the company. Companies considering taking over another use the breakup value,
among other metrics, to determine whether a takeover is worth the time and expense. It is also
called the private market value. The Brake-up Value of Bank Islami increased from 2006 to 2007
but since then it is on a constant decline in 2008 and 2009. This is the result of the bank‘s corporate
strategy of expention. The expention to 102 branch network cost increased the loss to many times
the total accumilated loss thus resulting in a decrease in brakeup value.
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2. Market Value Per Share:
Years 2006 2007 2008 2009
Market Value Per Share (Rs) 10.55 16.20 7.25 5.89
Interpretation:
Market Value of Share in which price the share is available in the market. Market value of
the share is the current price at which the share is being traded in stock markets. The market price is
determined by the demand and supply forces in the market. If demand for a particular stock is more
than its supply (volume of trading) then the price of the share will go up and vice-versa. The Market
Value Per Share of Bank Islami was improved from 2006 to 2007 but then it plunged to a very low of
Rs. 7.25 in 2008 and it is on a continuous decline ever since. This is the result of the bank‘s
corporate strategy of expansion. The expansion to 102 branch network cost increased the loss to
many times the total accumulated loss thus resulting in a drop off in Market Value per Share.
3. Earnings Per Share:
Earning Per Share of Comman Share = Net Income
Weighted Average Number of Shares
Years 2006 2007 2008 2009
Earnings Per Share (Rs) (0.04) (0.13) (0.12) (0.91)
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Interpretation:
The portion of a company's profit allocated to each outstanding share of common stock.
Earning per common share is the amount of income earned on a share of common stock during an
accounting period. Earnings per share serves as an indicator of a company's profitability. It applies
to common stock and to corporate income statement. Earnings per share is generally considered to
be the single most important variable in determining a share's price. It is also a major component
used to calculate the price-to-earnings valuation ratio. The earning per sharefollowing an overall
decreasing trend from 2006 to 2009. The overall treind shows a decrease in earnings per share
from -0.04 in 2006 to -0.91 in 2009. But in year 2008 percentage of net loss decreases due to
increase in operating expenses and number of common shares increased due to which earning per
share decreased. While the overall decresing Earnings per share is the result of the bank‘s
corporate strategy of expention. The expention to 102 branch network cost increased the loss to
many times the total accumilated loss thus resulting in a crash off in Earnings per share.
4. Net Spread To Gross Return:
Years 2006 2007 2008 2009
Net Spread To Gross Return 81.34% 49.5% 50.3% 44.3%
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Interpretation:
The chart shows an overall dclining net spread to gross returns. The main reason for this is the branch
network expention strategy.
5. Financing To Deposit Ratio ADR:
Years 2006 2007 2008 2009
Financing To Deposit Ratio ADR 53.94% 40% 52% 47%
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Interpretation:
The graph shows that the ratio first declined in 2007 from 2006 but then it increased again in 2008 and fell a
bit in 2009 this trend is also due to the branch network expention strategy that the bank had adopted to
increase the branch network of the bank.
6. Capital Adequacy Ratio:
Capital Adequacy Ratio = Total Equity
Total Assets
Years 2006 2007 2008 2009
Capital Adequacy Ratio 61.83% 37.92% 39.83% 20.39%
Interpretation:
Capital Adequacy Ratio (CAR) is a ratio that regulators in the banking system use to watch bank's
health, specifically bank's capital to its risk. Regulators in the banking system track a bank's CAR
to ensure that it can absorb a reasonable amount of loss. Capital adequacy ratio is the ratio which
determines the capacity of a bank in terms of meeting the time liabilities and other risk such as
credit risk, market risk, operational risk, and others. It is a measure of how much capital is used to
support the banks' risk assets. This ratio is used to protect depositors and promote the stability and
efficiency of financial systems around the world.
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The ratio signifies the bank‘s contribution of equity in total assets. Strong equity base
indicates the low risk factor. A measure of a bank's capital. It is expressed as a percentage of a
bank's risk weighted credit exposures. In usual practice of banks, they emphasize more on deposits
than injecting new equity in the business. In case of the BIPL there is an overall decreasing trend in
the ratio from 2006 to 2009. Only in the year 2008 we saw a minute increase in percentage of
Capital Adequacy Ratio because number of common shares increased due to which Capital
Adequacy Ratio increased.
7. Cash Flow Margin:
Cash Flow Margin = Cash Flow From Operating Activities/Cash Flows
Net Sales
Years 2006 2007 2008 2009
Cash Flow Margin -73.43% 879% 75.54% 204%
Interpretation:
The Cash Flow Margin Ratio is an important ratio as it expresses the relationship between
cash generated from operations and sales. The company needs cash to pay dividends, suppliers,
service debt, and invest in new capital assets, so cash is just as important as profit to a business
firm. The Cash Flow Margin ratio measures the ability of a firm to translate sales into cash. The
numerator of the equation comes from the firm's Statement of Cash Flows. The denominator comes
from the Income Statement. The larger the percentage, the better. The chart shows that in 2006 the
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Cash Flow Margin Ratio was negative. It hiked up in year 2007 but then it plunged down again in
the year 2008 the reason was that the branch network expention strategy was showing its impact. It
improved in 2009 and it is a good percentage.
8. Cash Return on Assets:
Cash Return on Assets = Cash Flow From Operating Activities/Cash Flows
Total Assets
Years 2006 2007 2008 2009
Cash Return on Assets -1.83% 36.63% 5.81% 13.05%
Interpretation:
The Cash Return on Assets Ratio is generally used only in more advanced profitability ratio
analysis. It is used as a comparison to return on assets since it is a cash comparison to this ratio as
return on assets is stated on an accrual basis. Cash is required for future investments. The
numerator is taken from the Statement of Cash Flows and the denominator from the balance sheet.
The higher the percentage, the better. The chart shows that in 2006 the Cash Return on Assets
Ratio was negative. It hiked up in year 2007 but then it plunged down again in the year 2008 the
reason was that the branch network expention strategy was showing its impact. It improved in 2009
and it is a good percentage now.
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9. Return On Investment:
Return on Investment = ( Net Income
L.T.D+Equity ) 100
Years 2006 2007 2008 2009
Return on Investment -0.21% -0.26% -0.28% -2.7%
Interpretation:
A performance measure used to evaluate the efficiency of an investment or to compare the
efficiency of a number of different investments. Return on Investment (ROI) analysis is one of
several commonly used approaches for evaluating the financial consequences of business
investments, decisions, or actions. ROI gives an indication that how efficiently debt and equity
sources of the bank are contributing towards earning ability of the bank. This ratio indicates the
profit earned by the bank on the resources employed. ROI analysis compares the magnitude
and timing of investment gains directly with the magnitude and timing of investment costs. A high
ROI means that investment gains compare favorably to investment costs. A consistent increasing
loss trend can be noted in the ROI of the bank from 2006 to 2009 this is again the result of the
bank‘s corporate strategy of expention. Thee abrupt fall of ROI in 2009 is the direct result of the
strategy. The expention to 102 branch network cost increased the loss to many times the total
accumilated loss thus resulting in a drop off in Return on Investment.
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10. Return On Equity:
Return on Total Equity = ( Net Income
Avg.Equity ) 100
Years 2006 2007 2008 2009
R.T.E Ratio -0.42% -0.096% -0.012% -0.096%
Interpretation:
One of the most important profitability metrics is return on equity (or ROE for short). This
is the amount of net income returned as a percentage of shareholders equity. Return on equity
reveals how much profit a company earned in comparison to the total amount of shareholder equity
found on the balance sheet. This ratio i.e. return on equity shows the return the owners of the
business enjoy after paying all the financial expenses and other liabilities of the business. A
business that has a high return on equity is more likely to be one that is capable of generating cash
internally. For the most part, the higher a company's return on equity compared to its industry, the
better. The ratio got better in the year 2007 followed by 2008 and then worsened abruptly and
drastically in 2009. This was also due to the large capital funds accumulation of the bank for
expansion of the branch network of the bank.
