mon & bank_final islamic banking

8/14/2019 Mon & Bank_Final Islamic Banking

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Syed Owais Ali (SP07-BB-0135)

M. Moez Siddiqui (SP07-BB-0106)

M. Laraib (SP07-BB-

0082)Pawan Kumar (SP07-BB-

0128)

Shahbaz Nawaz (Sp07-BB-0150

roup Members


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What is Islamic

Banking? Islamic banking has been defined as banking in

consonance with the ethos and value system of Islamand governed, in addition to the conventional good

governance and risk management rules, by the

principles laid down by Islamic Shariah.

Interest free banking is a narrow concept denoting a

number of banking instruments or operations, which

avoid interest.


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HistorySteps 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

comprehensive/national level.

The Islamization measures included the elimination of interest

from the operations of specialized financial institutions

including HBFC, ICP and NIT in July 1979 and that of thecommercial banks during January 1981 to June 1985.


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Continued

The legal framework of Pakistan's financial and corporate

system was amended on June 26, 1980 to permit issuance of

a Shariah compliant instrument of corporate financing

named Participation Term Certificate (PTC).

Separate Interest-free counters started operating in all the

nationalized commercial banks on January 1, 1981 to

mobilize deposits on profit and loss sharing basis.


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Major modes ofIslamic Banking and

Finance


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Continued

Ijarah-Wal-Iqtina :A contract under which an islamic bank provides equipment, building or other assets to the client against an agreed rentaltogether with a unilateral undertaking by the bank or the client

that at the end of the lease period, the ownership in the assetwould be transferred to the lessee.

Musawamah:Musawamah is a general and regular kind of sale in which price

of the commodity to be traded is bargained between seller andthe buyer without any reference to the price paid or cost incurred

by the former.


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Istisna a:It is a contractual agreement for manufacturing goods and

commodities, allowing cash payment in advance and future

delivery or a future payment and future delivery.

Bai muajjal:

Literally it means a credit sale. Technically, it is a financingtechnique adopted by islamic banks that takes the form of

murabaha muajjal.

Continued


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Mudarbah:A form of partnership where one party provides the funds

while the other provides expertise and management. The

latter is referred to as the Mudarib

Musharkah:Musharkah means a relationship established under a contract

by the mutual consent of the parties for sharing of profits and

losses in the joint business.

Continued


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Continued

Bai Salam:Salam means a contract in which advance payment is made

for goods to be delivered later on. The seller undertakes to

supply some specific goods to the buyer at a future date inexchange of an advance price fully paid at the time of

contract.


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Dubai Islamic Bank

The Worlds First Islamic Bank

The largest Islamic Bank in UAEAmongst the top 4 Banks in

the country

Government ownership 34%

Part of the Big Five IslamicBanks in the world

Globally recognized Leaderand Innovator in Islamic Banking

Strong Domestic FranchiseNearly 600,000 retail customers

49 branches / nearly

300 ATMs, CDM


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Products andServices


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Current Account

The Current Account is offered in Pak Rupees, USD, GBP,

EUR, JPY and any other approved currency by the central

Bank/Policy of the Bank.

The minimum initial deposit requirement shall vary for

each of the above categories as determined by the bank

from time to time.

The minimum initial deposit (opening deposit) requirement

shall vary for each of the above categories of the

currencies.


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Continued

The statement of account can be generated

monthly/quarterly/semi-annually and annually.

All persons are, subject to the terms and conditions, eligible

to open the Current Account

The Bank is not obliged to pay any profit on such accounts.

Likewise the customer may not bear any loss.

T Of C


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Types Of CurrentAccountsa) Individual or Joint Account

b) Minors Account

c) Purdah Observing Ladies Account

d) Illiterate/Photo Account.

e) Sole Proprietorship Account

f) Partnership Account


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Continued

g) Limited Liability Company Account.

h) Association, Society, Educational Institutes, Club

Account

i) Trust Account

j) Executors and Administrators Account.

k) Agents Account.


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Process Flow


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Continued

The Account Holder signs the ATM/VISA Debit

Card Application Form along with its Terms &

Conditions. (If he opts for such card)

Account Holder produces the required Documents

Branch/Operations Manager will check the AOF

and having ensured that if the same is complete andsign the AOF


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Continued After successful completion of the Compliance and

KYC checks, the account opening officer enters thecustomer name and CNIC/Passport number and otherinformation in the account opening module. System

will generate a serial number (Customer InformationFile CIF). Annexure ACT-Y1

After the generation of the CIF the account opening

officer will generate the account number according tothe customer information provided in accounting

opening form. Annexure ACT-Y2


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Continued

The Account Opening Form is to be scanned along

with its attached document(s).

Original Documents to be filed in the Account

Holders Current Account Opening file. (Account

number to be assigned later after the AOF is

completely processed at the Back Office and account

number is allotted to the batch number/CIF)


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BACK OFFICE LEVELACTIVITIES

COD will feed the relevant details from the AOF intothe core banking system.

After the necessary variables in the system are madethe system will check the customer informationthrough necessary KYC and AML filters.

If missing then, proper KYC and Due Diligence as

prescribed by the Banks KYC Policy is to becompleted.


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Continued

Account Number is to be assigned and

communicated to the Branch for their record

Cheque book request is to be sent to the cheque

book printers through NIFT (this will be done at

the account holding branch, once Back Office

completes its process and assign the accountnumber) (approx. turnaround time: 3 days)


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Continued

ATM/VISA Debit Card information to be fed in the

system and the request is then queued at the production

center in the back office. (approx. turnaround time: 1

day)

ATM/VISA Debit Card PIN and Tele-banking PIN

Mailers requests are queued in the system (approx.turnaround time: 1 day).


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I l i B ki Gl b l


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Over the last three decades Islamic banking and finance

has developed into a full-fledged system and discipline

reportedly growing at the rate of 15 percent per annum.

Today, Islamic financial institutions, in one form or the

other, are working in about 75 countries of the world.

In Malaysia, Bahrain, Pakistan and a few other countries of

the Gulf, Islamic banks and financial institutions are

working as a system parallel with the conventional system.

Islamic Banking GlobalScenario


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In Britain, the Financial Services Authority has issued

Islamic banking license to the Islamic Bank of Britain,

which has been sponsored by Gulf and UK investors.

The United States of America has appointed Dr.

Mahmoud El Gamal, an eminent economist/expert on

Islamic banking to advise the US Treasury and

Government departments on Islamic finance in June 2004.


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Both US and Britain have over two dozens of

Islamic financial institutions each for providing

Riba free financing facilities to their Muslim

communities.