PREFACE

Internship is the basic requirement of all business programs in nearly all of the business
institutes and especially in Lahore College for Women University, Lahore. It is actually
the basic requirement of the course of BCOM (Honors). Firstly, the purpose of
internship period is to become familiar with the practical world that what is actually
happening in different national and multinational companies and how different
activities are performed over there. Secondly, to cope the theoretical knowledge with
the practical side that what is to be taught us in business institutes and how it is
implemented in different enterprises?

I have done my internship in MEEZAN BANK LIMITED (CIVIC CENTER JOHAR

TOWN) since 24 of July, 2017 to 11st of September, 2017. I gained a lot from this
internship tenor under the kind supervision and guidance of my internship supervisor.
During my whole time, I was visited through different cells of the bank and was thoroughly
briefed about the procedure and working by cordial senior staff of there. My report is all
based on what I have learnt there. I hope that my report will give you good overlook of all
the banking related matters.

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1. INTRODUCTION:
MEEZAN Bank is the first and largest Islamic commercial Bank of Pakistan. The Bank is
headquartered in MEEZAN House - Karachi, Pakistan. It has a network of over 528
branches in more than 130 cities of Pakistan. It commenced operations in 2002 when State
Bank of Pakistan issued first-ever license for Islamic commercial banking. The Bank has
a market share of 35% in Islamic banking industry of the country.

The Bank offers wide range of Shariah-compliant banking products and services to its
customers, both retail and business. Besides traditional banking channels, the Bank offers
various Alternate Distribution Channels including Internet Banking, ATM Banking, Visa
& MasterCard debit card, SMS Banking, SMS Alerts, Mobile Banking Application and
Utility Bills Payment through ATM and Internet Banking.

Banking plays a very significant role in the economic development of a country. After
Partition of India and Pakistan British Government’s commission distributed the reserves
between Pakistan and India.

In August 1947, various Banks transferred their headquarters and funds to India. Before
partition of Pak-o-Hind, some Banks were operated which were Chartered Bank, Grind-
lays Bank, Imperial Bank of India, Australasia Bank and Habib Bank. After the
independence of Pakistan, Muslim Commercial Bank Limited, Bank of Bahawalpur
Limited, Punjab National Bank and National Bank of Pakistan were providing banking
facilities to general public.

The State Bank of Pakistanwas inaugurated by our great leader Muhammad Ali Jinnah.
On 1stJuly, 1948. Australasia Bank and Habib Bank were providing facilities to
the Pakistan’s nation. After some period, Australasia Bank Limited was converted into
Allied Bank of Pakistan.

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State Bank of Pakistan is a Central Bank of Pakistan. Other Banks are Commercial Banks,
Specialized Bank and Investment Banks.

Now a day in Pakistan, fifty-four banks are operated with thousands of branches. Banks
are providing Banking facilities to their customers and clients by offering different services
and packages.

Pakistan’s banking sector consisting of Islamic Banks, Private Banks, Public Sector Banks,
and Micro Finance Banks. These Banks are doing Corporate Banking, Trade Financing,
Lease Financing and some Banks are providing online banking facilities, ATM facility and
money transfer facilities also.

Banking sector is a back bone of our economy. If this sector is making progress than whole
economy is also growing a lot. Our Agricultural sector, Industrial sector, Mining sector,
Export sector all depend on the banking industry because Banks provide long term funds
as well as short term funds to all these sectors to meet out their short term as well as long
term requirement. Hence, banking progress is necessary indeed.

1.1. HISTORY AND BACKGROUND:

The founder of Pakistan, Quaid-e-Azam Mohammed Ali Jinnah while delivering speech
at the opening ceremony of State Bank of Pakistan on July 1, 1948, stated:
"We must work our destiny in our own way and present to the world an economic
system based on true Islamic concept of equality of manhood and social justice."
The statement serves as the concept of Islamic banking by the founding father of the nation
that was created in the name of Islam in 1947.

1991: Procedure adopted by banks in 1985 was declared un-Islamic by the Federal Shariah
Court (FSC). The Government and some banks/DFIs made appeals to the Shariah
Appellate Bench (SAB) of the Supreme Court of Pakistan.

3
1997: Al-MEEZAN Investment Bank is established with a mandate to pursue Islamic
Banking. Mr. Irfan Siddiqui appointed as first and founding Chief Executive Officer.

1999: The Sharia Appellate Bench of the Supreme Court of Pakistan rejects the appeals
and directs all laws on interest banking to cease. The government sets up a high level
commission, task forces and committees to institute and promote Islamic banking on
parallel basis with conventional system.

2001: The Shariah Supervisory Board is established at Al-MEEZAN Investment Bank led
by Justice. Muhammad Taqi Usmani as Chairman. State Bank of Pakistan sets criteria for
establishment of Islamic commercial banks in private sector and subsidiaries and stand-
alone branches by existing commercial banks to conduct Islamic banking in the country.

2002: MEEZAN Bank acquires the Pakistan operations of Society General and
concurrently Al MEEZAN Investment Bank converts itself into a full-fledged Islamic
commercial bank. The first Islamic banking license is issued to the Bank and it is renamed
MEEZAN Bank.

2003: MEEZAN Bank establishes itself as the pioneer of Islamic Banking in Pakistan and
quickly establishes branches in all major cities of the country. A wide range of products
are developed and launched consolidating the Bank’s position as the premier Islamic Bank
of the country Al MEEZAN Investment Management Limited (AMIM), the asset
management arm of MEEZAN Bank, introduces MEEZAN Islamic Fund (MIF), the
country’s first open-end Islamic Mutual Fund.

2004: The State Bank establishes a dedicated Islamic Banking Department (IBD) by
merging the Islamic Economics Division of the Research Department with the Islamic
Banking Division of the Banking Policy Department. A Shariah Board has been appointed
to regulate and approve guidelines for the emerging Islamic Banking industry. The
Government of Pakistan awards the mandate for debut of international Sukuk (Bond)
offering for USD 500 million. The offering is a success and establishes a benchmark for

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Pakistan. MEEZAN Bank acts as the Shariah Structuring Advisor for this historic
transaction.
2006: 62 branches in 21 cities

2007: Bank’s branch network reached the milestone number of 100 branches. The Bank
introduced Istisna' (Istisna' is a sale transaction where a commodity is transacted before it
comes into existence. It is an order to a manufacturer to manufacture a specific commodity
for the purchaser. The manufacturer uses his own material to manufacture the required
goods) financing to cater to the working capital needs of customers.

2008: MEEZAN Bank introduced Tijarah financing to allow customers to raise funds for
financing of stocks of finished goods.

2009: The branch network reached 201 branches (including sub-branches) in 54 cities
nationwide.

2010: The Bank developed MEEZAN Business Plus, a Mudaraba-based account that offers
an array of free services for businesses, MEEZAN Euro Savings Account and MEEZAN
Pound Savings Account. Bank’s branch network reached 222 branches in 63 cities across
Pakistan.

2011: The inauguration of the new Head office in Karachi. During the year, 53 branches
were opened to reach a landmark of 275 branches in 83 cities across Pakistan.

2012: Completed 10 years of operations.

2013: Over 350 branches in over 100 cities

On 18 October 2014, the Bank acquired the HSBC Pakistan operations. After conversion
of the business and branches of HSBC (Honkong and Shanghai Banking Corporation)
Pakistan to MEEZAN Bank; the HSBC Pakistan Accounts and Term Deposit Receipts

5
(TDRs) converted to MEEZAN Bank accounts and Certificates of Islamic Investments
(COIIs).
2014: Meezan bank reaches a branch network of 428 branches in 117 cities. The bank
acquired Pakistan operations of HSBC mobile banking application launched.

2015: Agreement signed with Karandaz Pakistan. Meezan Upaisa the first Islamic
branchless banking service launched successfully. 550 branches in over 130 cities.
2016: Launch of new corporate website.

1.2. BUSINESS PHILOSOPHY:

Our investment philosophy is based on a long-term strategic view, seeking to deliver sound
investment returns with acceptable levels of risk and consistent value creation for our
investors in a Shariah compliant manner.

1.2.1. Code of business:

Employees shall maintain strict secrecy regarding the Bank's affairs and shall not (except
so far as is necessary and appropriate in the normal course of their employment disclose to
any person, any information as to the practice, dealing or affairs of the Bank or any of their
customers, which may come to their knowledge by reason of their employment. During the
course of employment and after its termination for whatever reason, the employee must
not disclose to anyone (nor use for any purpose other than the business of the Bank) any
information relating to the Bank or its employees which is not already available to the
public unless authorized to do so. Such information includes customer data, product
manuals, technical secrets, confidential research work, technical processes, operating
manuals, marketing plans and strategies and other confidential financial or business
information of the Bank.

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1.3. VISION STATEMENT:

“Establish Islamic banking as banking of first choice to facilitate the

implementation of an equitable economic system, providing a strong foundation for
establishing a fair and just society for mankind.”

1.3.1. MISSION STATEMENT:

“To be a Premier Islamic Bank, offering a one-stop shop for innovative

value-added products and services to our customers within the bounds of Shariah, while
optimizing the stakeholders’ value through an organizational culture based on learning,
fairness, respect for individual enterprise and performance.”

1.3.2. SERVICE MISSION:

“To develop a committed service culture which ensures the consistent

delivery of our products and services within the highest quality service parameters,
promoting Islamic values and ensuring recognition and a quality banking experience to our
customers.”

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❖ Business Volume

Key business result 2016 2015 Growth

Financing Rs.312 Billion Rs.208Billion

50%

Branch network 571 Branch 551 Branch

4%

Presence 146 Cities 143 Cities

2%

Deposit Rs.564Billion Rs.472Billion

20%

Total asset Rs.658Billion Rs.532Billion

24%

Profit after tax Rs.5.56Billion Rs.5.02Billion

11%

Equity Rs.2.81Billion Rs.25.6Billion

10%

Trade business (import and export) Rs.552Billion Rs.461Billion

20%

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1.3.3. Values
1. Core Values:

Shariah-compliance, Integrity, Professionalism, Innovation, Service, Excellence, Social

responsibility.

2. Staff:

Committed, motivated and professionally trained employees who are empathic to their
customers’ needs.

3. Brand Personality:

A sober and established, strong, empathic, professional person; who is an extremely

loyal and dependable friend and business partner, and is committed to offering
comprehensive value-based Shariah-compliant financial solutions.

4. Relationships:
Our relationships are long-term. We recognize and value our customers’ needs above
all and strive to ensure their fulfillment. All customers are treated with professionalism
and in a friendly manner. It is our Endeavour to ensure that they receive efficient and
timely service. The MEEZAN Bank experience is a unique one.
5. Strategy:
By implementing robust(durable) and aggressive (competitive) strategic and tactical
initiatives on the side of consumer banking, MEEZAN Bank aims to fulfill its prime
objective of providing customers accessibility and convenience, within an atmosphere
and culture of dedicated service and recognition of their needs.
6. Technology:
MEEZAN Bank has a strong technology focus. It has invested heavily in state-of-the-
art software applications – namely Temenos T-24 and Oracle. It has also recently
upgraded its hardware platform and also has a ‘hot’ disaster recovery site in place to
cater to any unforeseen eventualities.

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 7. Strategy of Hiring in MEEZAN Bank:

The strategy used for hiring in MEEZAN Bank is Trend Analysis.“The Trend Analysis
is a method of analysis that allows traders to predict what will happen in the future.
Trend analysis is based in historical data about the employee’s performance given the
overall trends of the market and particular indicators within the market”.

1.4. MARKET STANDING OF MEEZAN BANK:

MEEZAN BANK market standing can be revealed by credit rating which it gets from
credit rating companies like PACRA is most reliable source of credit rating.

Entity Ratings by PACRA: Long Term: AA- , Short Term: A1+.

Long Term Rating AA: Very High Credit Quality. AA Ratings denote a very low
expectation of credit risk. They indicate very strong capacity for timely payment of
financial commitments. This capacity is not significantly vulnerable for foreseeable
events.

Short Term Rating A1+: Obligations supported by the highest capacity for timely
repayment.

1.4.1. AWARDS AND ACHIEVEMENTS:

Al Meezan has been time and again recognized for its

consistency in performance outshining the competitors in
domestic and global Islamic funds market. It is recognized
as Pakistan’s largest private sector Asset Management
Company. Below is a list of the awards and accolades we
have received from foreign bodies and respected industry
organizations in recognition of our investment
management and service excellence.

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1.4.1. Company award

Sr.# Description of Award Given By Announced in

1. Pakistan’s Financial Services AI Global Media 2016
Firm of the Year 2016 publication
2. Best of the Best in Finance AI Global Media 2016
Award-Pakistan 2016 publication
3. Best Private Sector Asset Wealth & Finance-Int’l 2016
Management & Investment
Firm 2016 – Pakistan
4. Best Investment Advisory Firm Wealth & Finance-Int’l 2016
2016 – Pakistan
5. Excellence in Equity Award Investor Review Magazine 2016

6. Shariah Compliant Investment The European 2016

Company of the Year- Pakistan
2016
7. Best in Private Sector Asset Corporate Live Wire 2016
Management 2017
8. Most Outstanding Shariah Acquisition International 2016
Compliant Asset Management (AI)
Company
9. Asset Management Company of IFFSA Awards, Islamic 2016
the Year, Pakistan Finance Forum of South
Asia
10. Best Islamic Asset Management Asset Triple A Awards, 2015
House of the year 2015 in Hong Kong.
Pakistan
11. Best Investment Management Wealth & Money 2015
Company, Pakistan-2015 Management Awards

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12. Best Islamic Asset Management APAC Insider Business 2015
Company – Pakistan Awards
13. Best Discretionary Portfolio APAC Insider Business 2015
Manager – Pakistan Awards
14. Excellence in Shariah Innovation &Excellence 2015
Compliant Financial Services – Awards- Corporate
Pakistan Livewire

15. Most Outstanding Asset Innovation &Excellence 2015

Management Company Awards- Corporate
Livewire

16. Best Regional Fund IFN Islamic Investor 2014

Performance 2014 Awards 2014
17. Best Islamic Asset Management Asset Triple AAwards, 2014
House of the year 2014 in Hong Kong
Pakistan
18. Best Islamic Asset Management Asset Triple AAwards, 2013
House of the year 2013 in Hong Kong
Pakistan
19. Best Islamic Asset Management Asset Triple AAwards, 2012
House of the year 2012 in Hong Kong
Pakistan
20. Best Islamic Asset Management Asset Triple AAwards, 2011
House of the year 2011 in Hong Kong
Pakistan
21. Fund Manager of the Year 2011 Financial Daily, Pakistan 2011

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1.4.3. Growth of Meezan Bank:

JCR-VIS Credit Rating Company Limited has reaffirmed the entity ratings of Meezan
Bank Limited at ‘AA/A-1+’, a statement issued by the company.

JCR-VIS has also reaffirmed sukuk ratings of Meezan Bank at ‘AA-’. Outlook on the assigned
ratings is ‘Stable’. The previous rating action was announced on June 2, 2016. The assigned ratings
to Meezan Bank incorporate the bank’s healthy customer franchise and a sound funding base,
largely comprising cost effective retail deposits. Ratings also reflect strong asset quality indicators
and adequate capitalization levels.

Meezan Bank continues to dominate the Islamic banking industry in the country with a market
share of 36 percent in total Islamic banking deposits, the statement added. With aggressive branch
expansion pursued over the last five years, branch network has more than doubled to 571 (2011:
275) branches as at the end of December 2016.

Resultantly, deposit base has grown at a CAGR of 27 percent over the last five years and
market share in total banking deposits has increased to five percent (2016: 4.9 percent;
2011: 2.9 percent).

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2. ORGANIZATIONAL STRUCTURE:

Meezan team

The business segments of the banks are:

1. Corporate Banking
2. Investment Banking
3. Commercial Banking
4. Treasury & Financial Institutions
5. Asset Management

1. Corporate Assets:

Over the years, Meezan bank has been able to grow its corporate assets portfolio
considerably despite the challenges. With a focused development strategy, we have been
able to build a healthy and well diversified portfolio that has resulted in our corporate assets
book to grow at a CAGR of 31% per annum over the last 5 Years.

2. Corporate Trade Business:

The Bank’s trade business (import and export) performed very well in 2016 in both volume
and income and registered a growth of 20% and 27.5%, respectively, notwithstanding the
fact that exports of the country as a whole dropped by 13% during the year. The total trade
business volume in 2016 crossed Rs 552 billion.

3. Investment Banking:

Whether it’s advising a client on a multi-billion Rupee merger / acquisition transaction or

marketing & distribution of structured finance transactions, our Investment Banking brings
superior innovation, experience and the required skill set to deliver according to the exact
requirements of our clients.

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4. Commercial Banking:

Meezan Bank Limited has been at the of reverent of the Islamic Banking since the last
decade. More than a bank unlike others in the post-renaissance context we have been
serving our clientele with utmost diligence to harness and garner long term relationships,
the efforts for which are evident from the growth of our asset size.

Committed to its vision, the commercial banking team at MBL has been dedicated to
providing on the edge services to our clients while exploring new industries and sectors to
cater to the expanding demands of the industrious and progressive individuals driving the
engine of Pakistan’s economy.

5. Treasury & Financial Institutions:

Al Meezan Investment Management Limited 2009was an eventful year. Rising interest

rates, coupled with a freeze in the local stock market for more than three months resulted
in a severe loss of confidence and led to a liquidity crunch in the last quarter. Meezan Bank
remained unaffected by this crises , rather becoming a formidable player in the local money
market , placing funds with major banks and non-banking financial institutions using
Shariah – approved structures. Treasury was not only able to deploy its excess liquidity,
but also benefit from the SLR eligible security that was in its custody for the period.

6. Asset management:

Al Meezan is the largest fund manager in private sector in Pakistan and the Only Shariah
compliant Asset Management Company in Pakistan. Al Meezan has successfully
completed 20 years of its existence in 2015. This is one of the longest track records in
private sector in the area of investment management in Pakistan and has emerged as one
of Pakistan’s leading investment solutions provider in a Shariah compliant manner. The
Shariah Advisor of Meezan Bank Limited, also the Shariah Advisor of Al Meezan,
supervises the operations to ensure Shariah compliance of the funds.

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2.1. ORGANIZATION CHART:

Resident Shariah Board Member Shariah Audit and Advisor

Internal Audit and Business Risk return

Product Development & Shariah Complainc

Company Secretariat

FINANCE

Support

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The organizational structure of the Bank consists of top level management, middle level
management and lower level management. The top level management comprises of
president, executive vice president, and divisional heads. The middle level management
comprises of departmental heads, SVPs and VPs. The lower level management comprises
of AVPs, Managers, and Operation Managers. The reporting system at horizontal level is
much effective and successful. The reporting system at vertical level i.e. from lower level
management to middle level management is also accurate, timely and complete. The
middle level management gives information to high level management at which decision
are made, rules and regulations are amended keeping in view the present scenario.

2.1.1. Auditors:

The retiring auditors A.F. FERGUSON&Co. Chartered Accountants, a member firm of

Pwc network, being eligible, have offered themselves for reappointment for the year ending
December 31, 2016.The Board of Directors, on the suggestions of Audit Committee,
recommended reappointment of the above firm as statutory auditors of the Bank for year
2016.

Statement of Compliance with the Code of Corporate Governance

For the year ended December 31, 2016

This statement is being presented to comply with the Code of Corporate Governance
(CCG) contained in Regulation No. 5.19 of the listing regulations of the Pakistan Stock
Exchange Limited where the Bank is listed for the purpose of establishing a framework of
good governance, whereby a listed company is managed in compliance with the best
practices of corporate governance. the Bank has applied the principles contained in the
Code in the following manner:

1. The Bank encourages representation of independent, non-executive directors and

directors representing minority interests on the Board of Directors. As at December 31,
2016 the Board included:

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 Category No. Name

Independent Directors 3 Mr. Mohammad Abdul Aleem

Executive Directors
Non- Executive Directors
Mr. Noorur Rahman Abid
Mr. Talal S.A. Al-Shehab
2 Mr. Irfan Siddiqui
Mr. Ariful Islam
7 Mr. Riyadh S. A. A. Edrees
Mr. Faisal A.A.A. Al-Nassar
Mr. Bader H.A.M.A. Al-Rabiah
Mr. Mansur Khan
Mr. Alaa A. Al-Sarawi
Mrs. Syeda Azra Mujtaba
Mr. Muhammad Zarrug Rajab

2. The Directors have confirmed that none of them is serving as a director on more than
seven listed companies in Pakistan including the Bank

3. All the resident Directors of the Bank are registered as taxpayers and none of them has
defaulted in payment of any loan to a banking company, a Development Financial
Institution or a Non-Banking Financial Institution or, being a member of a stock
exchange, has been declared as a defaulter by that stock exchange.

4. Casual vacancy occurred on the Board upon resignation of Mr. Rana Ahmed Humayun
on July 1, 2016 which was filled up by the Board within 90 days. The approval from
the State Bank of Pakistan for this appointment was received on August 19, 2016.

5. The Bank has prepared a “Code of Conduct” and has ensured that appropriate steps
have been taken to disseminate it throughout the Bank along with its supporting policies
and procedures.

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6. The Board has developed a Vision / Mission statement, overall corporate strategy and
significant policies of the Bank. A complete record of particulars of significant policies
along with the dates on which they were approved or amended has been maintained.

7. All the powers of the Board have been duly exercised and decisions on material
transactions, including appointment and determination of remuneration and terms and
conditions of employment of the CEO, other executive and non-executive directors,
have been taken by the Board.

8. The meetings of the Board were presided over by the Chairman and the Board met at
least once in every quarter. Written notices of the board meetings, along with agenda
and working papers, were circulated at least seven days before the meetings. The
minutes of the meetings were appropriately recorded and circulated.

9. The Bank is in compliance with respect to training requirements of its directors as

eleven directors have completed their training till December 31, 2016.

10. The remuneration and terms and conditions of employment of the Chief Financial
Officer (CFO) have been approved by the Board of Directors. Further, a new Company
Secretary has been appointed by the Board of Directors subsequent to the year end on
January 5, 2017 upon retirement of the existing Company Secretary. There was no new
appointment of Head of Internal Audit during the current year.

11. The Directors’ Report for this year has been prepared in compliance with the
requirements of the Code and fully describes the salient matters required to be
disclosed.

12. The financial statements of the Bank were duly endorsed by the CEO and CFO before
the approval of the Board.

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13. The Directors, CEO and Executives do not hold any interest in the shares of the Bank
other than that disclosed in the pattern of shareholding.

14. The Bank has complied with all the corporate and financial reporting requirements of
the Code.

15. The Board has formed an Audit Committee. It comprises of three members, all of
whom are Non-Executive Directors and the Chairman of the Audit Committee is an
Independent Director.