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11. Due To Banks To Total Deposits:
Formula = Due To Banks
Total Deposits
Years 2006 2007 2008 2009
Due to banks to Total deposits 2.81% 0.70% 1.97% .56%
Interpretation:
This ratio signifies the financial mix of bank. In ideal situations, there should be decreasing
trend or consistency in this ratio. In case of BIPL, although there is a tremendous increase in
deposits but borrowing is also increasing considerably. The ratio has dropped dramatically in the
year 2007. The hasty increase in bank borrowing may be due to the expansion in branch network,
where more funds are required in initial years. A minor decrease shows good management. The
significant fall in 2009 is a proof of Bank Islami‘s efficient management. This ratio is better in
comparison to other banks.
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12. Return on Deposits:
Return on Deposits = Net Income After Taxes
Total Deposits
Years 2006 2007 2008 2009
Return On Deposits -0.47% -0.37% -0.42% -1.71%
Interpretation:
This ratio indicates to what extent deposits which represent funds mobilization on the part
of the bank contribute towards income generation. At BIPL this ratio shows a decreasing low trend
through out the year 2007 to 2008 as compare to year2006. This is again because of increase in
bank‘s setup and expansion all over the Pakistan. The grate drop in the return on deposit ratio is
also the result of the bank‘s expention in branch network strategy. So far bank had to bear lot of
expenses as compare with its income till 2008, the year of expention in branch network. These costs
earned a huge loss that is many times then the loss of last year and the deposits just almost doubled.
Thus that the gigentic increase in net loss resulted in a grate fall in return on deposit. It is still
better if we compare it with other well established banks. The bank is expected to have a great rise
in these ratios in years to come.
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13. Advances To Deposit Ratio:
Formula = . Advances .
Total Deposits
Years 2006 2007 2008 2009
Advances To Deposit Ratio 54% 40% 53% 48%
Interpretation:
This ratio, a comparison of funds generation and its funds mobilization, indicates the total
loans sanctioned by the bank in relation to total amount of money deposited with the bank. In
simple words it is how much they have coming in (deposits) vs how much they have going out
(loans). The more money the bank has loaned out generates more profit income provided the loans
are to secure borrowers. The bank has high advances to deposits ratio in the year 2006. In the year
2007 the advances to deposits ratio decreased but it was still even better as compared to other
banks. It took Bank Islami no time to regain its old advances to deposits ratio in the year 2008 but
it then fell again a bit in 2009 because of the branch network expention strategy which reduced the
bank‘s capacity to lend but still this is a good ratio and demonstrates good performance and grate
governance of the bank.
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14. Advances to Deposits+Borrowing Ratio:
Formula = . Advances .
Deposits+Bank Borrwings
Years 2006 2007 2008 2009
Advances to Deposits + Borrowing Ratio 52.5% 39.6% 51.3% 47.19%
Interpretation:
As continuous increase has been observed in borrowing from other banks because of
expansion in branch network the ratio has firstly decreased in year 2007 as compared to 2006 and
then it regains strength in year2008 but this is due to increase in deposits as the branch network
grew. It plunges down a little in 2009 because of the full cost impact of the branch network
expansion strategy which reduced the bank‘s capacity to lend.
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15. Deposit to Total Liability Ratio:
Formula = . Deposits .
Total Liabilities
Years 2006 2007 2008 2009
Deposit to Total Liability Ratio 87.9% 93.7% 89.8% 94.72%
Interpretation:
This ratio is used to see that banks deposits are what percentage of its total liabelities. A
There is an overall cyclical trent which is quite hard to explain because there is no clear patren but
an consistint increasing patren can be identified in the deposits to total liability ratio from 2006-
2009. The ratio increased in the year 2007 as compared to 2006 but then it droped off a bit in 2008
but it was still higher then the year 2006 and then it again jumped to a highest of 94.72% in 2009.
It shows that bank is increasing its borrowings from the people. The ratio is better as compared to
other banks.
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16. Cash to Deposit Ratio:
Formula = . Cash .
Total Deposits
Years 2006 2007 2008 2009
Cash To Deposit Ratio 63.49% 40.37% 35.13% 22.43%
Interpretation:
This ratio shows that how much cash is available to meet the demand liabilities of
depositors. Here we can clearely notice a decreasing trend because of the higher expenditure of the
bank on its expansion and branch setup. This is not a good trend and the bank should try to
stabilize this ratio at a higher level then in the year 2009 or it will have to face severe conciquences
incase the trend continues.
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17. Investment to Total Assets Ratio:
Formula = . Investments .
Total Assets
Years 2006 2007 2008 2009
Investment to Total Assets Ratio 12.25% 26.75% 26.3% 19.87%
Interpretation:
The Investment to Total Assets Ratio is an important ratio because it measures the efficiency
with which the company is managing its investment in assets and using them to generate profit.
Investment to total asset ratio has been continuously increasing from year 2006 to year 2008.
Although 2008 saw a little fall in the ratio but this decrease was much grater in 2009 it is due to the
fact that investments are increasing but assets are also increasing at a much faster speed as
compare to the investments. This is another impact of the branch network expention strategy.
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18. Cost of Borrowings Ratio:
Formula = Return on Deposits
Deposits
Years 2006 2007 2008 2009
Cost of Borrowings Ratio 1.05% 3.05% 5.85% 4.37%
Interpretation:
There is increasing trend of the ratio from the year 2006 till 2008 due to increase in the
deposits and as the bank Islami is offering variable profit rate and conducting Halal business so
number of customers are increasing due to which deposits are increasing and bank investments are
increasing as a result of that cost of borrowing ratio is showing increasing trend. This ratio
declined in the year 2009 as a result of the bank‘s branch network expention strategy, due to
investing heavily in branch network expention the bank had less to invest in sakouk and thus the
return on deposits decreased.
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19. Current Ratio:
Formula = . Current Assets .
Current Liabilities
Years 2006 2007 2008 2009
Current Ratio (Times) 2.13 1.17 1.025 0.84
Interpretation:
This ratio shows that how many times the banks most lequid current assets can be used fulfil
its payoff current liabelities. A constently declining trend can be observed for the Current Ratio.
The bank‘s current libelities are increasing and current assets are decreasing. This is not a good
indecater. Although the ratio was good till year 2008 but the bank must try to increase the ratio by
reucing its current liabelities and should atleast have a current ratio of 1.
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20. Liquid Ratio:
Formula = . Current Assets – (Inventory + Prepaid Expenses) .
Current Liabilities
Years 2006 2007 2008 2009
Liquid Ratio 2.08 1.15 1.00 0.838
Interpretation:
This ratio shows that how liquid the bank is. It means that is bank in a condetion to pay off
its current liabelites now if it has to. A constently declining trend can be observed for the Liquid
Ratio. The bank‘s current libelities are increasing and current assets are decreasing. This is not a
good indecater. This means the bank is not in a condetion to payoff its current liabelities if it has to
pay them today. Although the ratio was good till year 2008 but the bank must try to increase the
ratio by reucing its current liabelities and should atleast have a Liquid Ratio of 1.
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21. Debt Ratio:
Debt Ratio = . Total Assets .
Total Liabilities
Years 2006 2007 2008 2009
Debt Ratio (Times) 1.99 1.36 1.37 1.16
Interpretation:
A ratio that indicates what proportion of debt a company has relative to its assets. The
measure gives an idea to the leverage of the company along with the potential risks the company
faces in terms of its debt-load. A debt ratio of greater than 1 indicates that a company has more
debt than assets, meanwhile, a debt ratio of less than 1 indicates that a company has more assets
than debt. Used in conjunction with other measures of financial health, the debt ratio can help
investors determine a company's level of risk. There is a constently decreasing trent in Debt Equity
Ratio which is not a good indecater of the bank‘s financial health but still the ratio at Bank Islami
is good and better then other banks.
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22. Debt Equity Ratio:
Debt Equity Ratio = . Long-Term Debt .
Total Capitalization
Years 2006 2007 2008 2009
Debt Equity Ratio (Times) 0.29 0.56 0.56 0.73
Interpretation:
A measure of a company's financial leverage calculated by dividing its total liabilities by
stockholders' equity. It indicates what proportion of equity and debt the bank is using to finance its
assets. The Debt to Equity Ratio measures how much money a bank should safely be able to borrow
over long periods of time. A high debt/equity ratio generally means that a bank has been aggressive
in financing its growth with debt. This can result in volatile earnings as a result of the additional
interest expense. If a lot of debt is used to finance increased operations (high debt to equity), the
Bank could potentially generate more earnings than it would have without this outside financing. If
this were to increase earnings by a greater amount than the debt cost (interest), then the
shareholders benefit as more earnings are being spread among the same amount of shareholders.
This means how many times the long term debt can cover total capetalization and the constently
increasing trend at Bank Islami is not a good financial indicater it means the bank is using debt to
finance the business more and more and is not focussing to use capital fo this purpose.
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23. Total Assets Turnover:
Total Assets Turnover = . Annual Sales .
Average Total Assets
Years 2006 2007 2008 2009
Total Assets Turnover (Times) 0.036 0.065 0.088 0.082
Interpretation:
The amount of sales generated for every Rupee's worth of assets. It is calculated by dividing
sales in Rupee by assets in Rupee. Asset turnover measures a firm's efficiency at using its assets in
generating sales or revenue - the higher the number the better. It also indicates pricing strategy:
companies with low profit margins tend to have high asset turnover, while those with high profit
margins have low asset turnover. There is as constently increasing trend in total assets turnover
from 2006 to 2008 but there is a slight decresi in the ratio for the year 2009. This is the impact of
the bank‘s branch network expention strategy although annual sales increased but the average total
assets also increased but at a higher pace thus resulting in a decrease in total assets turnover.
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24. Net Profit Margin:
Net Profit Margin = . Net Profit .×100
Sales
Years 2006 2007 2008 2009
Net Profit Margin -8.35% -6.15% -3.60% -21.83%
Interpretation:
Looking at the earnings of a company often doesn't tell the entire story. Increased earnings
are good, but an increase does not mean that the profit margin of a company is improving. The Net
Profit Margin calculated as net income divided by revenues or net profits divided by sales. It
measures how much out of every Rupee of sales a company actually keeps in earnings. Profit
margin is very useful when comparing companies in similar industries. A higher profit margin
indicates a more profitable company that has better control over its costs compared to its
competitors. Profit margin is displayed as a percentage; a 20% profit margin, for example, means
the company has a net income of $0.20 for each dollar of sales. The Net profit Margen was getting
better from 2006 to 2008 but here has been a sharp fall in the net profit margen that is the result of
the bank‘s branch network expention strategy.
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25. Price-Earning Ratio:
Price-Earning Ratio = . Market Price Per Share .
Earning Per Share
Years 2006 2007 2008 2009
Price-Earning Ratio (Times) -263.75 -124.62 -60.42 -6.47
Interpretation:
A valuation ratio of a company's current share price compared to its per-share earnings. In
general, a high Price Earnings suggests that investors are expecting higher earnings growth in the
future compared to companies with a lower Price Earnings Ratio. However, the Price Earnings
Ratio doesn't tell us the whole story by itself. It's usually more useful to compare the Price Earnings
Ratio of one company to other companies in the same industry, to the market in general or against
the company's own historical Price Earnings Ratio. It would not be useful for investors using the
Price Earnings Ratio as a basis for their investment to compare the Price Earnings Ratio of a
technology company (high Price Earnings Ratio) to a utility company (low Price Earnings Ratio)
as each industry has much different growth prospects. The Price Earnings Ratio is sometimes
referred to as the "multiple", because it shows how much investors are willing to pay per Rupee of
earnings. If a company were currently trading at a multiple (Price Earnings Ratio) of 20, the
interpretation is that an investor is willing to pay $20 for $1 of current earnings. We can notice a
continuously improving trend in Price Earnings Ratio.
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26. Earning Yield Ratio:
Earning Yield Ratio = . Earning Per Share .
Market Price Per Share
Years 2006 2007 2008 2009
Earning Yield Ratio (Times) -3.79 -8.02 -0.017 -0.15
Interpretation:
The earnings per share for the most recent 12-month period divided by the current market
price per share. The earnings yield (which is the inverse of the Price Earnings Ratio) shows the
percentage of each Rupee invested in the stock that was earned by the company. The earnings yield
is used by many investment managers to determine optimal asset allocations. We can se that the
earning yield ratio got worse in 2007 from 2006 but it improved in 2008 then droped a bit again in
2009. It is not a good indecatedr to judge financial posetion because fluctuations in the stock
exchange can change the results entirely.
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SWOT Analysis
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t is always the desire of every banking corporation to launch stable, long lasting and robust
strategies to compete and compare their competitors. Banks regulate the economy of
country, through, self and market based monetary and credit polices, strong corporate
governance, liberalization of foreign exchange regime and effective control through prudential and
other regulations. Strict compliances and competitiveness also enables to improve the quality of
Information Technology, Human Resource Development, Statement of Internal Control, Credit
Rating, Service Standards and automation of services.
All strategies must be capable, acceptable, flexible, compatible, reliable, stable, and
bearable for borrowers of that specific institution. The strategies should work for improvement of
assets, profitability, financial ratio, funds creation, long & short-term advances, shareholders,
capital adequacy ratio standards and for reflection of the expanding network of branches.
Strategies show the significant improvement in focus on the bank‘s core business. All these
important indicators show excellent base for the banks growth. Regular operational strategies,
plough back for profits, strong position and generate capability of taking up increasingly complex
and large transactions.
Deliberation for implementing potential synergies is a desire of management to create a
very strong organization, which will be able to compete with the leading players in the financial
sector.
As far as Bank Islami Pakistan Limited is concerned, the bank‘s performance is outstanding
– highlighting steady and continuous growth, due to prolong and strict compliance of regulations
and its own standards.
Few strengths, weaknesses, opportunities and threats for the bank are appended hereunder:
I
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Strengths:
The gratest strength of Bank Islami was that it has created history by esteblishing 102
branches in 49 cities across Pakistan in just two years of its operations after being established
in 2006. This is the fastest ever branch network growth by any bank in Pakistan‘s banking
history. Thus Bank Islami has shown a very competitive growth potential.
Bank Islami Pakistan Limited is conducting its business in an Islamic Shariah Compliant
manner following puritan Islamic rules. As compared to conventional banks pure Islamic
banking in total complience with Islamic Sharia gives Bank Islami an upper edge. This is
Bank Islami‘s greatest strength.
People who seek to avoid ―Riba‖ (as it is prohebited in Islam and there is severe punishment
for riba according to Quran and Hadis), prefer to open an account in Bank Islami. This gives
them a feeling of satisfaction that their money is not being utilized in any interest related
activity.
Bank Islami offers the most comprehensive and bonafide Islamic banking solutions to its
customers; with a diversified portfolio of Shariah complaint products and state of the art
technology.
BIPL achieved ―A1‖ rating for the short term obligations and its long term rating stands at A.
Bank Islami Pakistan Limited offers services that magnetically attract customers toward the
bank. Free online and internet bankinga along with free eStatements, Pay order issuance
facility, ATM, cheque book issuance and 24/7 call center etc. gives BIPL diffrential advantage
upon other banks.
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Bank Islami has Internationally renowened scholars as members of its Shariah Board. These
members of the Shariah Board are serving on the boards of many Islamic banks operating in
different countries – as Justice (Retd.) Muhammad Taqi Usmani who closely supervises all the
Islamic modes of the bank. This phenomenon enhances the bank‘s goodwill and people‘s trust
in the bank.
Bank Islami Pakistan Limited uses a centralized network system. Operations of all the Bank
Islami branches all over Pakistan are monitored by the head office in Karachi on daily basis.
The Head Office keeps a close check and balance on all Bank Islami branches through the
centralized system. This ensures that Bank Islami is providing reliable services to its
customers.
The Bank has a well developed intra-net and internet communication network as well. Intra-
net provides the employs a chance to have access to that data that they can not access without
the intranet. It provides data that helps the employs reduce the stress thye encounter during
work.
Those customers who do not have time to personally visit the bank are delighted to use Bank
Islami‘s Telephone and Internet Banking services. Banking through the use of phone line or
though the use of internet saves the precious time of the customers.