16. The meetings of the Audit Committee were held at least once every quarter prior to
approval of interim and final results of the Bank and as required by the Code. The terms
of reference of the committee have been formed and advised to the committee for
compliance.

17. The Board has formed a Human Resources and Remuneration Committee. It comprises
of three members; a Non-Executive Director, an Independent Director and an
Executive Director. The Chairman of the committee is a Non-Executive Director.

18. The Board has set up an effective internal audit function comprising of professionals,
who are suitably qualified and experienced for the purpose and are conversant with the
policies and procedures of the Bank.

19. The statutory auditors of the Bank have confirmed that they have been given a
satisfactory rating under the quality control review program of the ICAP, that they or
any of the partners of the firm, their spouses and minor children do not hold shares of
the Bank and that the firm and all its partners are in compliance with the International
Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the ICAP.

20. The statutory auditors or the persons associated with them have not been appointed to
provide other services except in accordance with the listing Regulations and the
auditors have confirmed that they have observed IFAC guidelines in this regard.

20
21. The ‘closed period’, prior to the announcement of interim/ final results and business
decisions, which may materially affect the market price of the Bank’s securities, was
determined and intimated to directors, employees and the stock exchange.

22. Material/price sensitive information has been disseminated among all market
participants at once through the Pakistan Stock Exchange.

23. The Bank has complied with the requirements relating to maintenance of register of
persons having access to inside information by a designated senior management officer
in a timely manner and maintained proper record including basis for inclusion or
exclusion of names of persons from the said list.

24. We confirm that all other material principles included in the Code have been complied
with.

2.2. CORPORATE PROFILE

Shari’ah Board:

• Justice (Ret’d) Maulana Muhammad Taqi Usmani - Holds position of deputy

Chairman of Islamic Fiqh Academy, Jeddah plus chairmanship on the Shariah boards
of a number of leading Islamic Law and Financial Institutions around the globe
including AAOFII, IFSB.
• Sheikh Essam M. Ishaq – from Bahrain Sheikh Essam M. Ishaq graduated in Political
Science from McGill University, Canada. Associated with Al Baraka Islamic Bank,
Bahrain, Bahrain Development Bank.
• Dr. Muhammad Imran Usmani – is an LLB, M. Phil, and Ph. D in Islamic Finance
and graduated as a scholar from Jamia Darul-Uloom, Karachi where he also
completed a specialization course in Islamic Jurisprudence. He has been teaching at
Jamia Darul-Uloom since 1990 and is also a visiting faculty member at the IBA,
Karachi. Dr. Usmani serves as an Advisor/Member of Shariah Boards of SBP, HSBC,

21
 France; GFG, USA; LTSB Bank, UK; Credit Suisse, Switzerland; Future Growth
Equity, South Africa.

2.2.1. Board of Directors:

1. H. E. Sheikh Ebrahim Bin Khalifa Al-Khalifa (Chairman)
2. Mr. Abdullateef A. Al-Asfour (Vice Chairman)
3. Mr. Irfan Siddiqui (President & CEO)
4. Mr. Ariful Islam (Deputy CEO)

2.2.2. Strategic Direction-2015

➢ 550 branches
➢ 475 Billion Deposits
➢ 550 Billion Trade Business

“Establish Islamic Banking as banking of first choice”

2.2.3. Branch Network:

Over 550 branches in over 140 cities across Pakistan, Meezan Bank is the largest Islamic
Bank and the 7th largest Bank (in terms of Branch Network) in Pakistan. This is a milestone
that is not only the success story of Meezan Bank but also the continuing success story of
Islamic banking in Pakistan. With this extensive network, our existing and potential
customers are now closer than ever in benefiting from Islamic Banking at their doorstep.
All branches provide real-time online banking facilities to customers.

As the first and largest dedicated Islamic bank in Pakistan, Meezan Bank team continues
to build on its Vision of establishing "Islamic Banking as Banking of First Choice". One
of the key objectives of the Bank is to have its footprint strategically placed throughout the
country enabling the public to avail the benefits of Shariah-compliant Banking in their
neighborhood. The cities in which the Bank presently operates are as follows:

Abbottabad Jhang Peshawar

Ahmedpur East Jhelum Phalia

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Arifwala Kabirwala Pir Mahal

Attock Kahror Pacca Pishin

Bahawalnagar Kahuta Qalanderabad

Bahawalpur Kamalia Qilla Saifullah

Bannu Kamoke Quetta

Battagram Karachi Rahim Yar Khan

Burewala Karak Raiwind

Chakwal Kasur Rajanpur

Chaman Khairpur Rashidabad

Charsadda Khan Bela Rawalakot

Chichawatni Khanewal Rawalpindi

Chiniot Khanpur Rawat

Chishtian Kharian Sadiqabad

Chung Khushab Sahiwal

Dadu Kohat Sakrand

Dadyal Kot Addu Samundri

Daska Kot Radha Kishan Sanghar

Depalpur Kotli Azad Kashmir Sara-e-Alamgir

Dera Ghazi Khan Kunri Sargodha

Dera Ismail Khan Lahore Sawari

Digri Lalamusa Shahdadpur

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Dina Larkana Shakargarh

Dinga Layyah Sheikhupura

Dukki Liaquatpur Shikarpur

Dunyapur Lodhran Sialkot

Faisalabad Loralai Sukkur

Fateh Pur Mailsi Swabi

Fort Abbas Mandi Bahauddin Swat

Gaggo Mandi Mansehra Tando Adam

Ghotki Mardan Tando Allahyar

Gilgit Baltistan Mehar Tarlai

Gojra Mian Channu Tando Mohammad Khan

Gujar Khan Mianwali Taunsa

Gujranwala Mirpur Azad Kashmir Taxila

Gujrat Mirpur khas Timergara

Hafizabad Moro Toba Tek Singh

Haripur Multan Umerkot

Haroonabad Muridkay Vehari

Hasilpur Muslim Bagh Wah Cantt

Hassan Abdal Muzaffarabad Wazirabad

Havelian Muzaffargarh Zhob

Hub (Lasbela) Narowal

24
 Hyderabad Nawabshah

Islamabad Nowshera

Jacobabad Okara

Jalalpur Jattan Pabbi

Jampur Pakpattan

Jaranwala Pattoki

2.2.4. The list of Board of Directors of Meezan Bank Limited is as under:

1. Mr. Riyadh S.A.A. Edrees (Chairman)
2. Mr. Faisal A.A.A. Al-Nassar
3. Mr. Bader H.A.M.A. AlRabiah
4. Mr. Rana Ahmed Humayun
5. Mr. Alaa A. Al-Sarawi
6. Syeda Azra Mujtaba
7. Mr. Muhammad Zarrug Rajab
8. Mr. Mohammad Abdul Aleem
9. Mr. Noorur Rahman Abid
10. Mr. Talal S.A. Al-Shehab
11. Mr. Irfan Siddiqui (President & CEO)
12. Mr. Ariful Islam (Deputy CEO)

2.2.5. Business Segments:

The business segment of Meezan bank are:

1. Retail Banking, SME, Commercial and Agriculture (Ijaz Farooq)
2. Treasury and Financial institutions (Muhammad Abdullah Ahmad)
3. Corporate and Investment Banking (Syed Amir)
4. Consumer Finance (Arshad Majeed)

25
 2.2.6. Computerized Working Environment:
In bank all the work is done on computers. All the entries are made in computer. Balance
is fed into the computer. This increases efficiency of the bank. All the branches are
centrally controlled through LAN settings. It helps them to co-ordinate more easily for
making efficient and fastest consumer service.

2.3. MANAGEMENT HIERARCHY

President

Chief operating office

Head of County of risk Executive voice Executive Chartered

county manager President voice account
operation President

Information Corporate Branch Branch

Department Head manager manager

26
2.3.1. MANAGEMENT HIERARCHY IN MAIN BRANCH

Regional Manager/Branch
Manager

Assistant Branch Manager

Operation Manager CAD Department SMEG. Department consumer

IT/HR Department Corporate

Department

27
2.3.2. Hybrid structure:

Because of complex banking environment, Meezan Bank use hybrid type of structure that
has the following characteristics:

1. Function:
➢ Allows economies of scale that all employees are located in the same place and share
all facilities.
➢ Enables in-depth knowledge and skill development.
➢ Enables organization to accomplish functional goals.

2. Divisional:
➢ Leads to client satisfaction because responsibilities and contact points are clear.
➢ Best in large organization.
➢ Horizontal
➢ Promotes flexibility and rapid response to changes in customer needs.
➢ Promotes a focus on team work and collaboration.
➢ Direct the attention of everyone toward the delivery of values to the customer.
2.4. Policy Formulation in Pakistan:
The system at Meezan Bank is totally centralized. All the policies are formulated at the top
level and implemented at the middle and lower level. The policies are formulated at
Karachi, which is the main Head Office of MBL. The most important thing about policy
formulation at MBL is that the policies are “dynamic’’ in nature. These are to be framed
according to the macro and micro environmental forces, so they keep on changing.

2.4.1. Main Categories of Policies:

➢ Functional policies regarding
▪ Main business areas
▪ Consumer banking product
▪ EBBS-the efficient IT system
➢ Managerial policies
➢ Accounting policies

28
2.4.2. Functional policies:
2.4.2.1. Business Areas in Pakistan:

First of all they have made a policy regarding ‘Business Areas in Pakistan’ which covers
the areas of businessoffered by MBL in Pakistan. The detail of the policy is as under:

➢ Consumer Banking
➢ Branch Banking
➢ Assets Sales
➢ Corporate and Institutional Banking
➢ Custody and Clearing Services
➢ Cash management
➢ Trade Finance
➢ Treasury Operations
2.4.3. Managerial policies:

Managerial policies include the following;

➢ Investment Policies
➢ Lending Policies
➢ Profit Rates
➢ Repayment and Collateral
➢ Audit and Control
➢ Servicing Policies
➢ Personal Policies
➢ Research and Development Policies
➢ Marketing Policies
➢ Recruitment Policies
➢ Environmental Policy
➢ Creditor Payment Policy
➢ Promotional Policies

29
2.4.4. Accounting policies:
➢ Accounting Convention
➢ Bad and Doubtful Debts
➢ Debt Securities, Equity shares and Treasury Bills
➢ Deferred Taxation
➢ Off-balance Sheet Financial Instruments

2.5. CREDIT RATING:

2016 2015

Long term AA AA
Short term A1+ A1+

The JCR-VIS Credit Rating Company Limited, an affiliate of Japan Credit Rating Agency,
Japan, has reaffirmed the Bank’s long-term entity rating of AA (Double A) and short-term
rating at A1+ (A One Plus) with stable outlook. The short-term rating of A1+ is the highest
standard in short-term rating. The rating indicates sound performance indicators of the
Bank.

30
3. MARKETING STRATEGY:
An organization's strategy combines all of its marketing goals into one comprehensive
plan. A good marketing strategy should be drawn from market research and focus on the
product mix in order to achieve the maximum profit and sustain the business.
The marketing strategy is the foundation of a marketing plan.

“The set of controllable tactical marketing tools that the firm blends to produce in
response to wants in the target market.”

Marketers use numerous tools to elicit desired responses from their targetmarket. These
tools constitute a market mix.

Various elements of marketing strategy are as follows:

➢ Products
➢ Price
➢ Place
➢ Promotion
➢ People
➢ Physical environment
➢ Process

31
MBL PRODUCTS AND SERVICES

Meezan bank
Product

Deposit account Term and certificates

Service Electronic banking Consumer finance

32
3.1. INTRODUCTION OF PRODUCTS:
3.1.1. Riba
1. Riba Free Meezan Providence:
It is a long-term investment product especially designed for the need and to fulfil the
requirements of the corporate and business concerns for purpose of investing their
provident, pension and Gratuity Funds as any sensible and wise person who wants to
invest his earning, his main concerns would be total security along with the best returns
possible, especially as these earnings or funds are a trust from his employees and one that
bears an important responsibility.

Meana Providence rests on the well-known and solid financial strength of Meana Bank,
which has a strong and credible balance sheet with excellent operating profitability,
including a capital adequacy ratio that has placed the Bank at the top of the industry.

Furthermore, its sterling track record shows consistently beneficial and highly
competitive returns for their broad range of investors. Finally, comes the benefit of truly
Halal returns, a benefit you may not have had the opportunity to enjoy before and one
that you can now pass on to your employees, many of whom would be grateful for such
an opportunity.

➢ Key Features of Meana Providence:

▪ A 100% hill investment in strict compliance with Shariah
▪ High returns
▪ Long Term security ensured
▪ Minimum investment amount: PKR 1,000,000
▪ Available tenures of 3, 5 and 7 years.
▪ Pre-mature withdrawal options available

33
2. Riba –Free-Certificates of Islamic Investment:
This investment product is designed to meet the short term and long-term needs. The
minimum investment is PKR 50,000 and it is available in tenures of 3 and 6 months, 1, 2,
3 and 5 years.
Furthermore, these certificates can be encased at any time without any charge or penalty,
only the profit rates will be adjusted according to the tenure completed. You can earn profit
on your investment on the following basis:

➢ Monthly profit on 1, 2, 3 and 5 years

➢ Quarterly profit on 1, 2, 3 and 5 years
➢ At maturity profit payment for all tenures
In the Riba Free COII, you enter into the Musharakah agreement that is strictly in
conformity with the principles of Islamic Shariah. The deposits of the customers together
with the Bank’s contribution are invested in a pool that consists of Ijarah and Murabaha
financing. The profit/loss on this pool is calculated every month on the basis of profit
sharing ratio determined by assigning weightings. Such weightings are assigned at the
beginning of every month and are displayed on the bank notice board and website. This
facility is available during the course of investment. However, profit shall be paid only
after completion of one month of investment.

3. Riba Free-Monthly Musharakah Certificate:

The riba free Monthly Musharakah Certificates are a flexible
investment product which has been designed to give the depositor a
monthly return which is Halal. The depositors participate with the
bank in the pool of investments which is comprised of Murabaha and
Ijarah transactions. The minimum investment required is required is
only PKR 100,000 and you receive profit for each complete month
of investment with the bank. The profit rate, so calculated, is applied
to all investments which mature between the periods starting from
the 6thday of each month to the 5thday of the next month. During

34
 your relationship with us, you would be entitled to receiving the
following additional benefits.

1. Personalized cheque books.

2. No restriction on withdrawals.
3. Call centre facilities.
4. Monthly profit payment to your current or saving account with us.
5. Free bank balance certificates
6. Personal financial consultancy services
7. Access to priority desk

4. Riba Free-Dollar Saving Account:

With a minimum of only $100 you can open a Dollar Saving Account with us under
a Mudarabah arrangement that is strictly in conformity with the principles of Islamic
Shariah. The return earned on the Mudarabah pool is calculated every month and the
profit ratio for all investors is declared at the beginning of the month. If you maintain a
minimum average monthly balance of $ 500, you shall be eligible to receive profits that
shall be disbursed to you get when they bank with us, we offer the following additional
conveniences to our customers. Every month. Apart from first class service and
personalized attention that our customers.
➢ Personalized cheque books
➢ No restriction on withdrawals or number of transactions.
➢ Call centre facilities
➢ Monthly profit payment
➢ Free bank balance certificates
➢ Taking stop payment instructions.
➢ Taking hold mail instructions.
➢ Issuance of duplicate statement of account.
➢ Personal financial consultancy services.
➢ Access to priority desk.

35
5. Riba Free-Rupee Saving Account:
With a minimum of only PKR 10,000 THE Rupee Saving
Account can be opened under musharakah agreement. The
profit earned is calculated every month. And if the client
maintains a monthly balance of PKR 10,000 the client is eligible
for the profits that will be disbursed every month. However, the
clients of COII may open this account with any minimum
balance.
Profit calculation is based on weight ages in the following tiers:
➢ PKR 10,000 up to PKR 9,999,999
➢ PKR 10,000,000 up to PKR 49,999,999
➢ PKR 50,000,000 up to PKR 99,999,999
➢ PKR 100,000,000 and above

6. Riba Free - Current Account:

In this type of account, the client is allowed to deposit or withdraw money as he likes.
He may, thus, deposit or withdraw several times in a day as he likes. Usually the bank
allows this and charges service charges are deducted by the bank from current deposit
account. It gives advantage for paying debts by the convenient and safe means of sending
cheese through the post thus avoiding the trouble and loss.

This bank account that is ideal for businesses and individuals looking for Shariah
compliant banking and ease of access. With a minimum amount of only Rs. 10,000 this
product offers you a range of benefits including personalized checking facility, no
restrictions on the number of transactions, free Call Centre facilities, free balance
certificates, priority banking and much more.

36
7. Islamic Agricultural Financing:
Meezan Bank is considered as a trend setter in Islamic
Banking in Pakistan mainly on account of offering wide
range of Shariah-Compliant banking solutions to cater
different needs of its customers. Following its track record,
Meezan Bank is now offering Islamic Agricultural
Financing Products to farmers.

8. Pmybl Scheme:
Under this scheme, financing will be available to the youth of Pakistan under the four
major categories, along with the eligibility criteria:
1. Small Entrepreneur:
Unemployed youth, especially educated ones who are looking for establishing or
extending Shariah compliant business in their personal capacity through establishment
of enterprise.
2. Microenterprise:
Individuals who have successfully completed 3-4 cycles with Akhuwat and want to
graduate from their current business size.
3. Agriculture (Tractor Ijarah):
Young farmers who require Tractor financing.
3.1.2. Car Ijarah –Islamic Car Financing:

Car Ijarah is Pakistan's first "Interest Free" car-

financing based on Islamic financing mode of
Ijarah or Islamic leasing. This product is ideal for
interest averse individuals, looking for a car financing
that provides the convenience of a well-designed
product while avoiding an interest based transaction.
Car Ijarah totally halal auto finance facility that is
very affordable, with quick processing and minimal

37
 documentation. Car financing that is very competitively priced, hassle-free, and totally
Halal.

As Ijarah is basically is the transfer of usufruct of a fixed asset to another person for an
agreed period, at an agreed consideration. Under car Ijarah agreement the car will be given
to the customer for the period agreed on the time of contract. In car Ijarah the asset remains
in the ownership and risk of bank and the customers only pay the rentals for use of the
asset: just like house rent. The product has grown all over the country with a portfolio of
Rs 291 million as of 31st December with non-performing contracts.

❖ Key Features of Car Ijarah:

➢ No application fees
➢ Ease of acquiring any new locally assembled car
➢ No upfront Insurance Payment
➢ No advance Rental
➢ Available in tenures of 3, 4 and 5 years
➢ Minimum security deposit as low as 20%

3.1.3. Labbaik saving account:

Meezan Labbaik Saving Asaan is an ideal

deposit product for you if you are an
individual saver and wish to save for your
spouse, children, parents, etc. You can take
benefit from this special Mudarabah based
Deposit account (available in six months to
twenty years plan) for Umrah & Hajj where
you will also be entitled for profit on the
deposited amount, thus providing Customers a bigger incentive to save for Umrah/Hajj through

38
Meezan Labbaik Saving Asaan. Meezan Labbaik Saving Asaan Account can be opened by
Individuals.

❖ Key feature:
➢ Minimum deposit required to open an account is Rs. 1,000/-
➢ Labbaik Saving Plan is available for six (06) months to twenty (20) year
➢ Customers can deposit additional amounts in order to complete the deposit amount
and make the desired journey sooner
➢ Customers will deposit monthly contribution as per the deposit schedule plan
➢ After completion of the desired deposit amount, customers will have a right to travel
with Meezan Bank or redeem their funds to go with an alternate company
➢ No pre-mature withdrawal schedule will be applied
➢ Available for individuals, where customers can open a single / joint account with
family members
➢ Customers may redeem 50% of the contribution as per defined procedure, one-time in
the entire deposit tenure
➢ Labbaik Saving Account is a non-chequing account, where no cheque book or VISA
Debit Card will be issued.
3.1.4. Kid club saving account:

Are you still not 12 years old? Then Meezan Bank

has something very special for you; a chance of
having your own Mudarabah-based Meezan Kids
Club Account. You can now put all your pocket
money, Eidi and all your other cash in this account,
where it will be safe and invested in line with Islamic
principles. When you get this account opened, you
will get to learn a lot more about managing your
savings. We will also make sure you have fun while learning to save the right way.

39
❖ Key feature:
➢ Pen your account with Rs 500/- only
➢ Specifically, for kids under the age of 12 years
➢ Exciting gifts on account opening
➢ Halal profit every month
➢ Free personalized “Kids Club Certificate”
➢ Personalized Cheque Book
➢ Free first Visa Debit Card in different colors for boys and girls
➢ Free Online Banking service and Internet Banking facility
➢ SMS alerts on your transactions
➢ Free Takaful Coverage* upto Rs. 1 million in case of an Accidental Death and Free
ATM Takaful Coverage* upto Card Limit *Maintaining a monthly average balance
of Rs 10,000 and above.
➢ Upgrade to a Meezan Teens Club Account after your 12th birthday

3.1.5. Teens club account:

Meezan Teens Club Account is a Mudarabah- based relationship
where you will be the Investor (Rab-ul-Maal) and the Bank will
be the Manager (Mudarib). Your funds will be utilized by the
Bank to provide Islamic financing to customers.
Meezan Bank is a keen Socially Responsible Organization and
realizing this responsibility, the Teens Club Account aims to
provide a forum to teens where their maturing minds are groomed in a modern yet Islamic way.
The Teens Club Account provides a blend of fun learning with special focus on character and value
building.
❖ Key feature:
➢ Open your account with Rs. 1000/- only
➢ Specially for teens of 12 to 18 years of age
➢ Exciting gifts on account opening

40
 ➢ Halal profit every month
➢ Free personalized “Teens Club Certificate”
➢ Personalized Cheque Book
➢ Free first Visa Debit Card in different colors for boys and girls
➢ Free Online Banking service and Internet Banking facility
➢ SMS alerts on your transactions
➢ Free Takaful Coverage* upto Rs. 1 million in case of an Accidental Death and
Permanent Disability free ATM Takaful Coverage* upto Card Limit*Maintaining a
monthly average balance of Rs 10,000 and above.

3.1.6. Business plus account:

Meezan Business Plus is a Mudaraba-based account that
allows you to conduct your banking transactions while
availing a wide range of free services and therefore provides
you the ideal blend of convenience & flexibility that you
deserve in Islamic banking.

Meezan Business Plus Account can be opened by Individuals and businesses including Sole
Proprietorships, Partnerships and Limited Companies.
❖ Key feature:
➢ Minimum investment required to open an account is Rs. 100/-
➢ There is no restriction on withdrawals or numbers of transactions
➢ Free Cheque books** and free Pay Orders
➢ Free Account Statements**
➢ There is no deduction of service charges if the balance maintained is low
➢ Free Hold Mail Facility
➢ Free SMS alert service
➢ Free Inter City Clearing
➢ Free Takaful Coverage* upto Rs. 1 million in case of an Accidental Death and
permanent Disability free ATM Takaful Coverage* upto Card Limit *Maintaining a
monthly average balance of Rs 10,000 and above.