The management of the bank believes in customer oriented banking rather than product
oriented banking. Thus the customer is the center of all key activities and keen interest is
taken while designing products and services for the customers and the element of flexibility is
the key focus point so that customers‘ needs are met effectively and efficiently. The products
and services designed by the bank are specifically tailored to the individual needs of its
customers.
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Bank enjoys a strategic competitive advantage over all domestic players by virtue of the
leadership in technological innovations. Staff welfare has always been a priority as well.
The human resource philosophy at Bank Islami Pakistan Limited focuses on multi talented
hiring, professional grooming on the job as well as off site training, and a meritorious reward
system.
The management team in all the branches of Bank Islami Pakistan Limited is based on young
graduates who are highly qualified and experienced in the field of banking. These young
people are highly motivated and vigorous and thus they outperform the staff of many other
banks in improving the purformance of the bank.
Bank Islami is also using Smart Marketing Ideas that resonate well with the public mind. Thus
its marketing is very much successful.
There is a centralized safety system to look after any type of unusual situations in banking
operations.
The Bank Islami Pakistan Limited staff is highly experienced in dealing with bank customers
in friendly manner and developing good, strong and long lasting customer relationships.
Bank‘s customer relationship managers are well equipped and well trained to provide most
efficient and personalized services to each and every customer at hand.
Gracious bonuses are offered to employees, which in turn keeps them motivated all year long.
Increments in salary are also a part of motivation strategies applied by the bank, thus the staff
is motivated all days a week, all weeks a month and all montes a year.
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Bank Islami Pakistan Limited has an efficient and effective human resource department that
has responded well to the challenges of recruitment. Regular training sessions are held by the
bank through which staff turnover remains one of the lowest in the industry.
Bank Islami‘s instruments are Payable at any BIPL Branch all over the Pakistan which is its
greatest strength as compared to other banks.
BIPL has a very reliable online network all over the country which is a greatest service for its
customers.
BIPL is proud of the pioneering role in providing the latest modern technological services to
its customers. BIPL is the only bank that provides biomatric thumb recognition in ATM
Machines. It‘s the bank‘s gratest strength!
All the forty five branches of Bank Islami Pakistan Limited are located at extremely crucial
and vital locations in their respective cities, which is indeed a very significant factor towards
earning more profit. Moreover all of the branches are very well furnished which is an integral
characteristic of a good bank in this age of consumerism.
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Weaknesses:
Bank Islami Pakistan Limited offers its credit services in only a limited number of cities. Many
branches of BIPL are not offering credit facilities and most of the financing is done in urban
areas, while little attention is paid towards the rural areas, which have potential of a lot of
customers.
The Bank is not giving any emphasis on the small scale businesses which are in abundance in
Pakistan.
Bank is not offering financing schemes for farmers, especially in agrarian cities.
There is a single branch of BIPL in Bahawalpur City that is why the bank staff has to face a
huge work load sometimes, and the staff gets heavily burdened along with customer dis-
satisfaction as its unavoidable twin.
Bahawalpur Branch of Bank Islami is not providing full fledged services to customers because
it was established in 2008 and is chiefly focused on retail banking. So all the departments are
not entirely operational in this branch yet.
Bahawalpur Branch of Bank Islami does not have a proper parking that causes trouble for
customers and the staff in parking their vehicles.
Due to lesser number of branches as compared to other banks customers may prefer to go to
the other feasible options instead of visiting the branches located at a greater distance as
compaired with other banks‘ branches.
The Bank needs a grieveance handling department that should be repsponsible for handling
the internal problems of the employees.
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There is a dire need of more IT related personnel as the staff is not in touch with IT. Thus due
to lack of a computer specialist, assistance from the head office is seeked time and again,
which wastes time.
People have incomplete knowledge about Islamic banking and thus they can not easily
diffrentiate it from conventional banking. They have no reason to switch to Islamic banking
and the promotional activities of the BIPL are not as much effective. Under such conditions
the promotional activities of the BIPL need to be improved. The bank should create awareness
in people about how Islamic banking is different from conventional banking and what are the
benefits of islamic banking instead of conventional banking.
BIPL is a newly established bank and its setup is only in Pakistan, so it is at a comparitive
disadvantage with those banks that have overseas branch networks and huge number of
investors.
Decision making is Centralized at BIPL, this can cause problems in the organization and it
wastes time in many operations of the bank.
BIPL Bahawalpur Branch faces the problem of Lack of space and furniture facility. At rush or
peek hours or busy days it causes inconvenience for staff, customers and internees as well.
The seating arrangement and the furniture of wating areas is not of such a good quality or
design that the customer feels himself well accomodated or comfortable. This is the reason
customers avoid to sit in the wating area.
Lack of staff is clearly noticed in BIPL Bahawalpur branch.
Bank has no grievance department for the internal problems of employees.
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There is no research cell in the bank, which should be engaged in gathering the information
about the present actions of its competitors and demands of its customers.
Lack of female staff can be noticed in almost all BIPL Branches. This creates some problems
for female (pardanasheen) customers. Women are reluctant to give their personal information
to or in the presence of male staff.
BIPL has no marketing and HR department at the branch level.
The air conditioning units in the branch are not capable enough to cool the huge hall in
scorching summer heat which is clearly expressed by many customers as a huge
inconvenience. Thus there is a need for another aircondetioning unit in the hall.
Supplies do not reach the branch on time and as a result the customers suffer delays.
The computer systems in BIPL are very slow and another reson for the slow speed is that the
router was damaged due to power fluctuations. The IT expert needs to find a way to speed up
the system speed. Because of slow speed, customers have to wait to give their biomatrics and
get their Pay Orders issued.
Speed of the intra-net is too slow and thus employs don‘t use it and waste such a precious
resource.
The Bahawalpur branch has no lockers facility for its customers.
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Opportunities:
BIPL provides its customers many services free of cost, its products promise customers
maximum possible benefits and uses the latest technologies. These diffrential advantages give
BIPL an edge over all other conventional and Islamic Banks.
BIPL is currently a local bank, it needs to go multinational. BIPL should start opening
branches all around the world in the world‘s biggest finacial markets like USA, UK and UAE.
A large number of Muslim communities are living in these countries who are intrested in
authentic Islamic banking.
Bahawalpur Branch of Bank Islami needs to have a proper parking for customers and the
staff to park their vehicles.
Bank can offer special financing schemes for farmers especially in agrarian cities.
The Bank should increase its advertising programs by using all available Medias of
advertising like TV, cable, radio and bill-boards to increase its business by providing more
information to people about Bank Islami. It should also bring some new elements in its
advertising campaigns like how Islamic banking is different from conventional banking, what
are the unique features of Bank Islami and what are the benefits of islamic banking instead of
conventional banking. BIPL needs to show its differential advantages to its current and
potential customers through advertisement.
The trend of Islamic banking is on the way of tremendous popularity and spreading out to the
whole world. If BIPL establishes a vast branch network through out the world then it can
make progress in leaps and bounds as compared to other banks.
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Its an era of information technology and due to heavy competetion in the market, only the
fittest will survive (survival of the fittest) only those organizations can survive that follow new
technology and keep themselves up to date with the latest developments in technology. BIPL
has all the competence and capabilities to avail maximum benefit out of the new technology
that they are using for their banking setup.
Previously and even now many people were not in the favour of conventional banking system
due to ―Riba‖. BIPL provides a chance to people to do ―Riba free‖ banking. People are now
switching from conventional to Islamic banking. This increasing trend towards Islamic
banking is a grand opportunity for BIPL.
Pakistan is a country with Muslims in majority. Thus there is a strong potential of Islamic
banking in Pakistan because it is already working at its peak in some Asian countries and
many other Islamic countries. This proves to be another opportunity for BIPL to make sky
rocketing progress.
BIPL has an opportunity to hire young highly qualified and talented candidates who do not
prefer to work with those banks who deal in ―Riba‖. This is a great opportunity for BIPL to
attract fresh minds and competitors‘ Employees as well.
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Threats:
Many new Islamic banks and islamic sections of already existing banks are now being
established in Pakistan. BIPL will face intense competition in the coming year.
Many other banks now a days are providing services based on latest technologies although
they are not providing all latest services like free online banking, etc. These banks can prove
to be a threat in the long run.