41
➢ Withdraw money as many times as you need in a single day

3.1.7. Meezan Consumer Ease:

Durable Goods Financing is first ever Shariah-compliant limit
based financing facility, which allows customers to purchase
laptops, generators and various consumer durable items such as
LED TVs, air conditioners, washing machines, mobile phones
etc. on easy and affordable monthly installments. A one -time
limit approval makes the process simple and hassle-free for the customer, making him/her
eligible for multiple financing facilities for Riba-free goods. The Consumer Ease products are
based on Shariah concept of Musawamah, which is a general and regular kind of sale.

3.1.8. Bike Ijarah:

Based on Ijarah principle, Meezan Bike Ijarah is a

Shariah-compliant solution under which the Bank
purchases the bike and rents it out to the customer for a
period of 1 to 3 years, agreed at the time of the contract.
Rental payments start after delivery of vehicle to the
customer. The facility includes full comprehensive
Takaful cover as well.
3.1.10. Easy home:

Based on the principle of Diminishing Musharakah, Easy

Home is a Shariah-compliant home financing facility, in
which a customer can buy or build a house, renovate an
existing house or replace the conventional house loan with
Easy Home facility. With flexible financing tailored to
support the customer's need, Meezan Easy Home provides one of the best home financing
options in the country with a hassle-free process and a quick turn-around time.

42
 3.1.11. Other Products Offered

1. On line Real Time ATM:

➢ Free ATM Card

➢ Per Day Limit of PKR 20K
➢ Rs 15 charges for use of other ATM Network
➢ Acceptable at all ATM outlets
➢ Debit card at Orix out lets (PKR 50k/Day)
1. On line Real Time Facility:
➢ Absolutely free from all branches of MBL
➢ Collection of Cheques absolutely free
➢ Available to PKR current, saving & Karobari Munafa acc.
➢ Mon - Sat9-5
➢ Friday9-12-30 & 3-5
➢ Saturday9-12-30
2. 24/7 Call Center:

24/7 call center provides you access to a wide range of Tele-banking solutions and
personalized banking service.

❖ Key Features:
➢ Check account balances
➢ Instruct issuance of pay orders and demand drafts
➢ Transfer funds between your own accounts
➢ Order issuance of cheque book
➢ Check transaction history of accounts
➢ Receive information on MBL products and services
➢ Issue stop payment instructions
➢ Report loss of your cheque book
➢ Request or change T-PIN
➢ ATM PIN Re issuance

43
➢ Report loss of ATM/Debit Card or cheque(s)
3. Internet Banking:

Internet Banking allow to have access to accountsregardless of where they may be in the
world.

❖ Key Features:
➢ Balance inquiry
➢ Statement viewing
➢ Statement downloads
➢ Cheque status

➢ Cheque blocking
➢ Pay order request
➢ Complaint logging and follow-ups
➢ Funds transfers between own accounts at MBL
➢ Change of address request
➢ Cheque book request

4. Alerts and Notification by E-mail:

➢ Low/High balance alert
➢ Credit/Debit transaction alert
➢ Request resolution alert
➢ Complaint resolution alert
5. Future Features:
➢ Alerts by SMS/Fax
➢ Utility bill payments
➢ Interbank funds transfers
➢ Payment to nominated accounts at MBL
➢ Standing orders for repeated payment.

44
6. Electronic Banking:

Electronic Banking provides non-stop banking convenience, twenty-four hours a day,

seven days a week.

➢ Visa Debit Card

➢ Internet Banking
➢ ATM Network
➢ Meezan Quickplay
➢ SMS Alerts
➢ 24/7 Call Center
7. Meezan Upaisa:

Meezan Upaisa is a joint venture of Ufone and Meezan Bank and is the world’s first Islamic
Branchless Banking platform that enables customers to send money, perform bill payments
and top-up transactions through Shariah-compliant banking system. The services include
the following key features:

■ Sending Money - Meezan Upaisa offers send money transaction to its customers with
competitive pricing. Customers just need to present their Original CNIC to send money to
any person pan Pakistan.

■ Bill Payments - Customers can pay their utility, internet bills at any Meezan Upaisa
Retailerwithout any extra charges.

■ Top Ups - Customers can top up their mobile credits for any teleco of their choice. In
addition, postpaid bills can also be paid through Meezan Upaisa Retailers and is supported
by a digital receipt of the transaction performed.

8. Meezan Premium Banking:

Meezan Premium Banking is the Bank’s Shariah-compliant priority banking service

developed to address the needs of high net worth customers. Premium Banking customers
enjoy special privileges such as:

45
■ Meezan Visa Platinum Debit Card - a very prestigious card, offering discounts at selected
retail outlets and restaurants across the country.

■ Access to International CIP lounges at Karachi, Lahore, Islamabad, Multan and Sialkot
airports.

■ Dedicated Premium Banking Centres at Karachi, Lahore, Islamabad, Sialkot and

Faisalabad.

■ Premium Phone Banking-a dedicated Call Centre exclusively for Premium Banking
customers.

■ Fee waivers on selected banking services. Online Banking

10. Online Banking:

Meezan Bank offers free Online Banking facility on all Pak Rupee accounts to its Online
Banking customers. This enables the Bank’s customers to access their accounts and
conduct banking transactions from any of Meezan Bank's 571 branches nationwide,
regardless of which branch or city they have their account in. This facility provides great
convenience for depositing and withdrawing cash, making pay orders and availing
numerous other banking services.

Transfer Funds Pay Utility Bills View last 8 transactions Check Account Balances Top-up
Mobile Phones and More Download the App FREE!

11. Mobile Banking App:

Designed for the customer on the move, the app is available to download through Google
Play and Apple App Stores. Compatible with all major Android and iOS versions, the App
allows customers to view account activity view transactions date wise, pay bills, top-up
mobile phone credits, transfer funds and block/unblock cards in a fast, convenient and a
secure way.

46
12. Meezan WebPay:

Shopping has never been more convenient than with Meezan WebPay. The service allows
all Debit Card holders to shop and purchase with online retailers over the internet. With
POS equivalent limits customer enjoys the freedom to transact.

13. Meezan VISA Debit Card:

Meezan VISA Debit Card provides convenience to customers to access their money
anytime and anywhere, at all outlets and ATMs displaying the VISA symbol. Meezan
VISA Debit Card is accepted at more than 30 million retail outlets and 2.3 million ATMs
worldwide. The new NFC based payment capability on our VISA Debit Cards allows
customers to pay for any transaction on the go by just tapping the card at the merchant
counters accepting NFC payments. Equipped with an EMV chip, the cards provide
advanced security and greater convenience. User Guide Terms and Conditions Mini
Statement Prepaid Mobile Phone Airtime Purchase Postpaid Mobile Bill Payment IBFT
(Inter Bank Funds Transfer) Cash Withdrawal Utility Bill Payment MasterCard

111-331-332

www.meezanbank.com

14. Meezan MasterCard Titanium

➢ Debit Card:

Meezan MasterCard Titanium Debit Card is the first Titanium debit card launched in
Pakistan. The debit card comes packed with benefits for the frequent traveler offering
free access to airport lounges across the Middle East, coupled with a wide array of
exclusive offers and discounts within Pakistan and worldwide.

➢ Meezan ATM Network:

Meezan Bank offers a nationwide network of over 550 ATMs located at its branches and
at prominent off-site locations across the country. The Bank also offers access to more
than 8,000 ATM locations country-wide via 1Link and MNET networks.

47
 ➢ SMS Banking:

Meezan SMS Banking is an interactive service that allows our customers to access their
account on demand anytime, anywhere from their mobile phone. It's not only simple and
easy but also free to use.

➢ SMS Alerts:

Meezan Bank's SMS Alerts service keeps customers informed about activities in their
accounts; enabling them to keep track of their financial transactions. Once customer signs
up for SMS Alerts, he/she will receive an SMS whenever there is a debit or credit
transaction in their account. Meezan SMS provides transaction details along with latest
account balance.

15. Type of Accounts:

Meezan Bank offers the largest range of Riba-free Deposit Accounts for Personal Banking.

1. Local Currency Accounts:

➢ Rupee Current Account - A Convenient, Secure and Stable Deposit Account
➢ Rupee Savings Account - Ensuring Truly Halal Savings with Comprehensive Returns
➢ Meezan Bachat Account - The convenience of a Saving Account with Halal Profit
➢ Labbaik Saving Aasaan - A specialized Saving Account designed to save for Umrah
& Hajj
➢ Business Plus Account - Serving you the perfect blend of convenience and flexibility
➢ Meezan Kids Club Account - Specialized saving account for kids under the age of 12
years
➢ Meezan Teens Account - Mudarabah based saving account specifically for teens
➢ Meezan Asaan Current Account - A Convenient, Secure and Stable Deposit Account
➢ Meezan Asaan Savings Account - Ensuring Truly Halal Savings with Comprehensive
Returns
2. Foreign Currency Accounts:
➢ Dollar Current Account - A Truly Halal Dollar Current Account
➢ Dollar Saving Account - A Truly Halal Dollar Saving Account

48
➢ Euro Current Account - A Truly Halal Euro Current Account
➢ Euro Saving Account - A Truly Halal Euro Saving Account
➢ Pound Current Account - A Truly Halal Pound Current Account
➢ Pound Saving Account - A Truly Halal Pound Saving Account
3.1.12. Islamic Mode of Financing:
These modes of financing have been written by Maulana Taqi Usmani who is the former
Chairman of Shariah board of Meezan Bank. After studying these we will be in a position
to understand the 90% working of the bank. The important modes of financing are:
1. Musharakah
2. Mudarabah
3. Ijarah
1. Musharakah:
❖ Hadees-e-Qudsi:
Allah Subhan-o-Tallah has declared that He will become a partner in a business
between two Mushariks until they indulge in cheating or breach of trust (Khayanah).
❖ Introduction:
'Musharakah' is a word of Arabic origin which literally means sharing. In the context of
business and trade it means a joint enterprise in which all the partners share the profit or
loss of the joint venture. It is an ideal alternative for the interest-based financing with far
reaching effects on both production and distribution. In the modern capitalist economy,
interest is the sole instrument indiscriminately used in financing of every type. Since Islam
has prohibited interest, this instrument cannot be used for providing funds of any kind.
Therefore, 'Musharakah' can play a vital role in an economy based on Islamic principles.
❖ Difference between Interest and Musharakah:
Interest' predetermines a fixed rate of return on a loan advanced by the financier
irrespective of the profit earned or loss suffered by the debtor, while Musharakah does not
envisage a fixed rate of return. Rather, the return in Musharakah is based on the actual
profit earned by the joint venture. The financier in an interest-bearing loan cannot suffer
loss while the financier in Musharakah can suffer loss, if the joint venture fails to produce
fruits. Islam has termed interest as an unjust instrument of financing because it results in

49
injustice either to the creditor or to the debtor. If the debtor suffers a loss, it is unjust on
the part of the creditor to claim a fixed rate of return; and if the debtor earns a very high
rate of profit, it is injustice to the creditor to give him only a small proportion of the profit
leaving the rest for the debtor.
❖ The Concept of Musharakah:
“Musharakah” is a term frequently referred to in the context of Islamic modes of
financing. The connotation of this term is a little limited than the term "Shirkah"
more commonly used in the Islamic jurisprudence. For the purpose of clarity in the basic
concepts, it will be pertinent at the outset to explain the meaning of each term, as
distinguished from the other.
"Shirkah" means "Sharing" and in the terminology of Islamic Fiqh, it has been divided into
two kinds:
❖ Some objections on Musharakah Financing:
1. Risk of Loss
2. Dishonesty
3. Secrecy of the Business
4. Clients' Unwillingness to Share Profits
Let us now examine some objections raised from practical point of view against using
Musharakah as a mode of financing.

1. Risk of Loss:
It is argued that the arrangement of musharakah is more likely to pass on losses of the
business to the financier bank or institution. This loss will be passed on to depositors also.
The depositors, being constantly exposed to the risk of loss, will not want to deposit their
money in the banks and financial institutions and thus their savings will either remain idle
or will be used in transactions outside of the banking channels, which will not contribute
to the economic development at national level. This argument is, however, misconceived.

Before financing on the basis of musharakah, the banks and financial institution will study
the feasibility of the proposed business for which funds are needed. Even in the present
system of interest-based loans the banks do not advance loans to each and every applicant.

50
They study the potentials of the business and if they apprehend that the business is not
profitable, they refuse to advance a loan. In the case of musharakah, they will have to carry
out this study with more depth and precaution. Moreover, no bank or financial institution
can restrict itself to a single musharakah.

There will always be a diversified portfolio of musharakah. If a bank has financed 100 of
its clients on the basis of musharakah, after studying the feasibility of the proposal of each
one of them, it is hardly conceivable that all of these Musharakah or the majority of them
will result in a loss. After taking proper measures and due care, what can happen at the
most is that some and them make a loss. But on the other hand, the profitable Musharakah
are expected to give more return than the interest-based loans, because the actual profit is
supposed to be distributed between the client and the bank. Therefore, the Musharakah
portfolio, as a whole, is not expected to suffer loss, and the possibility of loss to the whole
portfolio is merely a theoretical possibility which should not discourage the depositors.
This theoretical possibility of loss in a financial institution is much less than the possibility
of loss in a joint stock company whose business is restricted to a limited sector of
commercial activities. Still, the people purchase its shares and the possibility of loss does
not refrain them from investing in these shares. The case of the bank and financial
institutions is much stronger, because their Maharajah activities will be so diversified that
any possible loss in one Musharakah will be more than compensated by the profits earned
in other Musharakah.

Apart from this, 'an Islamic economy must create a mentality which believes that any profit
earned on money is the reward of bearing risks of the business. This risk may be minimized
through expertise and diversifying the portfolio where it becomes a hypothetical or
theoretical risk only. But there is no way to eliminate this risk totally. The one, who wants
to earn profit, must accept this minimal risk. Since this understanding is already there in
the case of normal joint stock companies, nobody has ever raised the objection that the
money of the shareholders is exposed to loss. The problem is created by the system which
separates the banking and financing from the normal trade activities, and which has
Compelled the people to believe that banks and financial institutions deal in money and

51
papers only, and that they have nothing to do with the actual results emerging in trade and
industry. Therefore, it is argued that they deserve a fixed return in any case. This separation
of financing sector from the sector of trade and industry has brought great harms to the
economy at macro-level. Obviously, when we speak of Islamic banking, we never mean
that it will follow this conventional system in each and every respect. Islam has its own
values and principles which do not believe in separation of financing from trade and
industry. Once this Islamic system is understood, the people will invest in the financing
sector, despite the theoretical risk of loss, more readily than they invest in the profitable
joint stock companies.
2. Dishonesty:
Another apprehension against Musharakah financing is that the dishonest clients may
exploit the instrument of Musharakah by not paying any return to the financiers. They can
always show that the business did not earn any profit. Indeed, they can claim that it has
suffered a loss in which case not only the profit, but also the principal amount will be
jeopardized. It is, no doubt, a valid apprehension, especially in societies where corruption
is the order of the day. However, solution to this problem is not as difficult as is generally
believed or exaggerated.

If all the banks in a country are run on pure Islamic pattern with a careful support from the
Central Bank and the government, the problem of dishonesty is not hard to overcome. First
of all, a well-designed system of auditing should be implemented whereby the accounts of
all the clients are fully maintained and properly controlled. It is already discussed that the
profits may be calculated to the basis of gross margins only. It will reduce the possibility
of disputes and misappropriation. However, if any misconduct, dishonesty or negligence is
established against a client, he will be subjected to punitive steps, and may be deprived of
availing any facility from any bank in the country, at least for a specified period.

These steps will serve as strong deterrent against concealing the actual profits or
committing any other act of dishonesty. Otherwise also, the clients of the banks cannot
afford to show artificial losses constantly, because it will be against their own interest in
many respects. It is true that even after taking all such precautions, there will remain a

52
possibility of some cases where dishonest clients may succeed in their evil designs, but the
punitive steps and the general atmosphere of the business will gradually reduce the number
of such cases (Even in an interest-based economy, the defaulters have always been creating
the problem of bad debts) But it should not be taken as a justification, or as an excuse, for
rejecting the whole system of maharajah. Undoubtedly, the apprehension of dishonesty is
more severe for the Islamic Banks and Financial institutions working in isolation from the
main stream of conventional banks. They have not much support from their respective
governments and central Banks. They cannot change the system, nor can they impose their
own laws and regulations. However, they should not forget that they are not just
commercial institutions. They have been established to introduce a new system of banking
which has its own philosophy.

They are duty bound to promote this new system, even if they apprehend that it will reduce
the size of their profits to some extent. Therefore, they should start using the instrument of
musharakah, at least on a selective basis. Each and every bank has a number of clients
whose integrity is beyond all doubts. The Islamic banks should, at least, start financing
them on the basis of true musharakah. It will help setting good precedents in the market
and induce others to follow suit. Moreover, there are some sectors of financing where
musharakah can be used easily.

❖ For example:
The use of musharakah instrument in financing exports has not much room for dishonesty.
The exporter has a specific order from abroad. The prices are agreed. The cost is not
difficult to determine. Payments are normally secured by a letter of credit. The payments
are made through the bank itself. There is no reason in such cases why the musharakah
arrangement should not be adopted. Similarly, financing of imports may also be designed
on the basis of musharakah with some precautions, as explained earlier in this chapter.
3. Secrecy of the Business:
Another criticism against musharakah is that, by making the financier a partner in the
business of the client, it may disclose the secrets of the business to the financier, and
through him to other traders.

53
However, the solution to this problem is very easy. The client, while entering into the
musharakah, may put a condition that the financier will not interfere with the management
affairs, and he will not disclose any information about the business to any person without
prior permission of the client. Such agreements of maintaining secrecy are always honored
by the prestigious institutions, especially by the banks and financial institutions whose
entire business is based on confidentiality.
3. Clients' Unwillingness to Share Profits:
Many a time, it is mentioned that the clients are not willing to share with the Banks the
actual profits of their business. The reluctance is based on two reasons:

1. They think that the bank has no right to share in the actual profit, which may be
substantial, because the bank has nothing to do with the management or running of the
business and why they should (the clients) share the fruit of their labor with the Bank
who merely provides funds. The Clients also argue that conventional banks are content
with a meager rate of interest and so should be the Islamic Banks.

Even if the above was not a factor, the Clients are afraid to reveal their true profits to
the Banks, lest the information is also passed on to the tax authorities and Clients' tax
liability increases. The solution to the first part, though not easy, is not difficult or
impossible either. Such Clients need to be convinced and persuaded that borrowing
on interest is a cardinal sin, unless there is a dire necessity for such borrowing. Mere
expansion of business is not a dire need, by any stretch of imagination. By making a
legitimate arrangement for obtaining funds for their business, by way of Musharakah,
not only do they earn Allah's pleasure but also a legitimate return for themselves, as
well as for the Islamic Banks.

2. In respect of the second factor, all that can be said is that in some Muslim countries,
rate of taxation is indeed prohibitive and unjust. Islamic Banks as well as their Clients
must lobby with the governments and struggle to change the laws which hamper the
progress towards Islamic banking. The governments should also try to appreciate the

54
 fact that if rates of taxation are reasonable and if the tax-payers are convinced that they
will benefit by honestly paying their taxes, this would increase, and not decrease,
government revenues.
❖ Termination of Musharakah:
Musharakah is deemed to be terminated in any one of the following events:
Every partner has a right to terminate the musharakah at any time after giving his partner
a notice to this effect, whereby the musharakah will come to an end.In this case, if the
assets of the musharakah are in cash form, all of them will be distributed pro rata between
the partners. But if the assets are not liquidated, the partners may agree either on the
liquidation of the assets, or on their distribution or partition between the partners as they
are. If there is a dispute between the partners in this matter i.e. one partner seeks liquidation
while the other wants Partition or distribution of the non-liquid assets themselves, the latter
shall be preferred, because after the termination of musharakah, all the assets are in the
joint ownership of the partners, and a co-owner has a right to seek partition or separation,
and no one can compel him on liquidation. However, if the assets are such that they cannot
be separated or partitioned, such as machinery, then they shall be sold and the sale-proceeds
shall be distributed.

If any one of the partners dies during the currency of musharakah, the contract of
musharakah with him stands terminated. His heirs in this case, will have the option either
to draw the share of the deceased from the business, or to continue with the contract of
musharakah.

If any one of the partners becomes insane or otherwise becomes incapable of effecting
commercial transactions, the musharakah stands terminated.

Termination of Musharakah without closing the business If one of the partners wants
termination of the musharakah, while the other partner or partners like to continue with the
business, this purpose can be achieved by mutual agreement. The partners who want to run
the business may purchase the share of the partner who wants to terminate his partnership,

55
because the termination of musharakah with one partner does not imply its termination
between the other partners.

However, in this case, the price of the share of the leaving partner must be determined by
mutual consent, and if there is a dispute about the valuation of the share and the partners
do not arrive at an agreed price, the leaving partner may compel other partners on the
liquidation or on the distribution of the assets themselves.

The question arises whether the partners can agree, while entering into the contract of the
musharakah, on a condition that the liquidation or separation of the business shall not be
affected unless all the partners, or the majority of them wants to do so, and that a single
partner who wants to come out of the partnership shall have to sell his share to the other
partners and shall not force them on liquidation or separation.

Most of the traditional books of Islamic Fqih seem to be silent on this question. However,
it appears that there is no bar from the Shariah point of view if the partners agree to such a
condition right at the beginning of the musharakah. This is expressly permitted by some
Hanbali jurists. This condition may be justified, especially in the modern situations, on the
ground that the nature of business, in most cases today, requires continuity for its success,
and the liquidation or separation at the instance of a single partner only may cause
irreparable damage to the other partners.

If a particular business has been started with huge amounts of money which has been
invested in a long-term project, and one of the partners seeks liquidation in the infancy of
the project, it may be fatal to the interests of the partners, as well as to the economic growth
of the society, to give him such an arbitrary power of liquidation or separation.

2. Murabaha:
❖ Introduction:
Most of the Islamic banks and financial institutions are using "Murabaha" as an Islamic
mode of financing, and most of their financing operations are based on "Murabaha". That

56
is why this term has been taken in the economic circles today as a method of banking
operations, while the original concept of "Murabaha" is different from this assumption.

"Murabaha" is, in fact, a term of Islamic Fiqh and it refers to a particular kind of sale having
nothing to do with financing in its original sense. If a seller agrees with his purchaser to
provide him a specific commodity on a certain profit added to his cost, it is called a
“Murabaha" transaction. The basic ingredient of "Murabaha" is that the seller discloses the
actual cost he has incurred in acquiring the commodity, and then adds some profit thereon.
This profit may be in lump sum or may be based on a percentage.
1. Some Basic Rules of Sale:
'Sale' is defined in Shariah as 'the exchange of a thing of value by another thing of
value with mutual consent'.
Islamic jurisprudence has laid down enormous rules governing the contract of sale, and the
Muslim jurists have written a large number of books, in a number of volumes, to elaborate
them in detail. What is meant here is to give a summary of only those rules which are more
relevant to the transactions of Murabaha as carried out by the financial institutions.
➢ The subject of sale must be existing at the time of sale. Thus, a thing which has not yet
come into existence cannot be sold. If a non-existent thing has been sold, though by
mutual consent, the sale is void according to Shariah.
▪ Example: A sells the unborn calf of his cow to B. The sale is void.
➢ The subject of sale must be in the ownership of the seller at the time of sale. Thus,
what is not owned by the seller cannot be sold. If he sells something before acquiring
its ownership, the sale is void.
▪ Example: A sells to Be a car which is presently owned by C, but A is hopeful that he
will buy it from C and shall deliver it to B subsequently. The sale is void, because the
car was not owned by at the time of sale.
2. Some Basic Mistakes in Murabaha Financing:
After explaining the concept of Murabaha and its relevant issues, it will be pertinent to
highlight some basic mistakes often committed by the financial institutions in the practical
implementation of the concept.

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1. The first and the most glaring mistake is to assume that Murabaha is a universal
instrument which can be used for every type of financing offered by conventional
interest-based banks and NBFIs. Under this false assumption, some financial
institutions are found using Murabaha for financing overhead expenses of a firm or
company like paying salaries of their staff, paying the bills of electricity etc. and setting
off their debts payable to other parties. This practice is totally unacceptable, because
Murabaha can be used only where a commodity is intended to be purchased by the
customer. If funds are required for some other purpose, Murabaha cannot work. In
such cases, some other suitable modes of financing, like musharakah, leasing etc. can
be used according to the nature of the requirement.
2. In some cases, the clients sign the Murabaha documents merely to obtain funds. They
never intend to employ these funds to purchase a specific commodity. They just want
funds for unspecified purpose, but to satisfy the requirement of the formal documents,
they name a fictitiously commodity. After receiving money, they use it for whatever
purpose they wish. Obviously, this is a fictitious deal, and the Islamic financiers must
be very careful about it. It is their duty to make sure that the client really intends to
purchase a commodity which may be subject to Murabaha. This assurance must be
obtained by the authorities sanctioning the facility to the customer. Then, all necessary
steps must be taken to confirm that the transaction is genuine.

❖ For example:
1. Instead of giving funds to the customer, the purchase price should be paid directly to
the supplier.
2. If it becomes necessary that the client is entrusted with funds to purchase the
commodity on behalf of the financier, his purchase should be evidenced by invoices or
similar other documents which he should present to the financier.
3. Where either one of the above two requirements is not possible to be fulfilled, the
financing institution should arrange for physical inspection of the purchased
commodities.

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4. Anyhow, the Islamic financial institutions are under an obligation to make sure that
Murabaha is a real and genuine transaction of actual sale and is not being misused to
camouflage an interest-based loan.
5. In some cases, sale of commodity to the client is affected before the commodity is
acquired from the supplier. This mistake is invariably committed in transactions where
all the documents of Murabaha are signed at one time without taking into account
various stages of the Murabaha. Some institutions have only one Murabaha agreement
which is signed at the time of disbursement of money, or in some cases, at the time of
approving the facility. This is totally against the basic principles of Murabaha. It has
already been explained in this article that the Murabaha arrangement practiced by the
banks is a package of different contracts which come into play one after another at their
respective stages. These stages have been fully highlighted earlier while discussing the
concept of 'Murabaha Financing'. Without observing this basic feature of Murabaha
financing, the whole transaction turns into an interest-bearing loan. Merely changing
the nomenclature does not make it lawful in the eyes of Shariah.
6. The representatives of the Shariah Boards of the Islamic banks, when they check the
transactions of the bank with regard to their compliance with Shariah, must make sure
that all these stages have been really observed, and every transaction is affected at its
due time.
7. International commodity transactions are often resorted to for liquidity management.
Some Islamic banks feel that these transactions, being asset-based, can easily be
entered into on Murabaha basis, and they enter the field ignoring the fact that the
commodity operations as in vogue in the international markets, do not conform to the
principles of Shariah. In many cases, they are fictitious transactions where no delivery
takes place. The parties end up paying differences. In some cases, there are real
commodities but they are subjected to forward sales or short sales which are not
allowed in Shariah. Even if the transactions are restricted to spot sales, they should be
formulated on the basis of Islamic principles of Murabaha by fulfilling all the necessary
conditions already mentioned in this book.
8. It is observed in some financial institutions that they affect Murabaha on commodities
already purchased by their clients from a third party. This is again a practice never

59
 warranted by the Shariah. Once the commodity is purchased by the client himself, it
cannot be purchased again from the same supplier. If it is purchased by the bank from
the client himself and is sold to him, it is a buy-back technique which is not allowed in
Shariah, especially in Murabaha. In fact, if the client has already purchased a
commodity, and he approaches the bank for funds, he either wants to set-off his liability
towards his supplier, or he wants to use the funds for some other purpose. In both cases
an Islamic bank cannot finance him on the basis of Murabaha. Murabaha can be
affected only on commodities not yet purchased by the client.
❖ Uses of Murabaha:
Murabaha can be used in following conditions:
Short / Medium / Long Term Finance for:
• Raw material
• Inventory
• Equipment
• Asset financing
• Import financing
• Export financing (Pre-shipment)
• Consumer goods financing
• House financing
• Vehicle financing
• Land financing
• Shop financing
• PC financing
3. Ijarah:
"Ijarah" is a term of Islamic fiqh. Lexically, it means ‘to give something on rent'. In the
Islamic jurisprudence, the term ‘Ijarah' is used for two different situations. In the first
place, it means ‘to employ the services of a person on wages given to him as a consideration
for his hired services."The employer is called 'mushaira' while the employee is called 'ajar'.

60
 Therefore, if A has employed B in his office as a manager or as a clerk on a monthly
salary, A is musta‟jir, and B is an ajir. Similarly, if A has hired the services of a porter to
carry his baggage to the airport, A is a musta‟jir while the porter is an ajir, and in both
cases the transaction between the parties is termed as Ijarah. This type of Ijarah includes
every transaction where the services of a person are hired by someone else. He may be a
doctor, a lawyer, a teacher, a labor or any other person who can render some valuable
services. Each one of them may be called an ‘ajir’ according to the terminology of Islamic
law, and the person who hires their services is called a ‘musta‟jir', while the wages paid to
the ajir are called their 'ujrah'.

The second type of Ijarah relates to the usufructs of assets and properties, and not to the
services of human beings. 'Ijarah’ in this sense means ‘to transfer the usufruct of a
particular property to another person in exchange for a rent claimed from him.' In this case,
the term 'Ijarah' is analogous to the English term 'leasing'. Here the lessor is called 'Mu‟jir',
the lessee is called 'musta‟jir' and the rent payable to the lessor is called 'ujrah'

Both these kinds of 'Ijarah' are thoroughly discussed in the literature of Islamic
jurisprudence and each one of them has its own set of rules. But for the purpose of the
present book, the second type of Ijarah is more relevant, because it is generally used as a
form of investment, and as a mode of financing also.

The rules of Ijarah, in the sense of leasing, are very much analogous to the rules of sale,
because in both cases something is transferred to another person for a valuable
consideration. The only difference between Ijarah and sale is that in the latter case the
corpus of the property is transferred to the purchaser, while in the case of Ijarah, the corpus
of the property remains in the ownership of the transferor, but only its usufruct i.e. the right
to use it, is transferred to the lessee.

Therefore, it can easily be seen that ‘Ijarah’ is not a mode of financing in its origin. It is a
normal business activity like sale. However, due to certain reasons, and in particular, due
to some tax concessions it may carry, this transaction is being used in the Western countries

61
for the purpose of financing also. Instead of giving a simple interest - bearing loan, some
financial institutions started leasing some equipment’s to their customers. While fixing the
rent of this equipment, they calculate the total cost they have incurred in the purchase of
these assets and add the stipulated interest they could have claimed on such an amount
during the lease period. The aggregate amount so calculated is divided on the total months
of the lease period, and the monthly rent is fixed on that basis. The question whether or not
the transaction of leasing can be used as a mode of financing in Sharia depends on the terms
and conditions of the contract. As mentioned earlier, leasing is a normal business
transaction and not a mode of financing. Therefore, the lease transaction is always
governed by the rules of Sharia prescribed for Ijarah. Let us, therefore, discuss the basic
rules governing the lease transactions, as enumerated in the Islamic Fqih. After the study
of these rules, we will be able to understand under what conditions the Ijarah may be used
for the purpose of financing.

Although the principles of Ijarah are so numerous that a separate volume is required for
their full discussion, we will attempt in this chapter to summarize those basic principles
only which are necessary for the proper understanding of the nature of the transaction and
are generally needed in the context of modern economic practice. These principles are
recorded here in the form of brief notes, so that the readers may use them for quick
reference.
1. Basic Rules of Leasing:
➢ Leasing is a contract whereby the owner of something transfers its usufruct to another
person for an agreed period, at an agreed consideration.

➢ The subject of lease must have a valuable use. Therefore, things having no usufruct at
all cannot be leased.

➢ It is necessary for a valid contract of lease that the corpus of the leased property remains
in the ownership of the seller, and only its usufruct is transferred to the lessee. Thus,
anything which cannot be used without consuming cannot be leased out. Therefore, the
lease cannot be affected in respect of money, eatables, fuel and ammunition etc.

62
 because their use is not possible unless they are consumed. If anything of this nature is
leased out, it will be deemed to be a loan and all the rules concerning the transaction of
loan shall accordingly apply. Any rent charged on this invalid lease shall be an interest
charged on a loan.

➢ As the corpus of the leased property remains in the ownership of the lessor, all the
liabilities emerging from the ownership shall be borne by the lessor, but the liabilities
referable to the use of the property shall be borne by the lessee.
❖ Example:
A has leased his house to B. The taxes referable to the property shall be borne by A, while
the water tax, electricity bills and all expenses referable to the use of the house shall be
borne by B, the lessee.
➢ The period of lease must be determined in clear terms.

➢ The lessee cannot use the leased asset for any purpose other than the purpose specified
in the lease agreement. If no such purpose is specified in the agreement, the lessee can
use it for whatever purpose it is used in the normal course. However, if he wishes to
use it for an abnormal purpose, he cannot do so unless the lessor allows him in express
terms.

➢ The lessee is liable to compensate the lessor for every harm to the leased asset caused
by any misuse or negligence on the part of the lessee.

➢ The leased asset shall remain in the risk of the lessor throughout the lease period in the
sense that any harm or loss caused by the factors beyond the control of the lessee shall
be borne by the lessor.

➢ A property jointly owned by two or more persons can be leased out, and the rental shall
be distributed between all the joint owners according to the proportion of their
respective shares in the property.

63
➢ A joint owner of a property can lease his proportionate share to his co-sharer only, and
not to any other person.
It is necessary for a valid lease that the leased asset is fully identified by the parties.
❖ Example:
A said to B. "I lease you one of my two shops." B agreed. The lease is void, unless the
leased shop is clearly determined and identified.
2. Determination of Rental:
The rental must be determined at the time of contract for the whole period of lease. It is
permissible that different amounts of rent are fixed for different phases during the lease
period, provided that the amount of rent for each phase is specifically agreed upon at the
time of effecting a lease. If the rent for a subsequent phase of the lease period has not been
determined or has been left at the option of the lessor, the lease is not valid.
❖ Example:
A lease his house to B for a total period of 5 years. The rent for the first year is fixed as
Rest. 2000/- per month and it is agreed that the rent of every subsequent year shall be 10%
more than the previous one. The lease is valid.
❖ Example:
➢ In the above example, A puts a condition in the agreement that the rent of Rest. 2000/-
per month is fixed for the first year only. The rent for the subsequent years shall be
fixed each year at the option of the lessor. The lease is void, because the rent is
uncertain.
➢ The determination of rental on the basis of the aggregate cost incurred in the purchase
of the asset by the lessor, as normally done in financial leases, is not against the rules
of Sharia, if both parties agree to it, provided that all other conditions of a valid lease
prescribed by the Sharia are fully adhered to.
➢ The lessor cannot increase the rent unilaterally, and any agreement to this effect is void.
➢ The rent or any part thereof may be payable in advance before the delivery of the asset
to the lessee, but the amount so collected by the lessor shall remain with him as 'on
account' payment and shall be adjusted towards the rent after its being due.

64
➢ The lease period shall commence from the date on which the leased asset has been
delivered to the lessee, no matter whether the lessee has started using it or not.
➢ If the leased asset has totally lost the function for which it was leased, and no repair is
possible, the lease shall terminate on the day on which such loss has been caused.
However, if the loss is caused by the misuse or by the negligence of the lessee, he will
be liable to compensate the lessor for the depreciated value of the asset as; it was
immediately before the loss.

3.1.13. Consumer Finance:

Consumer finance provides for construct a home, purchase a car, etc:
➢ Easy Home
➢ Car Ijarah
➢ Laptop Ease

3.1.14. Services:

Meezan Bank is dedicated in its efforts to provide a quality banking experience to our
customer via a range of unique Banking Services

➢ Labbaik Travel Aasaan

➢ Online Banking
➢ 8 to 8 Banking
➢ Ladies Banking
➢ Home Remittance
➢ Western union Money Transfer

3.1.15. Competitors:

The major competitors of Meezan Bank Limited are Bank Islamic, Dubai Islamic Bank
Pakistan Ltd, Albarka Islamic Bank. The other competitors are Bank Al-Falah Limited,
Bank Al Habib Limited, Askari Bank Limited, United Bank Limited, Allied Bank Limited,
Soneri Bank Limited, Faisal Bank Limited.

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3.2. PRICE:

“The amount of money customers pays for the products of company”

MBL provides different products to its customers. Pricing of products means the
commission paid by the customers in return of services provide by the bank. The
commission paid for the services mainly includes:

▪ Markup/ interest
▪ Bank charges
▪ Fees and bank commission

These charges and commission are prescribed on schedule of bank charges(SOC) that
keeps on changing time to time, and issued by the bank periodically (generally after six
months)

MBL charges a certain markup along with principle amount, which is to be recovered in
installment.

MBL has charges price called as bank charges for all the financing facility and other
services provided by bank. These prices are approved by SBP.

There has been a lot of controversy regarding the price of banking companies. Some
scholar argues that the markup received by the bank is rent for capital that is issued by
others. On contrary, some called it purely RIBA. This is however a very controversial and
sensitive issue is and I would like not to give any comment on it.

3.3. PLACEMENT:

“The product should be available from where your target consumer finds it easiest
to shop. This may be High Street, Mail Order or the more current option via e-
commerce or an online shop.”

Meezan Bank (Urdu ‫ )میزان بینک‬is the first and largest Islamic commercial Bank of Pakistan. The
Bank is headquartered in Meezan House - Karachi, Pakistan. It has a network of over 550 branches
in more than 140 cities of Pakistan. It commenced operations in 2002 when State Bank of Pakistan

66
issued first-ever license for Islamic commercial banking. The Bank has a market share of 35% in
Islamic banking industry of the country.

JCR-VIS Credit Rating Company Limited, an affiliate of Japan Credit Rating Agency, has rated
the Bank’s short term rating at A1+ (A-One Plus), the highest standard in short term rating, and the
long-term entity rating at AA (Double A) with “Stable” outlook, making it the only Islamic bank
with AA credit rating in the Islamic banking industry of Pakistan.

Head Office: Meezan House, C-25, Estate Avenue, SITE, Karachi - Pakistan.
PABX: (92-21) 38103500 UAN: 111-331-331 & 111-331-332
www.meezanbank.com

3.3.1. Branch Network:

Alhamdulillah, Meezan Bank has established 571 branches in 146 cities across Pakistan.
This is a milestone that is not only the success story of Meezan Bank but also the
continuing success story of Islamic banking in Pakistan. With this extensive network, our
existing and potential customers are now closer than ever in attaining Islamic banking at
their doorstep. All branches provide real time online banking facilities to customers.

As the first and largest dedicated Islamic bank in Pakistan, Meezan Bank's team continues
to build on its Vision of establishing “Islamic banking as banking of first choice". One of
the key objectives of the Bank is to have its footprint strategically placed throughout the
country enabling public to avail the benefits of Shariah-compliant banking in their
neighbourhood.

The Bank presently operates in the following cities of Pakistan:

Abbottabad Jhang Peshawar

Ahmedpur East Jhelum Phalia

Arifwala Kabirwala Pir Mahal

Attock Kahror Pacca Pishin

67
Bahawalnagar Kahuta Qalanderabad

Bahawalpur Kamalia Qilla Saifullah

Bannu Kamoke Quetta

Battagram Karachi Rahim Yar Khan

Burewala Karak Raiwind

Chakwal Kasur Rajanpur

Chaman Khairpur Rashidabad

Charsadda Khan Bela Rawalakot

Chichawatni Khanewal Rawalpindi

Chiniot Khanpur Rawat

Chishtian Kharian Sadiqabad

Chung Khushab Sahiwal

Dadu Kohat Sakrand

Dadyal Kot Addu Samundri

Daska Kot Radha Kishan Sanghar

Depalpur Kotli Azad Kashmir Sara-e-Alamgir

Dera Ghazi Khan Kunri Sargodha

Dera Ismail Khan Lahore Sawari

Digri Lalamusa Shahdadpur

Dina Larkana Shakargarh

Dinga Layyah Sheikhupura

68
Dukki Liaquatpur Shikarpur

Dunyapur Lodhran Sialkot

Faisalabad Loralai Sukkur

Fateh Pur Mailsi Swabi

Fort Abbas Mandi Bahauddin Swat

Gaggo Mandi Mansehra Tando Adam

Ghotki Mardan Tando Allahyar

Gilgit Baltistan Mehar Tarlai

Gojra Mian Channu Tando Mohammad Khan

Gujar Khan Mianwali Taunsa

Gujranwala Mirpur Azad Kashmir Taxila

Gujrat Mirpur khas Timergara

Hafizabad Moro Toba Tek Singh

Haripur Multan Umerkot

Haroonabad Muridkay Vehari

Hasilpur Muslim Bagh Wah Cantt

Hassan Abdal Muzaffarabad Wazirabad

Havelian Muzaffargarh Zhob

Hub (Lasbela) Narowal

Hyderabad Nawabshah

Islamabad Nowshera

69
 Jacobabad Okara

For 2017, Meezan Bank has planned to expand its Branch Network by 30 branches
countrywide. Meezan Bank's mission is to provide itscustomers dedicated and pure Islamic
banking facilities with the greatest of convenience and personalized services. It remains
the Bank'sendeavour to establish solid foundations of Islamic banking in Pakistan.

Branch Service Officers (Cash Officers) This is a career-oriented permanent position in

the Branch Banking team for newly qualified graduate,' with clearly defined learning and
career paths

Candidates meeting the above criteria may apply at www.meezan.rozee.pk. Only online
applications will be entertained.
www.meezanbank.com 24/7 Call Center 111-331-331 & 111-331-332.
3.4.PROMOTION:

“Promotion refer to entire set of activitics which communication the product,

brand, service to the user”

Promotion is a very important component of marketing as it can boost brand recognition

and sales. Promotion is comprised of various elements like:

➢ Sales Organization
➢ Public Relations
➢ Advertising
➢ Sales Promotion

Advertising typically covers communication methods that are paid for like television
advertisements, radio commercials, print media, and internet advertisements. In
contemporary times, there seems to be a shift in focus offline to the online world.

Public relations, on the other hand, are communications that are typically not paid for. This
includes press releases, exhibitions, sponsorship deals, seminars, conferences, and events.

70
Word of mouth is also a type of product promotion. Word of mouth is an informal
communication about the benefits of the product by satisfied customers and ordinary
individuals. The sales staff plays a very important role in public relations and word of
mouth.

It is important to not take this literally. Word of mouth can also circulate on the internet.
Harnessed effectively and it has the potential to be one of the most valuable assets you
have in boosting your profits online. An extremely good example of this is online social
media and managing a firm’s online social media presence.

In creating an effective product promotion strategy, you need to answer the following
questions:

➢ How can you send marketing messages to your potential buyers?

➢ When is the best time to promote your product?
➢ Will you reach your potential audience and buyers through television ads?
➢ Is it best to use the social media in promoting the product?
➢ What is the promotion strategy of your competitors?

Your combination of promotional strategies and how you go about promotion will depend
on your budget, the message you want to communicate, and the target market you have
defined already in previous steps.

3.4. PEOPLE:

“People of both target market and people directly related to the business.”

Thorough research is important to discover whether there are enough people in your target
market that is in demand for certain types of products and services.

The company’s employees are important in marketing because they are the ones who
deliver the service. It is important to hire and train the right people to deliver superior
service to the clients, whether they run a support desk, customer service, copywriters,
programmers…etc.

71
When a business finds people who genuinely believe in the products or services that the
particular business creates, it’s is highly likely that the employees will perform the best
they can.

Additionally, they’ll be more open to honest feedback about the business and input their
own thoughts and passions which can scale and grow the business.

This is a secret, “internal” competitive advantage a business can have over other
competitors which can inherently affect a business’s position in the marketplace.

3.5. PROCESS:

“The process of doing so can be modeled in a sequence of steps: the situation is

analyzed to identify opportunities, the strategy is formulated for a value
proposition, tactical decisions are made, the plan is implemented and the results are
monitored.”

The systems and processes of the organization affect the execution of the service.So, you
have to make sure that you have a well-tailored process in place to minimize costs.

It could be your entire sales funnel, a pay system, distribution system and other systematic
procedures and steps to ensure a working business that is running effectively. Tweaking
and enhancements can come later to “tighten up” a business to minimize costs and
maximiser profits.

3.6. PHYSICAL EVIDENCE:

In the service industries, there should be physical evidence that the service was delivered.
Additionally, physical evidence pertains also to how a business and it’s products are
perceived in the marketplace.

72
It is the physical evidence of a business’ presence and establishment. A concept of this is
branding. For example, when you think of “fast food”, you think of McDonalds. When you
think of sports, the names Nike and Adidas come to mind.

You immediately know exactly what their presence is in the marketplace, as they are
generally market leaders and have established a physical evidence as well as psychological
evidence in their marketing.

They have manipulated their consumer perception so well to the point where their brands
appear first in line when an individual is asked to broadly “name a brand” in their niche or
industry.