Now the world is a global village so competitors may arise from anywhere in the world at any
time. Many commercial banks are now dealing in ‗Islamic modes of financing‘ and ‗Islamic
Banking‘ like bank Al-Falah, etc. These banks have an established goodwill in the market and
many customers would prefer these banks when they will deal in both conventional and
Islamic banking. These banks can also attract BIPL‘s existing customers thus they are a great
threat for BIPL.
Usually people have a mindset that there is no diffrence between Islamic banking and
conventional banking and Islamic banks are deceiving under the name of Islam. These wrong
perceptions need to be removed otherwise they can also cause problems for BIPL.
Meezan Bank Limited is the premier Islamic bank and providing its services nearly in the
same way as BIPL is providing and it also has a strong network of branches all over Pakistan
thus resulting in a reduction in overall market share of BIPL.
Due to the recent international financial crisis, terrorist activities in Pakistan and the recent
severe floods in Pakistan has broght the economy of the country to an almost stand still. It
means there is less investment and low financing demands in the banking sector.
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As bank does not posess a large branch network so customers face inconvenience in dealing
with the bank.
Law and order situation in Pakistan is shoddier discouraging and is totally reducing invester
confidence to invest anywhere.
High rate of taxes on banking companies.
In the near future the world is going to be a free trade zone so the concept of ―survival of
fittest‖ will be in action.
Due to terrorist activities in Pakistan the economy is moving very slow. It means less
investment and as a result low financing demand.
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Limitations:
The time period of internship was too short to get grip on all the aspects of banking.
The bank has recently been established in Bahawalpur, so all the departments are not
practicing full fledged working capacity at Bahawalpur. Thus the internship experience was
of limited areas only.
Due to the high security of the vault and the cash room I was unable to practice the cash
department.
Due to privacy of the account holders and the security of the bank‘s information I was not
allowed to operate I Mal and PIBAS by myself.
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Suggestions and Recomendations
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Recommendations & Suggestions:
It was an interesting experience to do an internship in Bank Islami Pakistan Limited. The
staff was highly cooperative and due to their help I learned a great deal about modern banking.
I suggest that such an internship program be highly integrative for the students of business
education so that the students should be imparted with the knowledge of practical world. I do
summarize that it would be a great help to me in the selection of my job or my future field of work.
Here I am putting some suggestions and recomendations, which will in my point of view
enable the bank to compete with other banks more effectively & efficiently.
The BIPL should expand its Branch network throughout Pakistan especially in rural areas
and foreign countries as well.
To attract customers from competitors BIPL must provide some extra facilities and should
diversify itself towards a wider range of products.
Bank can offer special financing schemes for farmers especially in agrarian cities.
Although bank has agency relations with the foreign banks but it should open its own foreign
branches to compete with the competitors.
Enhancing promotional offers is must to stay competitive and to communicate effectively with
its customers.
BIPL should have a Marketing, Human Resource and IT specialist in all its branches.
BIPL should conduct Annual functions for awarding and rewarding its hardworking
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employees for showing extra ordinary performance. This is a great way to motivate others to
work harder. This also motivates employs in a positive manner toward greater performance
and achievements. It is better if the CEO, Board of Directors and senior staff of the bank is
also present at this function to backup and encourage the employs to work even harder.
BIPL Bahawalpur branch is currently doing retail banking only but its time now that it should
start other departments as well, which are not functional as of yet, to capture even more
customers in areas of consumer banking, investment banking, and corporate banking etc. the
reason behind this is that although Bahawalpur Branch started in year 2008 but within these
two years its a profitable branch and the deposits are quite much for a small and non-
industrial city like Bahawalpur.
Lockers facility should be provided to the customers at BIPL Bahawalpur branch.
BIPL Bahawalpur Branch needs to be at the very least refurbished or altogether changed as it
is too small for its current operations. I advise that the vault, a new locker facility and the IT
Room should be in the basement and the ground floor should have proper wating areas and
sitting arrangements.
Bahawalpur Branch of Bank Islami needs to have a proper parking, on urgent basis, for the
customers and the staff.
There is a need of a separate information desk of BIPL in each branch that is essential to
provide complete information about Islamic banking and all the products, services and
facilities provided by the Bank to potential or walk-in customers.
There should be a separate IT specialist in each branch for dealing with IT related issues and
for the proper guidance of staff members for using the softwares like PIBAS and i-Mal.
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Speed of intra-net also needs to be improved so that the employs should take benefit of this
precious resource.
There should be at least one female staff member in the BIPL Bahawalpur branch to deal with
female customers.
It is observed that the employees were overburdened so they have to stay at branch till late at
night. In this way their efficiency is affected and hiring more employees, although seemingly
expensive at the bank‘s part, can reduce their work and result in much more overall profit.
Internship should be started as a systematic regular activity in BIPL Bahawalpur branch and
a proper and sufficient amount of stipend should be paid to the internees to create a positive
and caring image of the bank.
Frequent Training programs should be provided to employees to enhance their skills.
Adequate furniture facility should be maintained within the bank.
Expenditures must be controlled, which are very high especially telephone and electricity
bills.
There should be a research cell in the bank, which should be engaged in gathering the
information about the present actions of its competitors and demands of its customers.
The computer systems in BIPL are very slow and another reason for the slow speed is that the
router was damaged due to pawer fluctuations. The IT expert needs to find a way to speed up
the system speed. Because of slow speed customers have to wait to give their biomatrics and
get their Pay Orders issued.
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Suggestion box should be introduced in the bank. The suggestions of customers and
employees should be welcomed.
There should be a supplies manager hwo should be responsible for providing essential
supplies to the branches within 5 to 7 days of the request made by the branch.
Bank Islami should have a close look on regularity measures of anti-money laundering.
The air conditioning units in the branch are not enough to cool the huge hall in scorching
summer heat. BIPL needs to install another aircondetioning unit in the main hall.
The Internship Incharge should be paid a bonus or incriment for giving traning to the students
so that he should be more motivated to explain everything to the students and one incharge
should not be over burdened by asigning him countless number of internees. One incharge
should only give traning to a maximum of 3 students, traning more then three students makes
the trained too exausted to purform his daily duties and the internees also don‘t get proper
attention.
There must be some visits by the Internship Incharge in the organization during the time of
students‘ internship.
There must be a clear statement obtained from the bank about the activities of the student on
weekly basis.
The institute must provide counselling in making the internship reports.
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Conclusion
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Conclusion
The whole period of my internship at Bank Islami and the preparation of this report have
been really helpful in making me understand Islamic and conventional banking in theory and in
practice and my experiences are so vast that I have no words to express them. Now after completing
this internship report I am confident that I have practically experienced banking and this would
help me a lot in my career. While making this report I got a chance to understand the concepts in
depth and to throw light at the concepts I had not either understood or had forgotten till the end of
my internship. Now after completing this report its time for me to conclude what I have learned
through out.
A bank is a financial institution that accepts deposits and channels those deposits into
lending activities. The Banks primarily provide financial services to customers while the main goal
is enriching investors. Banks are important players in financial markets and offer services such as
investment funds and loans. The first banks were most probably the religious temples of the ancient
world, and were most likely established sometime during the third millennium B.C. After the fall of
Rome, banking was abandoned in western Europe and did not revive until the time of the crusades.
Today banks work in a hybrid fashion providing a variety of services to their customers to yield
heavy profits. ―The days of conventional banking are long gone; it‘s the era of customer oriented
banking.‖, said Mr. Hafiz Aqeel Ahmed (Branch Manager, Bank Islami Bahawalpur Branch).
Islamic banking refers to a system of banking or banking activity that is consistent with the
principles of the Shari'ah and its practical application through the development of Islamic
economics. The principles which emphasize moral and ethical values in all dealings have wide
universal appeal. Shari'ah prohibits the payment or acceptance of interest charges (Riba) for the
lending and accepting of money, as well as carrying out trade and other activities that provide
goods or services considered contrary to its principles.
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Interest free banking is a narrow concept denoting a number of banking instruments or
operations, which avoid interest. Islamic banking, the more general term is expected not only to
avoid interest-based transactions, prohibited in the Islamic Shariah, but also to avoid unethical
practices and participate actively in achieving the goals and objectives of an Islamic economy.