73
FINANCIAL ANALYSIS OF THE MEEZAN BANK LIMITED FOR
THE THREE YEARS (2014, 2015,2016)

4. FINANCIAL ANALYSIS:

The purpose of the analysis of financial statement (FS) is to examine past and current
financial data so that a company’s performance and financial position can be evaluated and
future risk and potentials can be estimated. The analysis can yield valuable information
about trends relationship, the quality of company earnings and its financial strengths and
weaknesses. Financial statements among other things include balance sheets and income
statements. Balance sheet represents assets and liabilities of the business at a given data,
besides showing the ability of the business to service the loans on the strengths of its
financial structure. It also helps in evolving secured basis for extending financial support.
Apart from showing the profitability of a business, income statement discloses how the
business has been constructed and determines factors behind rise or decline in the net
worth.

The financial analysis involves:

• Horizontal analysis
• Vertical analysis
• Ratio analysis
4.1. HORIZONTAL ANALYSIS:

The percentage analysis of increases and decreases in corresponding items in comparative

financial statements is called horizontal analysis. Horizontal analysis involves the
computation of amount changes and percentage changes from the previous to the current
year. It is also called “Year to Year” analysis in which we compare each amount with the
base amount for a selected base year. This analysis is also called “index analysis”.

74
4.2. VERTICAL ANALYSIS:

It is the analysis of financial statements, where all balance sheet items are divided by total
assets and all income statement items are divided by net sales or revenues.

The balance sheet uses this presentation on individual items like cash or a group of items
like current assets. Cash is listed as an individual entry in the assets section with the total
balance being listed on the left and its percentage of total assets being listed on the right.

4.3. RATIO ANALYSIS:

A ratio is a simple mathematical expression of the relationship of one item to another.

Ratio analysis involves the method of calculating and interpreting financial ratios to assess
the organization’s performance. Financial ratios of ban can be divided into basic forms,
which are as follows.

Most investors are familiar with a few key ratios, particularly the ones that are relatively
easy to calculate. Some of these ratios include the current ratio, return on equity (ROE),
the debt-equity (D/E) ratio, the dividend payout ratio, and the price/earnings (P/E) ratio.

75
Consolidated Statement of Financial Position as

At December 31, 2016

MEANA BANK LIMITED

BALANCE SHEET
AT THE END OF DECEMBER 31, 2016
ASSETS 2016 2015 2014
Cash and balances with treasury 56,037,043 43,685,791 29,728,76
banks
Balances with other banks 12,067,855 11,205,707 5,501,077
Due from financial institutions 129,115,165 101,079,476 90,766,297

Investments - net 134,796,574 150,137,212 114,089,252

Islamic financing and related 311,530,270 207,568,823 175,711,942

assets - net
Operating fixed assets 9,031,686 8,161,435 6,273,239

Deferred tax assets - - 530,564

Other assets - net 10,689,082 14,111,489 14,804,823

Total assets 663,267,675 535,949,933 437,405,958

LIABILITIES
Bills payable 9,130,998 6,560,324 5,619,826

Due to financial institutions 32,005,501 13,609,551 15,465,418

Deposits and other accounts 563,999,852 471,799,473 380,421,569

Sub-ordinated Sukuk 7,000,000 - -

76
 Deferred tax liabilities 1,955,203 730,923 -
Other liabilities 14,403,557 13,569,243 12,021,378

Total liabilities 628,495,111 506,269,514 413,528,191

NET ASSET 34,772,564 29,680,419 23,877,767

OWNER EQUITY
Share capital 10,027,379 10,027,379 10,027,379

Reserves 9,724,001 8,611,679 7,276,191

Unappropriated profit 11,340,678 9,238,479 5,958,587

31,092,058 27,877,537 23,262,157

Non-Controlling Interest 1,221,989 944,623 -

32,314,047 28,822,160 -
Surplus on revaluation of 2,458,517 858,259 615,610
investments (including amount
relating to share of profit from
associates) - net of tax
Total owner equity 34,772,564 29,680,419 23,877,767

DATA SOURCE: Data collected from Financial Statement of Bank

77
 Balance sheet (Horizontal Analysis)

THE MEEZAN BANK OF LIMIMTED

BALANCE SHEET

AT THE END OF DECEMBER 31,2016

2013 2014 2015 2016

ASSETS % % % %

Cash and balances with treasury 100 4.00 52 96

banks
Balances with other banks 100 54 215 239
Due from financial institutions 100 111 125 1634
Investments - net 100 (24) (0.97) (11)
Islamic financing and related 100 37 62 144
assets - net
Operating fixed assets 100 12 45 61
Deferred tax assets 100 305 - -

Other assets - net 100 185 172 106

Total assets 100 32 62 101

LIABILITIES
Bills payable 100 55 81 152
Due to financial institutions 100 35 19 181
Deposits and other accounts 100 31 62 94
Sub-ordinated Sukuk 100 - - -

78
Liabilities against assets subject 100 - - -
to finance leases
Deferred tax liabilities 100 - - -
Other liabilities 100 100 125 139
Total liabilities 100 33 62 102

NET ASSET 100 26 56 83

OWNER EQUITY
Share capital 100 - - -
Reserves 100 104 142 173
Unappropriated profit 100 37 113 161
100 29 56 73
Non-Controlling Interest 100 - - -
Surplus on revaluation of 100 (38) (14) 144
investments (including amount
relating to share of profit from
associates) - net of tax
Total owner equity 100 26 56 83

INTERPRETATION

BALANCE SHEET –HORIZONTAL ANALYSIS

Horizontal analysis of financial statements encompasses comparison of financial ratio

or a line item over a number of accounting periods. It shows relative changes in
different items over a period of time. It is useful to assess trends over a period.

ASSET SIDE ANALYSIS

Cash Balances with Treasury Bank

Total assets of MBL have increased over year 2012 to year 2016.This asset shows
an increasing trend, as it is the requirement of SBP to maintain a certain percentage

79
amount of deposits of Islamic banks with it. This contribution shows an increasing
trend while with the excessive amount in hand

Balances With Other Banks

The balances provide safety with regard to the liquidity position of the bank.
Though this asset normally reduces the risk of shortage of ready cash in both certain
or uncertain circumstances. There is an up and down ratio of this bank.in 2016 this
ratio is normally very high which shows it has ready cash available to meet any
circumstances.

Lending To Financial Institutions

Bank has provided more loans to financial institutions because there is decrease in
the ratio in 2016 -13%as compare to 2012.

Investment

In 2016 there is Decrease in investment by 11% which shows bank investing in

various business activities. While in 2016 Decrease in investment shown in due to
excessive securities sold by the bank.

Operating Fixed Assets

Operating fixed assets which include the capital work in progress, property and
equipment, and intangible assets show an increase in 2015 due to expansion in
network of branches and to meet other operational need but a decrease in 2016
because of its non-expansion in network of branches

LIABILITY SIDE ANALYSIS

Bills Payable

Bills payable of the bank has decreased in 2015 of total assets which shows that the
bank is efficiently controlling its payable.

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Borrowing from Financial Institutions

In 2016 there is increasing trend in borrowing from financial institutions which is

not good indication for the bank. This shows that bank borrowing is greater much
from financial institutions. But in 2015 there is much decrease in these borrowing.

Deposits and Other Accounts

Deposits are not accurately handled by the bank there is decreasing trend of the
deposits which are in 2012 is 36% and decrease in 2016 by 20%.

Capital Fund

In 2014 capital fund is increasing which shows increasing trend.it is the good sign
for the bank. The reserves have also increasing in 2014 by 26% which is an
indication of stable business

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 Profit &loss statement (Horizontal Analysis)

THE MEEZAN BANK OF LIMIMTED

PROFIT & LOSS STATEMENT

FOR THE YEAR ENDED DECEMBER 31,2016
2013 2014 2015 2016
% % % %
Profit / return earned on Islamic 100 24 43 36
financing and related assets,
investments and placements
Profit on deposits and other dues 100 23 19 3
expensed
Net spread earned 100 26 71 74
(Reversal of provision) / provision 100 328 234 (194)
against non-performing Islamic
financing and related assets – net
(Reversal of provision) / provision 100 154 (466) 96
against diminution in the value of
investments
Provision against off balance sheet 100 - - -
obligations
Reversal of provision against amounts 100 (75) (100) (100)
due from financial institutions
Bad debts written off directly 100 - - -
100 400 503 (298)
Net spread after provisions 100 22 67 78

OTHER INCOME

Fee, commission and brokerage 100 25 130 213

income

Dividend income 100 (8) (40) 12

Income from dealing in foreign 100 170 144 100

currencies

Capital gain on sale of investments - 100 (7) (60) (18)

net

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Other income 100 27 200 256

Total other income 100 36 52 96

100 26 64 82
OTHER EXPENSES

Administrative expenses 100 26 70 94

Other (reversal of provisions) / 100 (3959) (2471) 2867

provisions

Other charges 100 912 (17) (26)

Workers Welfare Fund 100 25 62 80

Total other expenses 100 28 70 93

100 22 54 66
Share of results of associates before 100 - - -
taxation

Extraordinary / unusual items 100 - - -

Profit before taxation 100 22 58 86

Taxation - Current 100 41 63 109

- Prior years 100 (100) (364) (200)

- Deferred 100 (73) 53 (6)

100 38 128 132

Profit after taxation 100 16 28 67

INTERPRETATION

INCOME STATEMENT-HORIZONTAL ANALYSIS

Horizontal analysis (also known as trend analysis) is a financial statement analysis

technique that shows changes in the amounts of corresponding financial statement

83
items over a period of time. It is a useful tool to evaluate the trend situations. The
statements for two or more periods are used in horizontal analysis.

Net Spread Earned

A spread is the difference between an investment's lowest current offering price

among dealers and the higher price a dealer charges a customer. Spread earned
decreased over the period of time in 2016 which is 26% much more lowest than other
two years. This decrease due to decrease in loans and advances, deposit with
customers and financial institution and low securities purchased under resale
agreements.

Other Income
Other income is bank and creditor income derived primarily from fees including
dividend and transaction fees, insufficient funds (NSF) fees, annual fees, monthly
account service charges, Capital gain on sale of investments, inactivity fees, check
and deposit slip fees, and so on. This income is decrease in 2016 which is 26% which
means it has decrease 26% of the cash of the bank.

Administrative and Operating Expenses

Administrative and operating expenses increased a rise of 13%. The rise in expenses
is primarily due to full year impact of increase in staff expenses, rent and associated
costs as a result of addition of 123 branches during year 2015– an investment which
has reaped fruits for the Bank, as is evident from the strong growth in deposits and
profits over the years. With a network of 571 branches in 146 cities, the Bank
maintains its position as the largest Islamic Bank in Pakistan both in terms of deposits
and branch network.

Profit Before Taxation

Profit before tax (PBT) is a profitability measure that looks at a company's profits
before the company has to pay corporate income tax by deducting all expenses from
revenue including interest expenses and operating expenses except for income tax.

84
Profit before taxation has decrease in year 2016 by 22% as comparing to 2014 and
2015.this profit is lower due to except of deduction taxes.

Profit After Taxation

In year 2016 this profit after taxation has also decrease by 16% as compared to year
2015 & 2014 which is good indication of the investors for investing in the bank. A
Company's After-Tax Profit Margin Is Important Because It Tells Investors the
Percentage of Money a Company Actually Earns Per Dollar Of Revenue. Profit After
Tax (Pat) Is the Net Profit Earned by The Company After Deducting All expenses
like interest, depreciation and tax. Hence the profit of the bank after deducting all
taxes is greater than the prior years.it is not better in year 2016.

85
 BALANCE SHEET (VERTICAL ANALYSIS)

THE MEEZAN BANK OF LIMIMTED

BALANCE SHEET
AT THE END OF DECEMBER 31,2016

ASSETS 2016 2015 2014

Cash and balances with treasury banks 161% 147% 125%
Balances with other banks 35% 38% 23%
Due from financial institutions 371% 341% 380%
Investments – net 388% 506% 478%
Islamic financing and related assets – 896% 69% 736%
net
Operating fixed assets 26% 27% 26%
Deferred tax assets - - 2%
Other assets – net 31% 48% 62%
Total assets 1907% 1806% 1832%

LIABILITIES
Bills payable 26% 22% 24%
Due to financial institutions 92% 46% 65%
Deposits and other accounts 1622% 1590% 1593%
Sub-ordinated Sukuk 20% - -
Liabilities against assets subject to - - -
finance leases
Deferred tax liabilities 6% 2% -
Other liabilities 41% 46% 50%
Total liabilities 1807% 1706% 1732%

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NET ASSET 100% 100% 100%
OWNER EQUITY
Share capital 29% 34% 42%
Reserves 28% 29% 30%
Unappropriated profit 33% 31% 25%
89% 94% 97%
NON-CONTROLLING INTEREST 4% 3% 0%
Surplus on revaluation of investments 93% 97% 0%
(including amount relating to share of
profit from associates) - net of tax
7% 3% 3%
Total owner equity 100% 100% 100%

INTERPRETATION

BALANCE SHEET-VERTICAL ANALYSIS

Vertical analysis of the balance sheet shows that the percentage of various items in
terms of total assets which is considered as a base. Vertical analysis is a method in
which the relationship between the items in the financial statement is identified by
expressing all accounts as a proportion of total accounts.

ASSET SIDE ANALYSIS

Cash Balance with Treasury Banks

This shows increasing contribution in 2016 which is 161% as compare to 2014 which
was 125% of total assets this increasing trend shows that the bank has more cash with
treasury banks in 2014 than 2016.

87
Balances with Other Banks

This portion includes the same amount of balances with other banks throughout the
three years of analysis which shows 2016 in 35% of compositions of balances are
held with other banks as concerned with total assets.

Due from Financial Institutions

This ratio has significantly increases in 2016 but reduces in 2015 by 30% of total
assets which is not a good sign for the bank. An increase in ratio may shows that the
bank has provided more loans to other financial institutions.

Investments

Investment is meant for utilizing the idle funds available with the banks. IN 2016
there is decreasing in ratio by 388% which is much more same as in 2014 but as
compare to 2015 it has increased which indicates that bank is good position in
investing its funds effectively.

Islamic Financing and Related Assets

Operating fixed assets which include the capital work in progress, property and
equipment, and intangible assets show an increase in 2016 due to expansion in
network of branches and to meet other operational need but a decrease in 2015 is
699% because of its non-expansion in network of branches.

Operating Fixed Assets

There is decreased contribution of operating fixed assets in consecutively 3 years

2016, 2015, 2014 which shows the bank has not using its operating assets
effectively.

88
 LIABILITIES SIDE ANALYSIS

Bills Payable

Bills payable in 2016 are “26%” which shows that Bank is not efficiently controlling
its payable in 2016.

Due to Financial Institutions

In year 2016 there is a increases contribution of borrowing from financial institutions

from 92% to 46% of total assets by the bank which is healthy indication. This mode
of financing is an expensive one so the increase in percentage is unfavorable for the
bank. This increase may be because of more balance of banks deposits accounts with
Pakistan and the more balances in current accounts outside the Pakistan.

Deposits and Other Accounts

Deposits are the life blood of bank to survive in the industry but it puts obligations in
the bank to keep on hand reserve to meet the deposits requirements. This percentage
is respectively increasing by 16% by 15% in 2016.

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 PROFIT & LOSS STATEMENT (VERTICAL ANALYSIS)

THE MEEZAN BANK OF LIMIMTED

PROFIT & LOSS STATEMENT
FOR THE YEAR ENDED DECEMBER 31,2016
2016 2015 2014
% % %
Profit / return earned on Islamic
financing and related assets,
investments and placements 100 100 100
Profit on deposits and other dues
expensed 41 45 54
Net spread earned 59 55 46
(Reversal of provision) / provision
against non-performing Islamic
financing and related assets – net - 1 2
(Reversal of provision) / provision
against diminution in the value of
investments - - -
Provision against off balance sheet
obligations - - -
Reversal of provision against
amounts due from financial
institutions - - -
Bad debts written off directly - - -
(1) 2 2
Net spread after provisions 60 53 45
OTHER INCOME

Fee, commission and brokerage

income
13 9 5
Dividend income
1 1 1
Income from dealing in foreign
currencies
4 4 6
Capital gain on sale of investments
- net
3 1 4

90
Other income
1 1 -
Total other income
22 16 17
81 69 61
OTHER EXPENSES

Administrative expenses
51 42 36
Other (reversal of provisions) /
provisions
- - -
Other charges
- - -
Workers Welfare Fund 1 1 1
Total other expenses
52 43 37
30 26 24
Share of results of associates
before taxation
4 1 -
Extraordinary / unusual items
- - -
Profit before taxation 33 27 24
Taxation - Current
10 8 8
- Prior years
1 2 -
- Deferred
1 2 -
12 12 8
Profit after taxation 21 15 16
INTERPRETATION

INCOME STATEMENT-VERTICAL ANALYSIS

Vertical analysis of income statement shows that the percentage of various items in
terms of total markup returns which is considered as a base. Vertical analysis is a
method in which the relationship between the items in the financial statement is
identified by expressing all accounts as a proportion of total account.

91
Profit / Return Earned on Islamic Financing And Related Assets, Investments
And Placements

When a vertical analysis is done on an income statement, it will show the top-line
sales number as 100%, and every other account will show as a percentage of the total
sales number.

Net Spread Earned

As compare to 2014 in 2016 spread has increased by 59% of sales which is the greater
difference than in 2015 and 2014. This would be a good sign for the bank.

Income

This income also increased in 2016 over the period of time which is 22% of sales.
There is increasing trend in income which shows its income is increasing as 22% of
sales over the period of time.

Profit Before Taxation

There is increasing trend in 2016 of profit before paying any taxes which is 33% more
than other previous two years while in 2015 it was only 27% of sales. While in 2016
it is 33% of sales.

Profit After Taxation

It also shows increasing trend over the period of three years of time.in 2016 profit
after tax is 21% of sales while in 2015 it was 15% and in 2014 it was 16%.it does
also shows increasing trend in the profit of the bank. This is due to its huge investment
activities larger deposits and loyalty among customers.

92
4.3. FINANCIAL RATIO ANALYSIS:

A ratio is a simple mathematical expression of the relationship of one item to another. Ratio
analysis involves the method of calculating and interpreting financial ratios to assess the
organization’s performance. Financial ratios of ban can be divided into basic forms, which
are as follows.

Most investors are familiar with a few key ratios, particularly the ones that are relatively
easy to calculate. Some of these ratios include the current ratio, return on equity (ROE),
the debt-equity (D/E) ratio, the dividend payout ratio, and the price/earnings (P/E) ratio.
While there are numerous financial ratios, ratio analysis can be categorized into six main
groups:

➢ Liquidity Ratios:
liquidity ratios measure a company's ability to pay off its short-term debts as they come
due using the company's current or quick assets. Liquidity ratios include current ratio,
quick ratio, and working capital ratio.

➢ Solvency Ratios:
Solvency ratio also called financial leverage ratios, solvency ratios compare a company's
debt levels with its assets, equity, and earnings to evaluate whether a company can stay
afloat in the long-term by paying its long-term debt and interest on the debt. Examples
of solvency ratios include debt-equity ratio, debt-assets ratio, and interest coverage ratio.

➢ Profitability Ratios:
These ratios show how well a company can generate profits from its operations. Profit
margin, return on assets, return on equity, return on capital employed, and gross margin
ratio are examples of profitability ratios.

➢ Efficiency Ratios:
Efficiency ratio also called activity ratios, efficiency ratios evaluate how well a company
uses its assets and liabilities to generate sales and maximize profits. Key efficiency ratios
are the asset turnover ratio, inventory turnover, and days' sales in inventory.

93
 ➢ Coverage Ratios:
These ratios measure a company's ability to make the interest payments and other
obligations associated with its debts. Times interest earned ratio and debt-service
coverage ratio are two examples of coverage ratios.

➢ Market Prospect Ratios:

Market prospect ratio e.g. dividend yield, P/E ratio, earnings per share, and dividend
payout ratio. These are the most commonly used ratios in fundamental analysis. Investors
use these ratios to determine what they may receive in earnings from their investments
and to predict what the trend of a stock will be in the future. For example, if the average
P/E ratio of all companies in the S&P 500 index is 20, with the majority of companies
having a P/E between 15 and 25, a stock with a P/E ratio of 7 would be considered
undervalued, while one with a P/E of 50 would be considered overvalued. The former
may trend upwards in the future, while the latter will trend downwards until it matches
with its intrinsic value

4.3.1. Liquidity Ratios:

Liquidity refers to the amount of cash a company can generate quickly to settle its debts.
A reasonable level of liquidity is essential to the survival of a company, as poor cash control
is one of the main reasons for business failure.

1. Current ratio
2. Liquidity ratio
4.3.1.1. Current Ratio:

The Current Ratio is calculated by dividing Current Assets by Current Liabilities. Current
Assets are the assets that the firm expects to convert into cash in the coming year and
Current Liabilities represent the liabilities which have to be paid in cash in the coming year.
The appropriate value for this ratio depends on the characteristics of the firm's industry and

94
the composition of its Current Assets. However, at a minimum, the Current Ratio should
be greater than one.

Formula
Current Ratio = (Current Assets) / (Current Liabilities)

2016 64,354,6907 1.06 times

60,513,6351

2015 51,367,7009 1.04 times

49,196,9348
2014 29,728,764 0.07 time
40,150,6813

Chart Title
1.075 1.07
1.07
1.065 1.06
1.06
1.055
1.05
1.045 1.04
1.04
1.035
1.03
1.025
2014 2015 2016

current ratio

Interpretation
Current ratio is a financial ratio that measures whether a company has enough resources to
pay its debt over the next business cycle or not by comparing firm's current assets to its
current liabilities. If we compare the ratio of last two years, we come to know that in 2016
meezan bank limited have 1.06 times the current assets than current liabilities. It means
that a company has enough assets to pays the liabilities. In the same way, the ratio of current
assets is increasing in 2015.

95
4.3.1.2. Quick Ratio:

The Quick Ratio recognizes that, for many firms, Inventories can be rather illiquid. If these
Inventories had to be sold off in a hurry to meet an obligation the firm might have difficulty
in finding a buyer and the inventory items would likely have to be sold at a substantial
discount from their fair market value.

Formula

Cash + Marketable Securities + Receivables

Quick Ratio =
Current Liabilities

2016 68,104,898 0.12 times

60,513,635

2015 54,891,498 0.11times

49,196,9348
2014 35,229,641 0.08 time
40,150,6813

Chart Title
0.15
0.12
0.11
0.1 0.08

0.05

0
2014 2015 2016

quick ratio

96
Interpretation
The depicts increasing trend of quick ratio of Meezan bank. In 2014, the acid test ratio is
0.08 which is lower among other two years and indicates the less liquidity for the Meezan
bank. In year 2015, it increases to 0.11 and also in year 2016 it increases to 0.12.

4.3.2. Profitability Ratios:

These ratios show how well a company can generate profits from its operations. Profit
margin, return on assets, return on equity, return on capital employed, and gross margin
ratio are examples of profitability ratios.

1. Net spread to gross return

2. Net profit before tax to gross income
3. Net profit after tax to gross income
4. Administrative expense to income before provision
5. Return on equity
6. Return on asset
7. Advance to deposit ratio
8. Investment to deposit ratio
9. Capital adequacy ratio

4.3.2.1. Net spread to gross return:

The gross spread is the compensation that the underwriters of an initial public offering
(IPO) make to cover expenses, management fees, commission (or takedown) and risk. The
majority of profits that the underwriting firm earns through the deal are often achieved
through the gross spread. In addition to the gross spread, an initial public offering typically
involves "fixed costs," such as legal and accounting consultants, and registration fees.

Formula
Net spread to gross return= Net spread
Gross return

97
 2016 18,557 59.04%
31430

2015 18,217 55.01%

33,114
2014 13,363 46.39%
28,803

Chart Title
70.00%
59.04%
60.00% 55.01%

50.00% 46.39%

40.00%

30.00%

20.00%

10.00%

0.00%
2016 2015 2014

net spreadto gross return

Interpretation
Net Spread to gross income increase over the period of time in 2016 which is 59.04% much
more lowest than other two years. This increase due to increase in loans and advances,
deposit with customers and financial institution and low securities purchased under resale
agreements.

4.3.2.2. Net profit before tax to gross income:

Profit before tax measures a company's operating and non-operating profits before taxes
are considered. It is the same as earnings before taxes. Gross income, or gross pay, is an
individual's total pay before accounting for taxes or other deductions. At the company
level, it's the company's revenue minus the cost of good sold. In this case it is also referred
to as gross profit and, when expressed as a percentage of revenue, gross margin.

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Formula

Net profit before tax to gross income = Net profit before tax
Gross income

2016 8,943 24.02%

373

2015 8,452 22.41%

378
2014 6,898 20.56%
336

Chart Title
25.00%
24.02%
24.00%

23.00% 22.41%
22.00%

21.00% 20.56%

20.00%

19.00%

18.00%
2016 2015 2014

net profit before tax to gross income

Interpretation
There is increasing trend in 2016 of profit before paying any taxes which is 24.02% more
than other previous two years while in 2015 it was only 22.41% of sales. While in 2016 it
is 24% of sales.

99
4.3.2.3. Net income after taxes (NIAT):
Net income after taxes(NIAT) is the number of sales dollars remaining after all operating
expenses, interest, depreciation, taxes and preferred stock dividends have been deducted
from a firm's total revenue.

Formula
Net income after taxes= net income before tax
Gross income

2016 5,562 14.94%

373

2015 5,032 13.32%

378
2014 4,570 13.62%
336

Chart Title
15.50%
14.94%
15.00%

14.50%

14.00%
13.62%
13.50% 13.32%

13.00%

12.50%
2016 2015 2014

net profit after tax to gross income

Interpretation
The Bank posted profit after tax of Rs 5.56 billion as compared to Rs 5.02 billion, an
increase of 11% over the previous year.In year 2016 this profit after taxation has also

100
increase by 11% as compared to year 2015 & 2014 which is good indication of the
investors for investing in the bank. A company's after-tax profit margin is important
because it tells investors the percentage of money a company actually earns per dollar of
revenue. PROFIT AFTER TAX (PAT) is the net profit earned by the company after
deducting all expenses like interest, depreciation and tax. Hence the profit of the bank after
deducting all taxes is greater than the prior years.it is better in year 2016.

4.3.2.4. Administrative Expenses to income before provision:

Administrative expenses are the expenses that an organization incurs not directly tied to a
specific function such as manufacturing, production or sales. These expenses are related to
the organization as a whole as opposed to an individual department. Salaries of senior
executives and costs of general services such as accounting are examples of administrative
expenses.

Formula

Administrative Expenses =Administrative Expenses

Income before provision

2016 15,596 64.04%

24,539

2015 13,799 60.49%

22,251
2014 10,753 59.35%
6,898

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 Chart Title
65.00% 64.04%
64.00%
63.00%
62.00%
61.00% 60.49%
60.00% 59.35%
59.00%
58.00%
57.00%
2016 2014 2015

Administrative expenses to income provision

Interpretation
Administrative and operating expenses increased to Rs 15.6 billion from Rs 13.8 billion, a
rise of 13%. The rise in expenses is primarily due to full year impact of increase in staff
expenses, rent and associated costs as a result of addition of 123 branches during year 2015
an investment which has reaped fruits for the Bank, as is evident from the strong growth in
deposits and profits over the years. With a network of 571 branches in 146 cities, the Bank
maintains its position as the largest Islamic Bank in Pakistan both in terms of deposits and
branch network.

4.3.2.5. Return On Assets (ROA) Ratio:

Return on assets is the ratio of annual net income to average total assets of a business during
a financial year. It measures efficiency of the business in using its assets to generate net
income. It is a profitability ratio.

Formula

Annual Net Income

ROA =
Average Total Assets

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 2016 5,562 0.94%
6,57,767

2015 5,023 1.04%

5,31,850
2014 4,570 1.19%
4,37,510

Chart Title
1.40%
1.19%
1.20%
1.04%
1.00% 0.94%

0.80%

0.60%

0.40%

0.20%

0.00%
2016 2015 2014

Return on asset

Interpretation
The average of return on total assets is 0.94%. It measures the overall effectiveness of
management in generating profits with its available assets. The higher return on assets is
in 2013 which is 1.19%.

4.3.2.6. Return On Equity (ROE) Ratio:

Return on equity or return on capital is the ratio of net income of a business during a year
to its stockholders' equity during that year. It is a measure of profitability of stockholders'
investments. It shows net income as percentage of shareholder equity.

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Formula

Annual Net Income

ROE =
Average Stockholders' Equity

2016 5,562 20.71%

28,149

2015 5,023 20.57%

25,557
2014 4,570 22.20%
23,275

Chart Title
22.50% 22.20%
22.00%
21.50%
21.00% 20.71%
20.57%
20.50%
20.00%
19.50%
2016 2015 2014

Return on equity

Interpretation
The average of return on common equity is 20.71%. It measures the return earned on the
common stockholders’ investment in the firm. This return is higher in 2013, which is
22.20%.

104
4.3.2.7. Capital Adequacy ratio:
Capital Adequacy is a measurement of a bank to determine if solvency can be maintained due
to risks that have been incurred as a course of business. The Capital Growth Rate, which is
calculated by subtracting prior period equity capital from current period equity capital, then
dividing the difference by prior period equity capital, indicates that either earnings are
extremely good, minimal dividends are being extracted or additional capital funds have been
received through the sale of new stock or a capital infusion, or it can mean that earnings are
low or that dividends are excessive. The capital growth rate generated from earnings must be
sufficient to maintain pace with the asset growth rate.The 1988 Basel Committee Capital
Accord established a benchmark for measuring bank capital (and for correctly calculating
/ risk weighting assets,which became the denominator of the capital ratio).

Formula
Capital adequacy ratio = share capital
Total risk weighting asset
2016 1,0027 12.91%
6,57,767

2015 5,023 10.98%

5,31,850
2014 4,570 11.88%
4,37,510

Chart Title
13.50%
12.91%
13.00%
12.50%
11.88%
12.00%
11.50% 10.98%
11.00%
10.50%
10.00%
2016 2015 2014

Capital adequacy ratio

105
Interpretation
Bank’s Capital Adequacy Ratio (“CAR”) and will support the future growth strategy of
the Bank. It measures the capital growth rate in the firm. This ratio is higher in 2016,
which is 12.91% rather than compare in 2015, 2014 year.

4.3.3. Cash Ratio:

The cash ratio is the ratio of a company's total cash and cash equivalents to its current
liabilities. The metric calculates a company's ability to repay its short-term debt; this
information is useful to creditors when deciding how much debt, if any, they would be
willing to extend to the asking party. The cash ratio is generally a more conservative look
at a company's ability to cover its liabilities than many other liquidity ratios because other
assets, including accounts receivable, are left out of the equation.
Formula
Cash Cash ratio =
Current liabilities

2016 56,037,043 8.71%

64,354,6907

2015 43,685,791 8.50%

513,677,009
2014 29,728,764 7.15%
41,579,7332

Chart Title
8.71% 8.50%
10.00% 7%
5.00%

0.00%
2016 2015 2014

Cash ratio

106
Interpretation
The depicts increasing trend of cash ratio of Meezan bank. In 2014, the cash ratio is 7.15
which is lower among other two years and indicates the less liquidity for the Meezan bank.
In year 2015, it increases to 8.50 and also in year 2016 it increases to 8.71.

4.3.4. Advance to deposit ratio:

The formula for the loan to deposit ratio is exactly as its name implies, loans divided
by deposits. The loan to deposit ratio is used to calculate a lending institution's ability to
cover withdrawals made by its customers.
Formula
Advance to deposit Advance ratio =
Total deposit
2016 32,005,501 55.2%
5,64,024
2015 13,609,551 28.84%
4,71,821
2014 15,465,418 46.2%
3,804,22

Chart Title
60.00% 55.20%

50.00% 46.20%

40.00%
28.84%
30.00%

20.00%

10.00%

0.00%
2016 2015 2014

Finance/advance to deposit ratio

107
Interpretation

Advance to Deposits ratio (ADR) of the Bank now stands at an impressive 55%, as
compared to 44% in 2015. The depicts increasing trend of advance to deposit ratio of
Meezan bank. In 2014, the advance to deposit ratio is 46% which is lower among other two
years and indicates the less liquidity for the Meezan bank. In year 2015, it decrease to 28%
and also in year 2016 it increases to 55%.

4.3.5. Investment to deposit ratio:

He deposits ratio refers to the deposits raised by the bank from saving account, current
account, Recurring deposit account and Fixed Account But all these are income to bank
which earns an interest to the bank as well as the individual who has deposited the same
in the bank, and once again these moneys will be invested in the income earning sources
like share market, bonds etc., which would earn a profit for the banks. The total of all the
long term and short-term investment made by the bank on other sources like banks, share
market, loans and advances divided by the total amount of deposits raised by the bank by
various account as mentioned above.
Formula
Investment
Investment to deposit ratio=
Total deposit

2016 13,479,6574 23.08%

56,7024
2015 150,137,212 31.01%
4,71,821
2014 114,089,252 29.99%
3,804,22

108
 Chart Title
35.00% 31.01% 29.99%
30.00%
25.00% 23.08%

20.00%
15.00%
10.00%
5.00%
0.00%
2016 2015 2014

Investment to deposit ratio

Interpretation
The depicts decreasing trend of investment to deposit ratio of Meezan bank. In 2014, the
investment to deposit ratio is 29% which is lower among other two years and indicates the
less liquidity for the Meezan bank. In year 2015, it increases to 31% and also in year 2016
it decreases to 23%.

4.3.6. Market Prospect Ratios:

Market prospect ratio e.g. dividend yield, P/E ratio, earnings per share, and dividend payout
ratio. These are the most commonly used ratios in fundamental analysis. Investors use these
ratios to determine what they may receive in earnings from their investments and to predict
what the trend of a stock will be in the future. For example, if the average P/E ratio of all
companies in the S&P 500 index is 20, with the majority of companies having a P/E
between 15 and 25, a stock with a P/E ratio of 7 would be considered undervalued, while
one with a P/E of 50 would be considered overvalued. The former may trend upwards in
the future, while the latter will trend downwards until it matches with its intrinsic value.

1. Price to book ratio

2. Earnings per share
3. Price/earnings ratio
4. breakup value

109
4.3.6.1. Price-To-Book Ratio - P/B Ratio:

Price to book ratio (also called market to book ratio) is a relative valuation statistic which
measures the proportion of the current market price of a share of a company's common
stock to the book value per share of the company. Price to book value tells whether
investors in general value the company above, at or below the face value of the company's
assets as they appear in its financial reports.
The price-to-book ratio (P/B Ratio) is a ratio used to compare a stock's market value to
its book value. It is calculated by dividing the current closing price of the stock by the latest
quarter's book value per share.Also known as the "price-equity ratio".
Formula

P/B Ratio = Market Price per Share

Shareholder equity
2016 67.24 2.40
2,8149
2015 45.75 1.79
25,557
2014 47.00 2.03
23,275

Chart Title
3
2.4
2.5 2.03
2 1.79
1.5
1
0.5
0
2016 2015 2014

Price to book ratio

110
Interpretation
The depicts increasing trend of Meezan Bank in price to earnings ratio. However, this
increasing trend is better for bank because instead of this increasing trend the investors are
paying more than the book value. The year 2016 is better among others because in this year
the P/E ratio is higher. In 2014, the price to book ratio is 2.03 which is lower among other
two years and indicates the less liquidity for the Meezan bank. In year 2015, it decrease to
1.7and also in year 2016 it decreases to 2.40.

4.3.6.2. Earnings per share (EPS):

Earnings per share (EPS) is a profitability indicator which shows dollars of net income
earned by a company in a particular period per share of its common stock (also called
ordinary shares). Earnings per share is calculated by dividing net income for a period
attributable to common stock owners by the weighted average number of common shares
outstanding during the period.

Formula

Net Income – Preferred dividends

Earnings per Share (EPS) =
Number of Common Shares Outstanding

2016 5,562 5.55

10,027,379
2015 5,023 5.00
10,027,379
2014 4,570 4.55
10,027,379

111
 Chart Title
6 5.55
5
5 4.55
4
3
2
1
0
2016 2015 2014

Earning per share

Interpretation

The EPS of Meezan bank is better in all years. It indicates the earnings earned on each
share of outstanding common stock of the bank. The highest EPS is in year 2016 in
which it is 5.00 that indicates the highest earning on behalf of each share of outstanding
common stock. Overall EPS of Meezan is favorable as it is of best interest of present and
prospective stockholders and management. The graph depicts the ups in EPS of MBL. In
2014, EPS is 4.55, in 2015 it increases to 5.00. in year 2016, EPS increase to 5.55. year
2016 shows better earnings per share among other two years.

4.3.6.3. Breakup Value per share:

The sum-of-parts value of a publicly traded company. This value is derived by analyzing
each business segment of a company independently. This is usually applied to large cap
stocks that are likely to operate in several different markets or industries.

Formula

Net asset
Breakup value per share = Total number of
shareholder

112
 2016 34,772,564 28.07
10,027,379
2015 29,680,419 25.49
10,027,379
2014 23,877,767 23.21
10,027,379

Chart Title
28.07
30 25.49
23.21
20

10

0
2016 2015 2014

Break up value per share

Interpretation
The graph depicts the ups in breakup value per share of MBL. In 2014, EPS is 23.21, in
2015 it increases to 25.49 in year 2016, breakup value increase to 28.07. year 2016 shows
better breakup value among other two years.

4.3.6.4. Price/Earnings (P/E) Ratio:

Price/Earnings or P/E ratio is the ratio of a company's share price to its earnings per
share. It tells whether the share price of a company is fairly valued, undervalued or
overvalued.
Formula
Market Price per share
P/E Ratio =
Earnings per Share

113
 2016 67.24 12.1
5.55
2015 45.75 9.1
5.01
2014 47.00 10.3
4.56

Chart Title
14.00%
12.10%
12.00% 10.30%
10.00% 9.10%
8.00%
6.00%
4.00%
2.00%
0.00%
2016 2015 2014

Price/earnings ratio

Interpretation
The graph depicts the ups and down in price/earnings ratio of MBL. In 2014, EPS is
10%, in 2015 it decreases to 9% in year 2016, P/E ratio increase to 11%. year 2016 shows
better P/E ratio among other two years.

114
5. SWOT ANALYSIS

• Strengths • Weakness

S W

O T
• Opportunties • Threat

SWOT Analysis of Meezan Bank Limited:

SWOT Analysis can be very helpful for every organization to get large number of benefits
by just checking their Strengths, Weaknesses, Opportunities and Threats. In SWOT two
types of factors are calculated internal factors are Strengths and Weaknesses where
External factors are Opportunities and Threats. SWOT Analysis tells the accurate position
of business and tells what type of actions should be taken by Managements to improve the
organization.
Meezan Bank being a quality organization strives to provide quality to all its
stakeholders, customers, employees and environment. In Pakistan, it is
operating in a very volatile economic and political environment. I have summarized its
major strengths, weaknesses, opportunities and threats in the following paragraph:

115
5.1. STRENGTHS:

1. MBL has the privilege to be the first Islamic banking sector which gives a competitive
edge over all other banks and being the pioneer of this industry MBL is enjoying major
share of it.
2. The largest Islamic banking sector with 571 branches nationwide.
3. Strong growth of its Islamic banking SBU.
4. The members of its Shariah supervisory board of MBL are internationally renowned
scholars, serving on the boards of many Islamic banks operating in different countries.
5. Dedicated professional staff.
6. The working environment of the bank is very friendly and cooperative. There is no
bossiness in the higher management. The upper management consults its staff in
making decisions and provides then independence in their job areas.For the
objective is performance and not conformance with the boss.
7. Online banking service means that a customer can withdraw deposit his money at any
branch in the country. Where this service is not present, cheque must be presented only
in that branch on which they are drawn. But with this facility, a person has access
to its funds at any branch of the bank. That would mean that any person who
has an account with the bank, has an account in 24 branches of it. It provides a lot of
comfort and convenience to the customers.
8. Being an Islamic bank, MBL has a wide national network. As an emerging markets
bank, it has branches in all the major cities of Pakistan with the facility of online
banking, it is very easy for its customers to transact all over the country.
9. Attention and sensitivity to the competition prevailing in the country.
10. Strong shareholding.

5.2. WEAKNESS:

1. Meezan Bank Limited has no Credit card facility.

2. The Islamic economic system is not something that can work in isolation of
the geo-political and legislative system, as well as, and more importantly the
society's behaviors towards the injunctions of Islamic Shariah in personal

116
 and collective matters. Accordingly, one can easily imagine that in an economy
whereby most of the businessmen are not honest in fairly presenting the
financial statements of their businesses, how difficult it is to introduce a
profit-and-loss sharing based financial solution.
3. Lengthy & extensive documentation.
4. Lack of promotions and advertising of their products and service.
5. High charges for different activities such as online or Demand Draft as compared to
competitors.
6. It was observed in the bank that the degree of satisfaction of the employees
was quite low. First, the pays are lower those offered in other banks. Secondly, the
employees are given targets that are too difficult to achieve. For example, the targets
given to the personnel in sales and services department are higher than another bank in
the country, be it a local bank or a foreign bank.this makes the job tooThis makes the
job too stressful and tensed It is good to keep the people under a continuous
move, but to overstress them can be harmful to them and as well as to the organization.

5.3. OPPORTUNITIES:

1. House financing sector can be targeted to maximize the profit.

2. Growing demand of Islamic financial product and services.
3. Venturing into Islamic groups outside the countries as opportunity to
expand business in UAE and Golf states. i.e. financial institutions.
4. Coming up with. Products for the SME to targeting the medium level customers.
5. Doing business with companies having Islamic mindset. I-e Islamic
financial Institutions.
6. Increase branch network within the country.
7. To open overseas branches throughout the world like National Bank of Pakistan and
Habib Bank Limited or merger with other foreign banks outside Pakistan. Increasing
focus/target on different types of customers, MBL can open women branches,
especially in those areas where women class want to get involved but couldn’t due to
environmental restriction.

117
8. The formation of new and energetic marketing teams can increase the disbursement of
loans and new customers can be searched out.
9. They can capture a large portion of the market, if they expand its ATM and branch
network to other countries of the as well.

5.4. THREATS:
1. New competitors setting up their Islamic banking sections a n d t h e y h a v e t h e
infrastructure, skill, ability, resources & attitude to capture the market more than the
Meezan bank.
2. Rising customers’ expectations
3. Change in Government's attitude towards Islamic banking.
4. Fears on the credibility of Islamic banking ethical compliance and monitoring systems.
5. High Interest Rate from SBP.
6. SBP has not special policy regarding Islamic Banking.
7. Govt. policies are mostly for conventional banking system not for specially designed
for Islamic banking.
8. Fears on the credibility of Islamic banking ethical compliance and monitoring systems.

Reviewing this SWOT analysis from time to time would help evaluate the
bank's position. It would help the management in comparing their strengths
of the past with those of the present and to what extent the management has
been able to overcome the weaknesses.

118
6.1. DIVISIONAL OR DEPARTMENTAL DETAILS:
“Specialized functional area within an organization or a division, such as
accounting, marketing, planning. Generally, every department has its own manager
and chain of command.”
There are following two main departments of MBL which further sub divided into
different sections which are as follow:

Personal Banking Department:

• Bank Accounts
• Term deposits
• Consumer Finance
• Home remittance
• 1Meezan Upaisa
• Premium Banking

Business Banking Department:

• SME Business Banking
• Corporate Banking
• Islamic Advisory Services
• Agricultural Finance
• Correspondent Banking
• Asset Management
Following is given the brief Description of each department:
6.1.1. Personal Banking:

Personal Banking department basically directly related with the customer this department
holds the asset or the deposit of the bank which comes from the accounts and accounts
related to the customers, this department is handled by BDO’s (Business Development
Officer), PBO (Personal Banking Officer) and other employees also all of the employees
have supposed to bring the targeted deposit in the bank through providing valuable services
to the customers.

119
1. Account Opening Department:

This department is responsible for the new customers account opening procedure, and
many other services relating to the other services like providing ATM, Cheque books, MS
alerts and E-Statement related to the accounts of the customers:

Meezan Bank Offers its customers Individual, Sole-Proprietor and Joint accounts.

Following are the types of accounts Meezan Bank Offers:

• Meezan Rupee Saving Account

• Meezan Rupee Current Account
• Meezan Asaan Saving account
• Meezan Asaan Current Account
• Meezan Bachat Account
• Meezan kids club Account
• Meezan teen Club Account
• Meezan Business Plus Account
• Meezan Foreign Currency Account
• Labaik Saving Account

2. Term Deposits:

Meezan Bank provides a complete range of short term and long term deposit certificates
with the flexibility of monthly, quarterly, semi-annual and annual returns.

It includes the following products and services:

• Certificate of Islamic Investment (Periodic profit from 3 months to 5 years)

• Meezan Amdan certificate
• Meezan Mudarbah certificate
• Dollar Mudarbah certificate

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3. Consumer Finance:

Consumer Finance includes the Ijarah of house hold products including Car Ijarah, Bike
Ijarah, LED, Fridge etc.

4. Home remittance:

Meezan Easy Remit is a Home Remittance service which provides an easy, fast and
reliable way for Pakistanis who are working abroad to send money to their families and
relatives living in Pakistan. The money sent from abroad can be immediately collected
from any branch of Meezan Bank which has a strong presence of more than 570 branches
and 146 cities in Pakistan.