"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." (275)
Islamic Shariah prohibits ‗interest‘ (Riba) but it does not prohibit all gains on capital. It is
only the increase stipulated or sought over the principal of a loan or debt that is prohibited. Islamic
principles requires consideration of capital performance while rewarding the capital. The
prohibition of a risk free return and permission of trading, as enshrined in the Verse 2:275 of the
Holy Quran, makes the financial activities in an Islamic set-up real asset-backed with ability to
cause ‗value addition‘. The forms of businesses allowed by Islam at the time the Holy Quran was
revealed included joint ventures based on sharing of risks & profits and provision of services
through trading, both cash and credit, and leasing activities. In the Verse II:275, Allah Almighty
did not deny the apparent similarity between trade profit in credit sale and Riba in loaning, but
resolutely informed that Allah has permitted trade and prohibited Riba.
Islamic banking system is based on risk-sharing, owning and handling of physical goods,
involvement in the process of trading, leasing and construction contracts using various Islamic
modes of finance. Profit has been recognized as ‗reward‘ for the use of capital and Islam permits
gainful deployment of surplus resources for enhancement of their value. However, along with the
entitlement of profit, the liability of risk of loss on capital rests with the capital itself; no other
factor can be made to bear the burden of the risk of loss. As such, Islamic banks deal with asset
management for the purpose of income generation. They will have to prudently handle the unique
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risks involved in management of assets by adherence to best practices of corporate governance.
Once the banks have stable stream of Halal income, depositors will also receive stable and Halal
income. This is what Bank Islami is doing, rather it is quite sucessfully doing so.
Besides trading, Islam allows leasing of assets and getting rentals against the usufruct taken
by the lessee. All such things/assets corpus of which is not consumed with their use can be leased
out against fixed rentals. The ownership in leased assets remains with the lessor who assumes risks
and gets rewards of his ownership.
The principles of Islamic finance are established in the Qur'an, which Muslims believe are
the exact Words of God as revealed to the Prophet Mohammed. These Islamic principles of finance
can be narrowed down to four individual concepts without even a single one of these principles
financing will no longer be Islamic:
1. Prohibition of Interest or Usury
2. Ethical Standards
3. Moral and Social Values
4. Liability and Business Risk
In order to insure that these principles are followed, each Islamic institution must establish
and provide itself with an advisory council known as a Sharia'a Board. The members of Sharia'a
Boards can include bankers, lawyers or religious scholars as long as they are trained in the Islamic
law, or Sharia'a.
A very common misconception regarding "deposit" is that it is a form of amanah
(security/trust). However, according to Shariah definition, deposit has more resemblance to qard
(loan) than amanah. Deposits cannot be termed amanah, as it does not bear all the features of
amanah, and can be used by the bank for its business or benefit and the bank is liable in case of any
damage or loss to the deposit resulting from circumstances beyond its control. The main intention
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of the depositors is not to put the assets in banks as amanah; rather as qard by having collateral
security by appointing the bank as guarantor.
BankIslami Pakistan Limited (the Bank) was incorporated in Pakistan as a public limited
company on October 18, 2004 under the Companies Ordinance, 1984 to carry out business of an
Islamic Commercial Bank in accordance with the principles of Islamic Shariah. The registered
office of the Bank is situated at 11th Floor, Dolmen City, Marine Drive, Block-4, Clifton, Karachi.
The Bank commenced its operations from April 07, 2006. The shares of the Bank are quoted on the
Karachi Stock Exchange The Bank is operating with one hundred and two branches including thirty
two sub branches (2007: thirty six branches) as at December 31, 2008.
During the year 2008 the Bank has issued right shares representing 207.968 million
ordinary shares. BankIslami Mudaraba Investments Limited (Subsidiary company) The subsidiary
was incorporated in Pakistan on January 22, 1986 under the Companies Ordinance 1984. Later on
it was registered as a Mudaraba Company with the Registrar of Mudaraba Companies and
Mudaraba (Floatation and Control) Ordinance, 1980. The principal activity of the subsidiary is to
float and operate Mudaraba. The subsidiary is managing its Mudaraba with the name of
MODARBA AL-MALI. The principal place of business of the Subsidiary is situated at Tenth Floor,
Progressive Square, Shah rah -e-Faisal, Karachi.
BankIslami is the Joint venture project of 3 groups with 18.75% equity each, namely
Jahangir Siddiqui & Co. Pakistan, DCD Group UK, & Dubai Bank. Irrespective of stiff competition
in the market the Bank has successfully managed to grow over 400% during last one year and all
set to be a 102 Online Branch Network by the year end 2008. BankIslami has become a hallmark of
innovation and bringing new products and services in the market and by introducing the Bio-Metric
ATM facility it became the first bank of the region to offer such services and till date no bank has
been able to replicate this service.
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BankIslami has been able to form a strong image of having authentic basis for its banking
operations by using smart marketing ideas that resonate well with the public mind. For example,
the calligraphy of the bank's name in Urdu is claimed to have been done by the same calligraphers
who have done similar work in the Holy Mosque of Madina in Saudi Arabia. Marketing Department
of the Bank was at the forefront of re-branding exercise and achieving greater standardization
across the network. All branches of BankIslami have the same look and feel irrespective of location.
BankIslami claims in its logo story, ―Do you think Authenticity will ever escape our attention in
whatever we do?‖
The foremost achievement of the Bank during the year 2010 has been its emergence as a
serious Islamic Bank which is increasingly being seen as the most authentic provider of Islamic
Financial Solutions.
Another key achievement of bank Islami was the completion of branch expansion target of
100 branches and sub-branches. Bank Islami actually opened 102 branches and sub-branches
covering 49 cities in all four provinces, Azad Kashmir and Northern Areas. Not only does
BankIslami offer the best coverage compared with any Islamic Bank, but also this is the fastest
expansion achieved by any Bank in Pakistan's Banking industry. Almost all branches are online,
serviced with 24×7 Phone banking and offer the same standard facilities across the network. For
year 2010, BankIslami intends consolidating its network and operations.
On the business, liability side first towards the end of the first quarter last year, it was
decided to focus almost exclusively on the retail segment. As a result, institutional deposits were
shed as and when they matured. This enabled bank management not only to deal with the liquidity
crisis of un-parallel magnitude but also to develop a competitive depository franchise. At the end of
the year 2008 more than 80% of the deposits came from this segment. Bank‘s management
confidence and competitiveness in this segment led management to successfully launch a 10 year
depository product at the peak of the liquidity crisis. In 2009, management intends consolidating
gains in this segment with new saving oriented products of varying tenors.
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Bank Islami core Banking system, iMal, was successfully deployed in the first branch in
November 2008. The core banking module was completed deployment in nine largest branches
towards end of the year2008. Now all the branches of Bank Islami are using iMal successfully.
Deployment of iMal has made BankIslami the only bank in Pakistan to use Banking software that
has been designed for Islamic Banking as well as the bank was the fifth largest net acquirer on the
1 Link ATM network.
Besides Systems and SOPs employees are the major contributor to success or failure of any
organization. BankIslami has greatly emphasized on Islamic banking products to ensure Shari'ah
compliance from their end. Human Resources Department responded well to the challenge of
recruitment for 66 branches. Staff strength rose from 563 as on December 31, 2007 to 1,188 on
December 31, 2008 to 1,471 0n December 31, 2009. In all, 2,500 interviews were conducted and
785 training sessions were held. Online recruitment was launched with success. Staff turnover
remained one of the lowest in the industry at 1.9%.
With a handsome budget allocated for training program and state of the art Training
Centers have been established in Karachi, Lahore and Islamabad, a detailed Training Calender
was prepared to organize the sessions properly and to ensure that every employee gets proper
training. Case study based Method of training was introduced which was found very useful by the
participants. Training manuals for Murabahah, Ijarah and Diminishing Musharakah products were
also developed.
BankIslami was the first Bank that has a full time Shariah Adviser the scope of the Shariah
Department and the first Shariah Audit of the Bank was conducted in year 2008 and it reported that
not even a single deviation was found. The affairs of BIPL have been carried out in accordance
with rules and principles of Shariah, SBP regulations and guidelines related to Shariah compliance
and other rules as well as specific fatwa‘s and rulings issued by Shariah Adviser from time to time.
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Bank Islami‘s areas of working include Retail Banking which offers the customers a range
of saving and investment alternatives to help them grow their money in safe and secure manner;
Consumer Banking which offers the customers superior financing products and quality service to
help them own their home or car for a better quality life; Corporate Banking in which we are the
customer‘s financial partners to help them meet their business needs with timely and cost effective
financial solutions; and Value Added Services that provide state of the art banking services and
channels to help customers access their funds with utmost ease and convenience.
BankIslami, capitalizing on its expanded outreach, experienced substantial growth in
finances in 2008. This enabled BankIslami to register a significant increase in its net interest
revenue. Other operating income witnessed an upsurge on account of higher fee and commission.
Meanwhile, there was a sizeable increase in personnel and other expenses, owing to the ongoing
network expansion. Moreover, BankIslami made a net provision of PKR 130mln, due to sizeable
increase in the classified portfolio. This resulted in doubling the pre-tax loss of the bank. The
performance trend remained the same in 1Q09 with a slight addition in NPLs.
Going forward, BankIslami intends to leverage its expanded outreach to enhance both its
deposit base and finances portfolio. Although the bank has plans to penetrate the retail segment, no
significant lending is expected over the near-term, owing to currently weak credit environment.
BankIslami would continue with its recent strategy of focusing the corporate segment, though
cautiously here as well. The bank, with a view to reduce its cost of funds, plans to focus more on
demand deposits. BankIslami, to augment further its retail franchise, has entered into agreements
with different organizations to launch new products and services. Meanwhile, BankIslami, with
surplus liquidity and support of strong sponsors, eyes acquisition of banks as a strategy to achieve
sizeable growth. These initiatives exhibit clarity of direction but the extent to which they materialize
remains to be seen.
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The target is to take consumer financing, over the medium term, upto 10%-15% of the total
advances. With expansion in outreach, the bank intends to rationalize its deposit mix by substituting
a portion of term deposits with current deposits. Nevertheless, deployment of excess liquidity would
remain a challenge in the absence of an active Shariah compliant money market. Earnings from
investment banking business are expected to grow significantly.
The deal pipeline is currently healthy. Meanwhile, BIPL plans to lay down requisite
infrastructure for offering wealth management services, going forward. BankIslami, due to initial
stage of operations, maintains ample liquidity and has a very low deposit concentration, which
clearly stands out among close peers. The bank‘s investment portfolio is modest in size (end-08:
PKR 207mln) – mainly dominated by strategic investment (PKR 191mln). The bank recently
expanded its exposure to the sukuk market. There is a revaluation surplus, though slight, available
on this investment (PKR 16 mln).
BankIslami, mainly due to un-utilized resources, has a relatively high level of capitalization
(CAR), which offers significant room for credit expansion. However, with restricted internal
generation, the bank would remain dependent on its sponsors meeting
BIPL perceives the management of risk not to be limited to a department or a function, but
rather should read into our daily business routine. Ideas and decisions are heavily based on the
risk/ reward trade-off some of the ideas which never see the light of the day are usually the ones
which have been shelved due to an unacceptable risk level. The risks when identified and analyzed
are further weighed against the applicable risk weights and its impact reviewed on a periodic basis.
This pro-active approach helps in outlining the organization‘s risk tolerance level vis-a-vis BIPL's
risk appetite in relation to its size, current position and market standing, with a view to refine
processes, controls and guidelines to not only mitigate, but also to effectively manage risk.
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A well formulated policy and procedure is critical for an effective risk management
framework; it than needs to be reinforced through a strong control culture that promotes sound risk
governance. Our Risk Management Framework has been developed keeping in mind 3 things 1) To
be effective, strong monitoring and control activities should be integral to the Bank; 2) Critical
Decision Making should be based on relevant research, proper analysis and effective
communication within the Bank; and 3) Every loss or near miss event should provide some KLO
(Key Learning Outcome), developing a better risk analysis ability.
At strategic level, the risk related functions are approved by the senior management and the
Board. These include; defining risks, setting parameters, ascertaining institutions risk appetite,
formulating strategy and policies for managing risks and establishing adequate systems and
controls to ensure that overall risk remains within acceptable level and the reward compensates'
for the risk taken.
It encompasses risk management within a business area or across business lines. Generally
the risk management activities performed by middle management or units devoted to risk reviews
fall into this category. Periodical sensitivity / scenario analysis, stress testing is performed, to
review sensitivity and resilience of the portfolio.
Risk management at micro level, is of critical importance. This function if performed with
diligence and understanding, can be of maximum benefit to the organization. Micro level risk
management includes the business line acquisition, strong adherence to the credit and other related
criteria.
BIPL‘s objectives for a sound capital management are: 1) to ensure that the Group
complies with the regulatory Minimum Capital Requirement (MCR) 2) maintain a strong credit
rating 3) maintain healthy capital ratios to support business and to maximize shareholder value
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and 4) to operate with a Revolving Planning Horizon and be able to take advantage of new
investment opportunities when they appear.
The State Bank of Pakistan through its BSD Circular No.07 dated April 15, 2009 requires
the minimum paid up capital (free of losses) for Banks / Development Finance Institutions to be
raised to Rs.10 billion by the year ending December 31, 2013. The raise is to be achieved in a
phased manner requiring Rs.6 billion paid up capital (free of losses) by the end of the financial
year 2009.
The paid up capital of the Bank (free of losses) as of December 31, 2009 amounts to Rs
4.706 billion. However, the Bank had been granted an exemption till March 31, 2010 to meet the
Minimum Capital Requirement by the SBP, vide its letter BSD/BAI-3/608/191/2010 dated March 3,
2010. The Board of Directors, in order to comply with the enhanced capital requirement, is
considering various options including but not limited to issue of right shares and acquisition
options. In this connection, the Bank has already made an announcement to Karachi Stock
Exchange about its decision to enter into a Memorandum of Understanding (MoU) with another
Islamic Commercial Bank in relation to its merger/acquisition into/by the Bank. The Board is
confident that it will meet the Minimum Capital Requirement within the stipulated time.
In addition, the Group was also required to maintain a minimum Capital Adequacy Ratio
(CAR) of 10% of the risk weighted exposure of the Group. The Group CAR as at December 31,
2009 was 20.87% of its risk weighted exposures.
The requirements of the Code of Corporate Governance set out by the Karachi Stock
Exchange in its listing regulation relevant for the year ended 31st December 2009 have been
adopted by the Bank and have been duly complied with. A statement to this effect is annexed with
the report.
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The Bank has been assigned a long term entity rating of 'A' and short term rating of 'A 1' by
Pakistan Credit Rating Agency Limited (PACRA), reflecting BankIslami well conceived business
strategy and establishment of an effective operating platform to execute the business strategy.
During the year under review efforts have been made for an effective and efficient internal
control system. In accordance with SBP-BSD Circular No. 7 of 2004, the Bank formulated all the
key policies and procedures for its different lines of business. While formulating such policies clear
line of authority and responsibility have been established in order to ensure an effective internal
control system. The Bank has established an audit function independent of line management. The
control activities are being closely monitored across the Bank through audit group / compliance &
control, which covers all banking activities in general and key risk areas in particular. The Audit
Committee of the Board reviews the audit function quarterly which includes program as well as
surprise audits.
Internal control system in the Bank is designed to manage, rather than to eliminate the risk
of failure to achieve the business objective, and can only provide reasonable and not absolute
assurance against material misstatement or loss. However, it is an on going process that includes
identification, evaluation and management of significant risks faced by the Bank.
The vision of Islamic bank is to be recognized as the leading authentic Islamic bank the
Mission of BankIslami is to create value for Stakeholders by offering Authentic, Shariah Compliant
and technologically advanced product and services. With a diversified portfolio of Shariah
compliant products and state-of-the art technology, bank Islami offers the most comprehensive and
authentic Islamic banking solutions. With a network of 102 online branches in 49 cities and such as
Biometric Atm, internet banking, 24/7 phone banking, interbank funds transfer, Deposit ATMs and
estatement, Bank Islami is truly serving its customers in the right way. The products offered by bank
Islami are following Islami Auto Ijarah, Islamic current account, Islami Mahana Munafa account,
Islami Amdani certificate, Ijarah, Musharakah Financing, MUSKUN-Home financing, Islami
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Bachat Account, Murabahah Financing, Islamic Export re-finance, Istisna Financing, Deminishing
Musharkah Financing. And value added services of bank Islami are 24 hours call center, free ATM,
free online, free internet banking, free eStatement, and intra bank transfer.