5. Meezan U-paisa:

To support the financial inclusion and expand the reach of Riba-free banking services,
Meezan Upaisa enables every citizen of Pakistan to send and receive money nationwide
using their original CNIC.

Through this first Islamic Branchless Banking service of the world, launched in
collaboration with Ufone, an Etisalat group company, you may also pay Utility/ISP/Phone
Bills anywhere, anytime in Pakistan.

6. Premium Banking:
Meezan Premium Banking is a prestigious way of Islamic banking specially designed to
meet your financial needs. Experience your banking needs with our Premium Banking
services and value-added benefits available to you from our personalized and free banking
services to customary discounts and privileges tailored to your lifestyle at finest retail
outlets, restaurants and hotels across the country.

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6.1.2. Business Banking Department:
Business Banking includes the following Banking departments:

1. Small Business banking department:

Meezan Bank provides Shariah compliant banking services like financing, trade and
deposit related services to small & medium sized enterprises. We combine the expertise of
in-house product specialists and Shariah scholars to provide Sharia compliant financing
solutions to meet the working capital finance, import finance, export re-finance long-term
finance, documentary credit requirements and project financing needs of our customers.

Eligibility Criteria:
1. Small Enterprises:
• Annual Sales Turnover: up to Rs.150 Mn
• Number of employees: Up to 50
• Max Financing allowed: up to Rs.25 Mn
2. Medium enterprises:
• Annual Sales Turnover: Rs.150 Mn up to Rs.800 Mn
• Number of employees: 51 to 250 (Manufacturing & Service Concerns) - 51 to 100
(Trading Concerns)
• Max Financing allowed: up to Rs.200 Mn
2. Corporate Banking:

We provide a comprehensive range of financial services to large number of corporate

clients including multinationals and public sector entities, by partnering with them to build
long-term relationships. By drawing on the expertise of in-house product specialists and
Shariah scholars working under the guidance of our Shariah Supervisory Board, we, at
Meezan Bank can provide Shariah-compliant financing solutions to meet the working
capital finance, import finance, export re-finance, long-term finance, documentary credit
requirements and project financing needs of our customers.

Our Corporate Banking relationship teams work closely with Treasury, Cash Management,
Investment Banking, Commercial Banking and Consumer Banking departments to develop

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and deliver value added banking products that fulfill the diverse business needs of our
corporate clients.

3. Corporate Assets:
Over the years, Meezan bank has been able to grow its corporate assets portfolio
considerably despite the challenges. With a focused development strategy, we have been
able to build a healthy and well diversified portfolio that has resulted in our corporate assets
book to grow at a CAGR of 31% per annum over the last 5 Years.

4. Corporate Trade Business:

The Bank’s trade business (import and export) performed very well in 2016 in both volume
and income and registered a growth of 20% and 27.5%, respectively, notwithstanding the
fact that exports of the country dropped by 13% during the year. The total trade business
volume in 2016 crossed Rs 552 billion.

5. Islamic Advisory Services:

In line with our vision of establishing Islamic Banking as banking of first choice, Meezan
Bank believes in working for the larger benefit of the society. Meezan Bank has the unique
combination of experts in areas like Islamic law & Jurisprudence, Accounting, Auditing,
Capital Markets, Corporate Finance and Islamic Finance. Our expertise, accumulated over
the years, enables us to provide world class service and unmatched Shariah-compliant
solutions to most sophisticated problems in a timely manner.
We’re working to expand the market, not merely our market share. The continuous
interaction with the academia has enabled us to produce a stream of expert practitioners-
cum-trainers. Our trainings are not only backed by solid theoretical foundations, they are
continuously updated based on real life experiences. Our case studies help learners gain
hands-on experience of various aspects of Islamic finance.

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6. Islamic Capital Market Services:
❖ Skuk Structuring:
As a leader in structured finance products, Meezan Bank has been involved in Sukuk
Structuring, Shariah Advisory and Syndication/Consortium financing, lead-managing a
number of new Shariah-compliant Sukuk issues and syndicated transactions with its
corporate clients.

IFAS provides assistance in execution of Sukuk transactions and development of Sukuk

structures based on client-specific requirements. Our multi-layered approach enables both
commercial and Shariah considerations to be incorporated into proposed structures.
Emphasis is placed on developing structures to achieve wide Shariah acceptance and
marketability of Sukuk.
❖ Mutual Funds:
Mutual Funds are an important financial intermediary in developing markets where capital
markets are volatile and investors do not have the expertise, savings and time to devote
themselves to making a well-diversified profitable and Shariah-compliant portfolio.
Islamic investment principles require persistent Shariah Compliance. Islamic Mutual
Funds are therefore catering to this important need and we provide them with technical
expertise in managing their portfolios in Shariah-compliant manner.
❖ Stock Market Indices:
Meezan Bank has initiated the formation and subsequent management of a domestic
Islamic Market Index i.e. KMI-30 index in collaboration with Karachi Stock Exchange
(now Pakistan Stock Exchange PSX). Shariah Compliance is necessary not only at the time
of IPO, but it also encompasses all operations of the enterprise at all stages of the
organizational life cycle.

7. Agricultural Finance:

Meezan Bank is recognized as the leader and trendsetter in Islamic Banking in Pakistan by
it being the first to provide a myriad of Shariah-compliant financial products for both
domestic and corporate customers. Continuing this tradition, Meezan Bank has also

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launched Islamic Agricultural Finance to enable the farming sector to avail Shariah-
compliant financing for their needs.

In addition to other permissible modes of financing, the Bank offers the following specific
agricultural products finance.

It provides following services:

• Meezan Tractor Asaan

• Meezan Agri Asaan
• Meezan Fasal Asaan

8. Correspondent Banking:
Financial Institutions, a part of the Treasury and F.I. Group, primarily focuses on building
and maintaining relationships within the Financial sector. Relations range from
authenticated communication links by way of SWIFT RMA to Trade, Treasury and account
maintenance in different currencies worldwide.

With over 360 banks in 86 countries, our 600 globally located correspondents provide all
trade services, seeking to add value and service to our branches and functional units.
Services include advising, confirmation, discounting of letter of credits, reimbursement
undertakings and standby LCs and guarantees. Further, the ever-increasing SWIFT RMA
relationships with financial institutions serve to route all kinds of transactions.

9. Asset Management:
Al Meezan is the largest fund manager in private sector in Pakistan and the Only Shariah
compliant Asset Management Company in Pakistan. Al Meezan has successfully
completed 20 years of its existence in 2015. This is one of the longest track records in
private sector in investment management in Pakistan and has emerged as one of Pakistan’s
leading investment solutions provider in a Shariah compliant manner. The Shariah Advisor
of Meezan Bank Limited, also the Shariah Advisor of Al Meezan, supervises the operations
to ensure Shariah compliance of the funds.

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10.Services:
Following services are provided by this department:
- Developing, floating and managing Islamic Mutual Funds.
- Structuring and managing Discretionary and Non-Discretionary.

- Providing Investment Advisory Services.

6.2. Internship Activities:

6.2.1. Work done by me:

In Meezan Bank limited I really enjoyed working with the bank staff of MBL civic centre
johar town branch and having a wish to be an employee of this organization following the
Islamic discipline. It was very difficult to work in different departments of bank within
limited time but on my request, the bank staff provides me an opportunity to work in
different departments for the sake of practical knowledge.

I started my internship from 26st July 2017 till 11th September 2017 and duration of my
internship is 6 weeks. The staff of branch is much cooperative. They imparted my training
in all departments of the branch i.e. customer service, clearing, remittance and account
opening. On the first day of my internship, the branch manager asked me some questions
about my studies. He told me some basic rules and regulations about banking operation
and introduced me with other staff members of the Bank, and introduce me with employees
working in MBL Civic Centre branch.

I have done the following activities during my internship:

1) Filling Cheques
2) Filling deposit slips
3) Issuance of cheque book
4) Remittance Printout
5) Filling Account Opening Form
6) Online funds transfer
7) Pay Order

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8) Other General Banking Activities

1. Filling Cheques:
For filling the Cheques, we may write the date, payee, amount in words and figures then
one signature of customer in front and two behind cheque.

2. Filling Deposit Slips:

For filling the deposit slips the name, account number, amount in words and figures branch
name and signature of depositor are necessary.

3. Issuance of cheque Books:

For issuing cheque book the signature of customer are necessary.

4. Remittance Printout:

For foreign Remittance, pin code, branch name, CNIC number of beneficiary,
Beneficiary’s name, CNIC expiry date, Mobile number of beneficiary, sender name and
city are noted down on remittance form and the signature of beneficiary is taken and
original ID card is seen.

5. Filling Account Opening Form:

For account opening forms the CNIC number, mobile number, CNIC copies. Next of kin’s
CNIC copy, customer personal and professional information is necessary. For thumb
account the photos of customers are also necessary.

6. Online Funds Transfer:

For online transfer, the account of customer is necessary and amount is written in words
and figures.

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7. Pay Order:

Pay order are negotiable instrument used for transferring the amount from one place to
another place safely. Pay order is payable on specific branch of same bank which is written
on the face of pay order.

8. Other Banking Activities:

Also, doing other general banking activities with my branch staff such as verification of
documents, filling of branch documents, and many more.

6.2.2. Names of Departments:

1) Account Opening Department
2) Clearing Department
3) Remittance Department
4) Cash Department

6.2.2.1. Account Opening Department:

At the start of my internship, I started my work at account opening Department where I

learned how to open an account what are the basic requirements for a customer for account
opening and which documents are required for further procedure

Also learned how many accounts are used in bank like

➢ Single
➢ JOINT Personal
➢ Sole Proprietorship

The requirement for these types of account opening are:

➢ Select the nature of the account

➢ Original CNIC or Copy of CNIC
➢ Permanent Residential address
➢ Photos

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➢ The reference of any person who has already an account.
➢ The other information related to the account filled on choice of applicant.
➢ Signatures are done on form as well as on “Signature Specimen Card (SS Card)” there
should be no cutting or over writing specially on SS card. The signature on SS Card
scanned into the computer as a record in the computer.

The requirements for opening the above-mentioned account are given below:

1. For Single/Normal Account:

➢ Original CNIC must be originally seen by the Personal Banking Officer and its copy
is attached to the form.
➢ If signatures are not strong/ or signatures are simple than photos of the person required
and thumb impression is taken on the SS Card.
➢ Source of Income or Salary slip must be required.
➢ If residential or mailing address is change as per CNIC than an under taking is attached
with the form.
➢ And if the signatures differ from CNIC than also undertaking attached with form on
which both signatures are taken as per form or as per CNIC.
2. For Partnership:
➢ CNIC copies of all partners must be required and they are originally seen by the PBO.
➢ Attested Copy of partnership deed dully signed by all partners of firm.
➢ Attested copy of Registration Certificate with register of Firm. In case the partnership
is unregistered this fact should be clearly mentioned on the a/c opening form.
➢ Authority letter, in original, in favor of the person authorized to operate on the a/c of
the firm.

3. For trust Account:

➢ Attested Copy of certificate of registration.
➢ List of all members/leading person that lead to trust.
➢ Copy of CNIC of all members must be required.

Visit report is also attached with the form and the visit is done by branch manager.

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These are all the requirement for all types of account opening forms. I personally filled up
many forms here for the sake of learning and practice, it tale too much time to gather the
information from the customer. I learn about different about of stamps which are necessary
for account opening

And learn about the use of the stamps on the right place. Following stamps are required to
be use on account opening form:

1. Signature Verified
2. Signature admitted
3. Void
4. Picture Admitted
5. Original Seen
6. PBO stamp
7. Operation manager Stamp
8. Branch Manager Stamp
9. L.t, R.t thumb
10. Time, Date stamp on the front page of form.

After form completion and proper Stamping, Nadra verisys is attached and the form is
authorized by operation manager, and after that PBO, Operation manager and branch
manager do their signatures on their specified place. And the complete procedure is given
below:

4. Account Opening Form:

This department relates to open new accounts. Customers approach to Bank and an
Account Opening Form is given to him for completing and signing the same. After
completed account opening form in all respect and checked by the bank officer and
properly signed by the customer which is also verified by the Operation Manager.
Specimen Signature Card are got signed from the customer and after verifying the
information written there in, Customers are given account number and all this information
are saved in the system.

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5. Completion of the Form:

After completed account opening form in all respect and checked by the bank officer and
properly signed by the customer which is also verified by the Operation Manager.

6. Specimen Signature Card (SSC):

Specimen Signature Card are got signed form the customer and after verifying the
information written there in, Customers are given account number and all this information
are saved in the system.

7. Signature Difference Form:

The signature of the client is taken on a signature difference form if his signature differs
from the CNIC.

8. Computerized Checking:

After filling in the form, the officer connected via internet enters the record of his
customer, then the officer of the bank authenticates the record under his signature and
stamp and send it to the Branch Manager. This is known as CIF.

9. Account Number:

After completion of all formalities, an account number is allotted to the customer and all
the information are recorded in the computer. After completion of all procedures, the bank
prepares a letter and sends it to the client at his postal address to pay gratitude to the
customer.

10.Cheque Book Issuance:

Cheque Book requisition for first Cheque book is send to Head Office, Karachi for
issuance the same. The Cheque book consists of 25 leaves and the charges of the cheque
books are 10 Rs. Per leaf so if the person is opening ASAAN account than 116 rupees
including tax have been deducted, and if Normal account than 250 rupees have been
deducted. And the cheque book will receive from 3-4 working days after the activation of

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account. When Cheque books received in branch call are made to inform customers that
they can receive it from bank and when customer receives the cheque book signatures are
taken from customers on cheque book receiving register.

11.ATM Card Issuance:

Meezan Bank limited provides the ATM facility to its Customers and they can withdraw
their amount at any time through ATM. ATM card requisition is also sent to head office,
Karachi for the issuance of ATM card.

Meezan bank offers following 3 types of ATM cards to its customers:

➢ Silver Card (Transaction Limit up to 50000, and charges 696 along with tax)
➢ Gold Card (Transaction limit up to 100000 and charges 1044 along with tax)
➢ Master Card (Transaction limit is up to 150000 and charges 1392 along with tax)

It also takes 3-4 working days for the processing after account activation. When Card is
received in branch than the calls are made to make them aware of that their card has been
reached in branch, when customer comes signature are taken from him on ATM Card
Register. For activation of ATM, customer has to call the help line (111-331-331).

12.Procedure for Closing of an account:

Whenever a customer wants to close the account, he fills up an account closing form and
signs there in, account balance should be zero, approval is taken from the Branch Manager,
specimen card is taken back and is attached with the form and account is closed.

13.Locker Operation:

Locker facility is also available at all the branches of MBL for keeping the valuables there
in. As for as privacy is concerned, lockers are located in a specially designed area protected
with strong room doors and grills under the control of two officers, operated by use of
Master Key and Customers Key supplied to the customer at the time of locker is rented
out. Lockers are three types: Small, Medium and Large lockers.

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Security fee of locker is Rs. 5000 which is refundable when locker is surrendered and
charges(rent) for Small Rs. 2500, for Medium Rs. 3500 and for Large Rs. 5000 per annum.
The process for providing a locker is as follow:

A separate application form is complete and signed by the customer along with a copy of
CINC with two photographs. After completing all the formalities, a locker is allocated to
the applicant and Key is given to him with locker identification card. And whenever
customer have to use the locker he has to bring his card every time and entry is recorder in
the locker operation register where locker number, name of attendant, Time in and Time
out is noted down and the signature of the customer is taken.

Locker operation is a very critical and confidential task so only the authorize person of
bank have this right to operate the locker. And I have just record the entry of locker
operation.

14.Stop Payment Procedure:

For stopping the payment, Bank takes sign of the customer on stop payment form where in
account number with date and amount of cheque is written. Customers also mention the
reason of stop payment then Bank mark that cheque as stop payment. The bank will not
make payments of these Cheques. And the charges deducted for stop payments are 580
rupees rather they are 1 or 2.

6.2.2.2. Clearing Department:

Clearing department work with provision used for settlements of proceeds of cheque
among different through the medium of a clearing house. I learnt they’re about Clearing of
different Cheques. I was told there the main objects of clearing. After making entries in
outward and inward clearing registers. All the Cheques are sent to NIFT (National
Institutional Facilitation Technology).I have also Worked in the clearing department.

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1. NIFT:

NIFT stand for National Institutional Facilitation Technologies. Clearing House of SBP
has shifted a part of its work to private institution named NIFT. NIFT collects Cheques
from all branches of different Banks within city through its carriers and send them to the
branches on which these are drawn for clearing. NIFT prepares a sheet for each branch and
send it to each branch as well as to State Bank of Pakistan where accounts of Banks are
settled.

2. Types of Clearing:

There are following two types of clearing:

❖ Inward Clearing:

When Cheques of other Banks are deposited in our bank, after clearing these Cheques
through NIFT by the other Banks on which these are drawn. Accounts of the customers are
credited. Afterwards the they check the amount in the specified account, signature are
accurate and authentic and there are accurate date and stamping is done than clearing takes
place.

❖ Outward Clearing:

When Cheques of our bank are deposited in other Banks and these Cheques are sent to us
for verification, we debit the account of our client after verification of their accountant
person comes daily to branch for purpose of receiving checks for clearing.On cheque
transfer funds following four stamps must be required:

• Signature Verified
• Payee’s Account Credited
• Authorized Date
• Meezan Bank Ltd.

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6.2.2.3. Remittance Department:

Meezan Easy Remit is a Home Remittance service which provides an easy, fast and reliable
way for Pakistanis who are working abroad to send money to their families and relatives
living in Pakistan. The money sent from abroad can be immediately collected from any
branch of Meezan Bank which has a strong presence of more than 570 branches and 146
cities in Pakistan.

The Procedure for home remittances is as follow:

1) Customer takes the Remittance print out and fill it out which contains the basic
information like Pin code, Amount, Beneficiary’s CNIC number, Beneficiary’s name,
Beneficiary’s address, Beneficiary’s mobile number and Sender’s name and city, at the
customer must put his signatures.
2) Then customer takes this form to the authorized person who deals the whole procedure
he checks the original CNIC of Beneficiary and Verified the payment.
3) After verification customer submit his CNIC copy and after proper authorization,
customer went to cashier counter for the payment.

6.2.2.4. Cash Department:

Cash department is usually to collect and deliver cash. When a customer comes to the bank
and wants to issue or deposit amount comes to the cash counter to give or receives amount.
So, it is the cash officer’s duty to deposit or withdraw the amount after verification of
signature or account number of the customer. Cash officer checks the balance and then pay
the amount to the customer. The banker make journal and ledger to enter notify the
customer account all the entry is done in the system, and take print of those entry to keep
record, and check all the entry are recording right head of account. So, all the cash dealings
occurred in the banks are over to cash officer and the cash officer is responsible for all the
deposits or withdrawals.

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6.2.2.5. Service Quality Department:

In this department, I worked from 24th July 11th September where I learnt a lot about floor
time management and quality assurance affairs in branch.

6.2.2.6. Floor Time Management:

While standing near the main gate bank ensures that customers coming into MBL are
properly looked after. Bank also creates a sense of ownership of service quality and
develops a service mindset and ultimately a quality service culture at MBL.

Furthermore, Bank manages the sale and service area of the branch to provide maximum
opportunities to clients as well as provide a sense of comfort and personal attention.

❖ Responsibilities of Floor Time Management:

Bank maintains and file daily working sheet of Floor Time Management and record
customer’s complaints in the CRM. Bank monitors daily log of TAT sheet and put up it to
Branch Manager. Complaint handling and its follow up is made on daily basis.
Modifications and improvements are suggested in the system and process. Try to make
coordination between branch and Head Office regarding service quality. Lead Floor
Manager is assigned duty first of all.

❖ Responsibilities of Lead Floor Manager/ Floor Manager:

Lead Floor Manager welcomes all the customers and introduces himself with a smiling
face and checks branch cleanliness and pleasant atmosphere in the branch. He also checks
availability customers stationary at proper places as well as maintain the notice board and
assist in SQ. Individual customers are provided comprehensive services. He moves around
the banking hall and cash counters area to ensure that every customer is looked after
properly.

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6.3. Department: Learning and development
The learning and Development department in coordination of Human Resource
Department and other stakeholders finalize the hiring. The officers are hired to fill the
existing gaps and provide the quality.

Yearly & quarterly bonuses, Good Medical Insurance, Learning opportunities. Working in
MEEZAN improves your management skills very much because of work load, employee
has to manage the balance between and work and his/her personal life.

MEEZAN Bank Ltd is the largest Islamic bank in Pakistan, with state of the art building
and work place environment, crossing over 550 branches across the country, its increasing
value and profit margins. Time to time workshops with in-house & foreign speakers and
courses are offered by the bank for its employees, Good environment, management, and
excellent co-workers make a typical day exciting and challenging.

It is an auspicious and renowned Islamic bank. The Branch Manager and Relationship
managers are very helpful and motivate to perform the tasks assigned efficiently and
effectively. It also provides opportunity of Internship for the students who are interested
and provide productive, learning environment and the employees get chances to grow in
future career.

6.3.1. During My Internship Program:

I started my internship program on 26th of july, 2015 and ending date of this program is 8th
September, 2016 in Learning and Development Department at Civic Center in Johar Town,
Lahore.

I have learnt many techniques of working in this department.

➢ Modes of Islamic Banking.

➢ Maintaining Data.
➢ Calling candidates to inform them about time, date and venue of the recruitment test
and interview.
➢ Sending schedule to the Branch managers for the training of their employees.

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➢ Generate emails to the Trainers.
➢ Checking tests of the trainees after the evaluation of the trainees through tests.
➢ Checking the trainee’s during test as an invigilator.
➢ Preparing sheet on Excel of feedback and their results.
➢ Tele the cost sheets with costs spend on the training.
➢ Mailing Shariah Cards to the branches of the specific employees.
➢ Attend some of the training classes.
➢ Working as a team member.
➢ Took interview of L&D branch manager on the process of hiring to prepare an
assignment of the university.
6.3.2. Training Program:

I started my first day of internship with the introduction of the bank employees and with
introduction of bank department. In this week just know how work done in the department
of the bank.

Manager Mr. Omer Khan gave a brief introduction of the modes of the Islamic banking
time to time, so the interns & employees memorize and the other employees who already
know can remind those modes.

❖ Murabaha:

Literally it means a sale on mutually agreed profit. Technically, it is a contract of sale in

which the seller declares his cost and profit. Islamic banks have adopted this as a mode of
financing. As a financing technique, it involves a request by the client to the bank to
purchase certain goods for him. The bank does that for a definite profit over the cost, which
is stipulated in advance.