Due to a heavy expansion last year, the full cost impact of which came this year, BIPL is
reporting a loss of Rs. 563M before tax and Earning Per Share stood (0.91). This is approximately
Rs. 250M more than what we had budgeted. Due to economic in-stability, we preferred to conserve
the liquidity. At the same time, private corporate credit off take was slow there by drying up
appetite for quality credit. While our closing ADR is still less than 50%, going forward the signs
are very positive. Almost 30% growth came in the last quarter only.
The success story of the year was the growth in deposits, which came almost entirely from
retail segment. BIPL is one of the few banks in Pakistan which has a genuine deposit franchise.
Instead of targeting large, rate sensitive accounts, BIPL as strategy focused on retail customer
which are stable, less rate sensitive and loyal. Current and Saving Accounts recorded impressive
growth. Even growth in Fixed Deposits was propelled by our five and ten depository products
which now accounts for 21% of the deposit base. Despite of 124% increase in deposits, cost of
funds actually declined. BIPL will continue to follow the same strategy – strong focus on retail
deposits, a further 5% to 10% reduction in cost of fund coupled with at least 50% increase in the
deposit base.
Our technology infra-structure was further strengthened during the year with full
deployment of state of art sharia compliant core banking system, iMal. We remain the largest user
of Linux in Pakistan which has helped us to have a stable, cost effective platform compared to our
peers. Our market share in ATM transactions has improved to 11th position amongst 1-LINK
members. We are aiming to complete deployment of the next phases of iMal during 2010. BIPL also
continued with focus marketing initiatives. Our greatest asset today is probably our brand name
'BankIslami'. Going forward, we plan to maintain presence in selected media segments.
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As discussed earlier, the reason for our losses this year is non-absorption of operating costs
due to lower asset volumes. Besides that, BIPL has all the right straits which a successful bank may
wish to have. Our net-work is large and well spread out, deposit base is stable and cost effective,
intermediation cost is within the top quartile in the industry, NPLs are low and that too contained
and technology base is one of the best. With improving asset deployment, BankIslami achieved
operating break from December. On full year basis, we will inshallah report a profit starting from
first quarter. No large expansion in net-work is envisaged this year.
The departments that are currently in practice in Bahawalpur branch are Cash Department
and Operations department that includes the Account opening department, remittance department,
clearing department, accounts department, foreign exchange department.
The department that is responsible for opening and closing an account assumes immense
significance and holds a central place in the basic banking operationsThis department is the best
way to start with the banking career or training. This is because the ways you deal with the
customers give a lot exposure to you for the coming days in banking because the bankers are
always in contact with customers as customers are the biggest source of assets for the bank. I really
enjoyed my stay at this department as I got to interact with the customers directly for the first time.
The banking history is full of various examples of fraud largely due to incorrect opening of
accounts. These frauds could have been avoided if the branch mangers and other designated
officers had taken due care and exercised precautions at the time of opening of accounts. As the
branch manager once said ―fraud starts when an account is opened‖. If you do not guess the right
monthly and yearly turnover of the customer‘s account then this may lead to a fraud or money
londering. Banks today are more careful about money londering then anything ever before. Money
londering is the same like normal londering in which dirty clotes go into a londery and are cleaned
the same way illigal or black money goes into the bank as a big laundry machine and then comes
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out clean. If someone is depositing more then the expected monthly deposit then we have to cunfurm
to the head office about where the money came from.
Bank Islami provides its customers with four types of accounts 1) Islami Current Account,
2) Islami Foreign Currency Account, 3) Islami Bachat Account and 4) Islami Dollar Bachat
Account; and two types of Term Deposit Recipt (TDR) Certificates 1) Islami Mahana Munafa
Account, and 2) Islami Amadni Certificatewith a bonus of a lot of our Value Added Services i.e.
Online Banking, Inter Bank Fund Transfer, Internet Banking, ATM/Debit Card, Biometric ATM,
24/7 Phone Banking, e-Statement, Self Service Phone Banking and Lockers.
Cash department is the major point of contact among the customer and the bank. All cash
dealings are done through the cash department and the officer in this department is called ―teller‖.
His main responsibility is to deal with the cash payment and receipts.
Clearing department is the way through which Bank Islami clears cheque of other banks
and clears the cheques of its own bank from other banks. Every bank acts in two ways i.e. Paying
bank and collecting bank. A large part of this work is carried out through the bankers clearing
house wherever it is established.
Remittance department transfer funds from one place to another. This department performs
the function of transfer of money. The need of remittances is commonly felt in today‘s business.
Bank Islami is one of the leading banks of the world and it is completely dependent on the
use of technology i.e. it is doing the paperless banking. Information Technology Department (ITD)
is responsible for management and support of the technology architecture, hardware, software, and
the respective resources throughout the country. The IT department of Bank Islami is one of the
most sensitive departments as the working of the bank is completely dependent on the computer
based and the web based technology and any problem at any part can negatively impact the whole
working of the bank. Thus, great care is taken in the management of IT Department.
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The SWOT analysis of the bank shows that the bank has a lot of strengths to maintain and a
large no of opportunities which it must grasp. If the management focusses on my suggestions then it
can easily grasp opportunities leaving behind the threats and it can reduce its weekneces to a
minimum as well by concedering my suggestions.
Through out the Financial Analysis I noted that the bank is performing very well as
compared to other bbanks although its performance has declined due to the expention of the branch
network but it is recharging its batries once again to surprise all with another bold decesion. In my
openion the overall financial posetion of the bank is quite strong.
The aforementioned discussion renders obvious that Bank Islami is a force to reckon with in
the Industry. It shows all potential to continue its growth and expand its roots. It is definitely
bringing some genious and generic solutions which can add more variety to the existing financial
network. This emerging bank on the contrary is a sure shot going in giving a tough time to its
competitors.
To my internship experience I would like to say that this internship experience at the Bank
Islami was a unique and life changing one. It has taught me a lot about banking and life itself. The
auditors‘ visit proved as a bonus for my internship. I learned a lot of things about banking
throughout my internship. I also learned how to deal with customers. I have gained in-depth insight
into the banking operations of an Islamic bank.. My experience so far has been fabulous and I hope
what so ever I have learned helps me to develop my career in future. I also wish to serve my country
the Right way!
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To put it in a nutshell I would not like to miss an opportunity here without stating that the
overall analysis of Bank Islami establishes clearly that bank Islami is performing at a more than
satisfactory level. It is one of the best modern banks in the country and can be of the world even if
taken to such heights of operations, because it is providing Shariah based products – a rare mix in
the banking sector, and modern facilities that use the latest technology in the banking sector like its
I-Mall and PIBAS. Bank Islami is also constantly bringing forth innovative differentiated products
to become highly competitive with its competitors. The customers are increasing day by day and the
overall deposits of the bank are at an unbelievable increasing rate and the bank is robustly moving
towards growth. Equity base of the bank is also increasing and total assets of the bank are also
increasing. By the end of 2009 its assets were worth a phenomenal Rs. 34,286.77 Millions as for a
private bank. Its human resource department is in full bloom too. The year 2010 will undoubtedly
offer an increased competition in the secured assets business as more Islamic banks emerge in the
market. But being the pioneer in its product base and with its well thought strategies and product
development initiatives, Bank Islami is at a whole new level to be competing with. The bank enjoys
an excellent repute in the market as well, when people tend to be hurt by the slightest of bad trust.
Overall the bank is doing good business which shows all is well for now, but there are few
problems for which I have tried suggest some points that in my humble view might help improve the
company from the inevitable short falls. I wish a prosperous and succesful future to Bank Islami
Pakistan Limited.
I can find no better words to sum-up and conclude Bank Islami in a few words then
“Serving you, the Right way!”