❖ Ijarah:

Ijarah is a contract of a known and proposed usufruct against a specified and lawful return
or consideration for the service or return for the benefit proposed to be taken, or for the
effort or work proposed to be expended. In other words, Ijarah or leasing is the transfer of

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usufruct for a consideration which is rent in case of hiring of assets or things and wage in
case of hiring of persons.

❖ 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. Istisna’a
can be used for providing the facility of financing the manufacture or construction of
houses, plants, projects and building of bridges, roads and highways’ Muajjal Literally it
means a credit sale. Technically, it is a financing technique adopted by Islamic banks that
takes the form of Murabaha Muajjal. It is a contract in which the bank earns a profit margin
on his purchase price and allows the buyer to pay the price of the commodity at a future
date in a lump sum or in installments. It has to expressly mention cost of the commodity
and the margin of profit is mutually agreed. The price fixed for the commodity in such a
transaction can be the same as the spot price or higher or lower than the spot price.

❖ Mudarabah:

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. Any profits accrued
are shared between the two parties on a pre-agreed basis, while loss is borne only by the
provider of the capital.

❖ Musharakah:

Musharakah means a relationship established under a contract by the mutual consent of the
parties for sharing of profits and losses in the joint business. It is an agreement under which
the Islamic bank provides funds, which are mixed with the funds of the business enterprise
and others. All providers of capital are entitled to participate in management, but not
necessarily required to do so. The profit is distributed among the partners in pre-agreed
ratios, while the loss is borne by each partner strictly in proportion to respective capital
contributions.

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 6.3.3. Learning and Experience Gained:

Informed candidates who were selected for the test of the recruitment through calls and
after their results, I got the task of generating calls to the selected candidates for the
interview and inform them about the Venue, Date of &Time. Have learnt, Mr. Mazhar
Farooqi taught me how to generate emails to the branch manager to inform them which
employees of the branch have been selected for the training and inform them of a complete
schedule of the training and generate emails to the Trainer’s. After the training tests are
being held at that time I experienced the role of Invigilator and duties in the correspondence
of Mr. Omer Khan (Manager of L&D). Checking tests while comparing it with the keys of
the test which are held. Gathering feedbacks of the trainer from the trainees and preparing
Excel sheet of the feedback result. Tele the cost sheets with the costs spend on the training
under the instructions of manager. Generating mails of Shariah Cards to the branches of
the specific employees. And even I have attended some the classes with the permission of
manager for my knowledge. For example, I got the information about;

▪ Tijarah
▪ Istisna
▪ Sukuk’s

While working in this department it helped me in recognize the atmosphere of working in

an office and the culture of Meezan Bank, which polished my skills of team work. The
understanding of Meezan bank assisted me in preparing report which were provided by
university (University of Lahore). One of its example is as follow, prepared this by
interviewing the Manager of Learning and Development Department. The assignment was
on the Recruitment and selection and the role of the Learning and Development
Department in this process.

❖ PROCESS OF HIRING:

There are two types hiring in MEEZAN Bank.

i. Direct Hiring.
ii. Batch Hiring.

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 ➢ BSO (Branch Service Officer)
➢ TCO (Trainee Cash Officer)
➢ TBO (Trainee Branch Officer)
1. Steps of Hiring Batches: BSO, TCO, TBO

❖ Steps:
➢ Advertise/ Publicity (Dawn newspaper, Rosee.pk, MEEZAN’s web).
➢ Collection of C.V’s (Online).
➢ Screening &Short list of candidates.
➢ Generate Email to the short-listed candidates (Venue, Date of Test &Time).
➢ Generate calls to the candidates (Venue, Date of Test &Time).

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➢ Recruitment Test.
➢ Short list of eligible candidates after test.
➢ Generate Email for the Interview call (Venue, Date of Test &Time).
➢ Generate Calls to the candidates (Venue, Date of Test &Time).
➢ Conduct Interview by Head of Department, HR manager & Manager of Learning and
development/ Area manager (Panel Interview)

➢ Attesting of Certificates & Degrees from Board & HEC/Universities.

➢ Final selected candidates list issued.
➢ Calling final candidates to complete the documentation of Joining / Service Agreement
on Stamp Paper (Bond)
➢ Meanwhile, List of final candidates sent to the HR Department.
➢ HR Department Issue’s Offer Letter.
➢ Send to the Learning and Development Department.
➢ Generate calls of final selection
➢ And Intimate to candidates of date of joining.
➢ Confirmation signatures by candidates of receiving Offer Letter at date of Joining.

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❖ INDUCTION AND WELCOME:
➢ Training Session starts, 1st day of training is the Orientation Day(Welcome party to the
trainees by the particular department too.).
➢ Introduction of MEEZAN ISLAMIC BANK and its history, Mission, Vision.
➢ Employee ID’s are issued to the employee’s
➢ In case of any objection, the documents are re-checked and send to the HR Department.

❖ TRAINING:

Training is of two types.

1. Class training (Theoretical Information)

2. Rotation / On-Job training (Practically know, how about working / Job)

Names of courses related to the fields the candidates are selected for, Counting, Cash
Handling, Currency Notes Identification, Negotiable Instruments, Other SBP regulations
& SOP Prudential Regulations, F.E. Manual, Other SBP regulations & SOP.
After 2 weeks of class training the trainees are sent to the rotation of the branches for 2
weeks so they can clear their concepts related to the theoretical training, after completing
their rotation of branches, trainees are sent back to the class training for another month.

➢ Proposed Branches for Final Placement.

➢ Send to HR Department for final Placement.

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7. Problems
❖ Islamic banks facing operational and institutional problems:
➢ Islamic Banking has been growing at a swift speed in Pakistan as well as all over the
world. Pakistan and many Muslim countries are experiencing dual banking system. The
Islamic Banking industry has generated considerable interest in the financial world in
recent years. It is considered as Faith-based banking with considerable growth
potential.
➢ The interest-free Islamic banking has recorded a vigorous growth in the last few years
and would further expand vastly with the help of effective legislation and introduction
of more products.
➢ Total assets of Islamic banking in Pakistan have grown by 34 percent to Rs641 billion
at the end of last calendar year. In the same degree deposits base has also increased by
34 percent to Rs521 billion during 2011.
➢ Market share of Islamic banking has grown exceptionally in the overall banking
industry. Total assets of Islamic banking are 7.8 percent of the total banking industry
while deposits have 8.4 percent share in the total banking sector in the country.
➢ In 2002, Meezan bank limited started operations as the first local Islamic bank in
Pakistan. In a decade this Islamic Bank has shown a phenomenal growth.
➢ Islamic banking industry has witnessed an attractive growth during the global financial
crisis. In Pakistan, many full-fledge Islamic Banks are operating with over 600 branch
across the country. Many conventional banks have also opened their Islamic windows
to cater the needs of Muslims.
➢ It is also relevant to mention that Islamic Banking industry has been facing many
bottlenecks both operational and institutional.
➢ Some of the hitches being faced by Islamic banking in Pakistan are examined below:
i. Islamic Banks have not yet been successful in creating an interest-free structure to
place their funds on a short-term basis. They face the same problem in financing
consumer loans and government deficits.

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 ii. The risk involved in profit-sharing is so high that most of the Islamic banks have
taken recourse to those instruments of financing which bring them a fixed sure
return.
iii. The problem with the Islamic banking is the lack of expert Islamic bankers who
have clear or deep perception knowledge of Islamic banking and finance. Currently,
our Universities have degree, certificate and diploma programs on Islamic Banking
and Finance. But unfortunately, these programs are not up to the mark and do not
provide practical knowledge and expertise in the field of Islamic Finance. It is
advisable that both Shariah Scholars and industry experts provide training in
schools, colleges, Universities and Madrasahas.
iv. Islamic banks need to improve their management capabilities by training their
personnel in project appraisal, monitoring, evaluation and performance auditing.
v. The biggest problem for Islamic Banking is the lack of short term Investment
Avenue. Islamic Banks cannot invest in interest based instruments such as T-Bills
and Pakistan investment bonds.
vi. To overcome the problem the Government of Pakistan issues Ijarah Sukuk to
provides some relief as an alternative to Pakistan Investment Bonds. The demand
for short term investment is stronger than of supply of limited Ijarah Sukuk.
vii. Many Muslim countries are offering relaxed rules and regulations for Islamic
Banking industry. Pakistan should also offer such rules and regulations for Islamic
banking industry which would help this industry to grow swiftly.
viii. Government patronage and regulatory/tax reforms play a vital role for any industry
to grow an accelerating speed. Governments like United Kingdom and Malaysia
are offering relaxed rules and taxation for exploiting the great demand for Shariah-
compliant investment by Muslim investors, especially from the Middle East.
ix. Pakistan can also become a regional hub for Islamic finance if proper regulatory
reforms are introduced. To achieve this goal, the Government needs to revamp the
existing structure of taxes and duties to make them conducive to Islamic finance.
x. To encourage people to invest in Shariah compliant products, government should
introduce incentives in the form of tax credits.

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 xi. For example, the Malaysian government has given certain incentives for investors
in Islamic Finance industry till the year 2016 to make Malaysia a regional hub for
investment.
xii. Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI)
has introduced various Sharia'h standards to bring some consistency into the
Sharia'h based legal framework of the Islamic finance and banking industry. But
these standards needed to bring these agreements in assent with the local taxation
and law makers.
xiii. It is not possible to achieve the up to the mark level of allocative efficiency when
executives change over from Islamic banks to conventional banks to escape high
cost borrowing.
xiv. Profitability of projects the best device of efficient resource allocation, at this
situation, does not apply to Islamic banking system as it, considering the rational
behavior of the borrower, takes recourse to modes other than profit-loss-sharing.
This situation continues as long as Islamic banks operate side by side with the
conventional banks.
xv. It has been evidenced that distributive efficiency of Islamic banking is lost when an
Islamic bank starts operation under conventional banking framework. Any shift
from profit-loss-sharing modes leads the system break the direct relationship
between the incomes of the entrepreneurs, the bank and the depositors.
xvi. In the absence of Islamic money market in Pakistan, the Islamic banks cannot invest
their surplus fund i.e., temporary excess liquidity to earn any income rather than
keeping it idle.
xvii. All the Government Treasury Bills, approved securities and Pakistan Bank Bills in
Pakistan are interest bearing. So, the Islamic banks cannot invest the permissible
part of their Security Liquidity Reserve and liquid surplus in those securities,
consequently they deposit their whole reserve in cash with state Bank. Alike the
liquid surplus also remains not invested.
xviii. Substantial problem facing Islamic banks in Pakistan is how to organize their
relationships with foreign banks, and more generally, how to conduct international
operations. This is, of course, an

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 xix. issue closely related to the creation of financial instruments, which would be
accordingly consistent with Islamic principles and acceptable to interest-based
banks, including foreign banks.
xx. Islamic Banks go very closely to the pricing policies of the government. They
cannot benefit from hidden costs and inputs, which heighten the level of prices by
certain entrepreneurs without any justification.
xxi. It is keenly observed when Islamic banks start operation within the conventional
banking structure their efficiency goes on diminishing.
xxii. The setback is not because of Islamic bank's own fault but it is the capability -
undermine operation of the conventional banking system that puts a
disadvantageous impact on the efficient operation of Islamic banks.
xxiii. Even under the conventional banking framework Islamic banks can operate with
certain level of efficiency by applying in a reasonable percentage the PLS modes -
the distinguishing features of Islamic banking.
xxiv. Islamic principles specify certain conditions that need to be bound to while
developing Islamic banking products. Having left with no choice due to the absence
of attractive investment avenues, Islamic banking products mainly rely on asset
based financing to generate returns for their depositors.
xxv. Due to lack of documentation in the economy, Islamic banks are finding it difficult
to enter into profit and loss sharing based real business ventures with their
customers instead of fixed return products. Moreover, businessmen and
industrialists are also reluctant to share profits with the financiers in low risk
ventures.
xxvi. Some Pakistani customers are doubtful about the genuineness of Islamic banking
practices. Most customers have opinions that are based on information that is not
correct and represent lack of understanding of Fiqh issues.
xxvii. To succeed as a viable banking option, Islamic banks need whole hearted supporters
but also a number of patronizing institutions to perform functions which are being
carried out by various financial institutions in the conventional model.
xxviii. Attempts should be made to change the existing structure to provide better products
and quality service within the ambit of Islamic laws.

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xxix. Banking and insurance have to go hand in hand in matters of trade and business in
order to protect investments of banks against unanticipated hazards and disasters.
Unfortunately, Islamic banks have to depend on interest-based insurance
companies in the absence of Islamic insurance companies.
xxx. Islamic banks can satisfy most of the conditions if they can operate as only one
system in an economy examined above.
7.1. Recommendations:

Based on experience & observation regarding the operation and policies of Meezan bank,
I have tried to show some problems and recommendations for further improvement:

➢ The employee turnover is very high which they cut down as they are losing several
good trained employees.
➢ Lack of awareness of Islamic banking in general public.
➢ The employee usually face work over loaded problems.
➢ Branches increase but business of Meezan bank may not increase with same speed.
➢ As for as I have observed during my training, the bank should improve the services
given to the customers so that they may feel satisfied. Bank should increase its products
to enhance its margin so that it may compete in the market. Further more employees
are the assets of the bank which must be motivated by the management of the bank.
Employees should be given incentive in the shape of cash award, increase in pay,
promotion etc. if the customers of the bank are satisfied and employees of the bank are
hardworking as well as loyal, the bank will make progress by leaps and bounds.
Management of the bank must try its best to satisfy the customers as well as motivate
the employees.
➢ As for as ratio are concerned, its current ratio is much below the standard which needs
to be increased to grow in the market. Working capital is the life of every organization,
in 2014 working capital is in negative but in 2015 and 2016 working capital is positive
but below the standard. Working capital must be increased by the bank so that the bank
may show its short-term solvency to meet out its short-term debt. Debt of the company
is 0.9299 in 2014, in 2015 is 0.9960 and in 2016 is 0.9284 which shows that the Bank

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 is highly levered. Debt of the company is on higher side which must be decreased to
show it long term solvency. Net profit Margin on sale although increasing on year to
year basis but is much below than the standard of industry which also need to be
increased to grow in the markets.
7.2. For Future:

Here it been a conventional bank equipped with an extensive network and complete
portfolio of products, we would have proposed….
But this is not the case with Meezan Bank. The network and the portfolio of the products
offered are limited. For this we would propose...
“Early to bed, early to rise
Work like hell & IMPROVISE"
In this particular scenario, the word IMPROVISE stands for;
• Innovation
• Market perceptions
• Prudence
• Rifle approach
• Objectives clearly understood
• Vision
• Identifying & understanding customer needs
• Satisfying customer needs
• Educating the customer
• TV. Advertising
• Press Advertising
• Wall clocks for mosques
• Awareness through curriculum
• Umra and Haj packages
• It will ensure proper auditing and monitoring, which will in turn inspire public
confidence in the bank.

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• RIBA FREE COMMERCIAL BANKING to be set up in all countries of the world/
Muslims & non-Muslims. This will greatly facilitate international export import trade
without the fear of being involved in any riba dealing
• Increase consumer banking
• Develop the healthy and sound competition b/w employees and bosses.
• Meezan bank does not provide job security to the employees. Mostly are hired on
contractual basis. More people must be employed on permanent basis/ providing job
security and satisfaction.
• There is no separate department for the training of new employees. There should be
establishment of a separate department for the training of the new employee and a
competent teaching staff should be hired for their training.
• MBL should become very specific about its competitors, so that it can understand
who’s its competitor is in the first degree and who is in the second degree. Then the
first-degree
• Competitors should be closed closely.
• A research cell should continuously try to gather information about the present action
so its competitors and expected future actions. So, in this way more effective strategies
can be formulated.
• The performance reward linkage should be making strong as it is said “A happy
employee delivers more than he receives from the organization". The MBL should also
try to make its employees happier.
• The management should develop in workers the operator ownership to encourage them
and make them responsible for their work.
• The worker should be given sense of teamwork and the managers should be trained to
manage the team as a good leader.
• Maximum automated machines should be used.
• New schemes should be introduced and maximum privileges should be given to
customer, so that to win money market.
• Working hours should be increased for customer’s convenience; night banking service

may be used to increase the business.

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8. ANNEXURE:

Annexure means something annexed; also called annex Annexure is a term substituted in
some legal documents for Appendix. Annex and '-ure' meaning action or process To
attach, append, or add, esp. to something larger or more important.

8.1. Annexure I:

CEO Chief executive officer

EPS Earnings per share

HR Human resource

IT Information technology

SMEG Small medium enterprise

DD Demand draft

PO Pay order

ATM Atomic trailer machine

MBL Meezan bank limited

IBFT Inter-bank funds transfer

PAT Profit after tax

EPS Earnings per share

SMS Short message service

NIFT National intuitional facilitation technologies

ROE Return on equity

ROA Return on asset

P/E Price earning

UAE United aribic emirate

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8.2. Annexure II
Consolidated Statement of Financial Position as
At December 31, 2016
MEANA BANK LIMITED
BALANCE SHEET
AT THE END OF DECEMBER 31, 2016
ASSETS 2016 2015 2014
Cash and balances with treasury 56,037,043 43,685,791 29,728,76
banks
Balances with other banks 12,067,855 11,205,707 5,501,077
Due from financial institutions 129,115,165 101,079,476 90,766,297

Investments - net 134,796,574 150,137,212 114,089,252

Islamic financing and related 311,530,270 207,568,823 175,711,942

assets - net
Operating fixed assets 9,031,686 8,161,435 6,273,239

Deferred tax assets - - 530,564

Other assets - net 10,689,082 14,111,489 14,804,823

Total assets 663,267,675 535,949,933 437,405,958

LIABILITIES
Bills payable 9,130,998 6,560,324 5,619,826

Due to financial institutions 32,005,501 13,609,551 15,465,418

Deposits and other accounts 563,999,852 471,799,473 380,421,569

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 Sub-ordinated Sukuk 7,000,000 - -

Deferred tax liabilities 1,955,203 730,923 -

Other liabilities 14,403,557 13,569,243 12,021,378

Total liabilities 628,495,111 506,269,514 413,528,191

NET ASSET 34,772,564 29,680,419 23,877,767

OWNER EQUITY
Share capital 10,027,379 10,027,379 10,027,379

Reserves 9,724,001 8,611,679 7,276,191

Unappropriated profit 11,340,678 9,238,479 5,958,587

31,092,058 27,877,537 23,262,157

Non-Controlling Interest 1,221,989 944,623 -

32,314,047 28,822,160 -
Surplus on revaluation of 2,458,517 858,259 615,610
investments (including amount
relating to share of profit from
associates) - net of tax
Total owner equity 34,772,564 29,680,419 23,877,767

DATA SOURCE: Data collected from Financial Statement of Bank

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8.3. Annexure III

Consolidated Statement of Financial Position as

For the year ended December 31, 2016

THE MEEZAN BANK OF LIMIMTED

PROFIT & LOSS STATEMENT
FOR THE YEAR ENDED DECEMBER 31,2016

2016 2015 2014

Profit / return earned on Islamic financing
and related assets, investments and
placements 31,429,642 33,113,547 28,803,059
Profit on deposits and other dues 15,440,250
12,871,789 14,895,778
expensed
Net spread earned 18,557,853 18,217,769 13,362,809
(Reversal of provision) / provision against
non-performing Islamic financing and
related assets – net (120,246) 425,908 545,764
(Reversal of provision) / provision against
(64,673) 121,093 (83,857)
diminution in the value of investments
Provision against off balance sheet
- 16,173 4,897
obligations
Reversal of provision against amounts due (300)
- -
from financial institutions
Bad debts written off directly - - -
(184,919) 563,174 466,504
Net spread after provisions 18,742,772 17,654,595 12,896,305
OTHER INCOME

Fee, commission and brokerage income

3,942,236 2,891,445 1,569,327
Dividend income
345,288 184,320 283,633
Income from dealing in foreign currencies
1,207,563 1,471,337 1,626,363
Capital gain on sale of investments - net
1,012,424 488,697 1,148,499

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 Other income
357,060 301,034 127,062
Total other income
6,864,571 5,336,833 4,754,884
25,607,343 22,991,428 17,651,189
OTHER EXPENSES

Administrative expenses
16,115,217 14,049,760 10,459,934
Other (reversal of provisions) / provisions
-74,038 59,152 96,288
Other charges
3,600 4,067 49,433
Workers Welfare Fund 211,940 191,116 147,000
Total other expenses
16,256,719 14,304,095 10,752,655
9,350,624 8,687,333 6,898,534
Share of results of associates before -
taxation 1,166,467 238,580

Extraordinary / unusual items -

- -
Profit before taxation 10,517,091 8,925,913 6,898,534
Taxation - Current 2,223,292
3,283,846 2,559,908
- Prior years -
268,219 709,046
- Deferred
362,603 589,017 105,156
3,914,668 3,857,971 2,328,448
Profit after taxation 6,602,423 5,067,942 4,570,086
DATA SOURCE: Data collected from Financial Statement of Bank

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❖ Conclusion:
I spent six weeks of my internship at MBL Johor town. During these six weeks, I feel
myself be a part of bank. Even this was my experience of working in a bank, but I learned
a lot in from my very first experience. Business of the bank is quite up to the mark keeping
in view the standard of banking industry. Bank is located at JOHAR TOWN CIVIC
CENTRE Road Where Bank Al Habib, Habib bank limited, Habib metropolitan bank
limited as well as Allied bank and Bank Al-falah are also doing business in the same area
but Meezan Bank limited is competing with all these banks and increasing its clients.

Bank is giving better services to its customers as well as better facilities to its employees,
its employees are making an untiring effort to increase the profit of the company on year
to year basis as well as time their best to increase the wealth of the shareholders. Bank is
offering many products to its customers which are increasing the margin of the bank.

One of the most important aims of the student life is to express him / her correctly and
adequately. This was believed in my mind when I first decided to go to Islamic Meezan
Bank Limited to complete my internship program. With their focused strategy and product
development initiatives planned for the year, Meezan Bank is strongly positioned to meet
these challenges. The bank has very well repute in the market. Overall bank is going well
and doing a good business but there are few problems.

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❖ Reference& sources:
✓ Meezan bank and AL-Meezan investment group.
✓ Website on google
✓ Practice and Law of Banking in Pakistan by Dr ASRAR H SIDDIQUI.
✓ Money and Banking & Finance by M. SAEED NASIR.
✓ Financial statement analysis by K.R. SUBRAMANYAM
✓ Strategic management concepts cases by FRED R. DAVID
✓ www.meezanbank.com.pk
✓ www.google.com
✓ www.worldbank.org
✓ www.apnahyderabad.com
✓ www.meezanbank.com.pk
www.almeezan.com.pk
Newspaper
✓ Business Recorder
✓ Annual Report 2014,2015,2016

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