Professional Documents
Culture Documents
Table of Contents.................................................................................................................1
INTRODUCTION TO ISLAMIC BANKING....................................................................1
Prohibition of Riba in the Quran and Sunnah......................................................................1
Second stage of prohibition.............................................................................................1
Third stage of prohibition................................................................................................1
Fourth and final stage of prohibition...............................................................................2
Prohibition of Riba in the Sunnah....................................................................................2
ISLAMIC BANKING in Pakistan (a brief history).............................................................2
DIFFERENCE BETWEEN ISLAMIC BANKING & CONVENTIONAL BANKING....4
INTRODUCTION TO ASKARI BANK.............................................................................5
ATM’s Installed in Pakistan................................................................................................7
ASKARI ISLAMIC BANKING..........................................................................................8
MISSION STATEMENT................................................................................................8
VISION............................................................................................................................9
Core Values......................................................................................................................9
OBJECTIVES..................................................................................................................9
Code of Ethics and Conduct..........................................................................................10
CORPORATE INFORMATION...................................................................................10
ASKARI ISLAMIC BANKING SERVICE DIVISION...............................................11
Askari Islamic bank DIVISIONS .................................................................................11
1. International Division............................................................................................12
2. Legal Affairs Division...........................................................................................12
3. Corporate & Investment Banking Group (CIBG)..................................................13
Islamic Banking Services...................................................................................................13
Products and Services....................................................................................................13
IJARAH ...................................................................................................................13
Advantages of Ijarah..................................................................................................14
MUSAWAMAH ...........................................................................................................14
MUDARABAH ............................................................................................................14
MUSHARAKAH...........................................................................................................15
BAISALAM...................................................................................................................15
ISLAMIC BANKING IN PRACTICE..............................................................................15
I. Collection of Deposit..................................................................................................15
II. Financing contracts...................................................................................................16
1. Murabaha (mark-up sale)...........................................................................................16
2. Musharaka (profits and loss sharing system).............................................................16
Types of Musharaka partnerships..................................................................................16
3. Mudharaba.................................................................................................................17
4. Ijara ...........................................................................................................................17
5. Bay'us-Salam (Advance purchase)............................................................................17
INTERN JOB.....................................................................................................................17
LOCATION IN THE DEPARTMENT.........................................................................17
JOB DESCRIPTION.....................................................................................................18
AREAS LEARNT..........................................................................................................18
DEPARTMENTS OF ISLAMIC BANKING SERVICES DIVISION.........................18
SHARIAH ADVISOR ..............................................................................................19
SHARIAH AUDIT METHODOLOGY....................................................................19
OPERATIONAL DEPARTMENT............................................................................19
OPENING OF NEW BRANCHES:..........................................................................20
ASSET SIDE PRODUCTS...........................................................................................20
ASKARI IJARAH BI SAYYARAH.............................................................................20
MAIN FEATURES OF ASKARI IJARAH BI SAYYARAH:.................................21
CASE APPROVAL AND DISBURSEMENT HIERARCHY.................................21
AT BRANCH LEVEL...............................................................................................21
AT HEAD OFFICE...................................................................................................21
ELIGIBILITY CRITERIA FOR ASKARI IJARAH BI SAYYARAH....................22
DOCUMENTS REQUIRED FOR BUSINESS PERSONS......................................22
FOR SALARIED PERSONS....................................................................................22
FOR SELF EMPLOYED PERSONALS...................................................................22
TENURE OF THE CAR IJARAH............................................................................22
SECURITY DEPOSIT..............................................................................................23
ASKARI HOME MUSHARAKAH..............................................................................23
PRODUCT FEATURES............................................................................................23
PRODUCT TYPES....................................................................................................23
1. AHM PURCHASE ...............................................................................................23
2. AHM CONSTRUCT.............................................................................................24
3. AHM IMPROVE...................................................................................................24
4. AHM TRANSFER.................................................................................................24
ELIGIBILITY CRITERIA.........................................................................................24
DOCUMENTS REQUIRED.....................................................................................24
PROCESS OF DIMINISHING MUSHARAKAH....................................................24
TENURE OF THE DIMINISHING MUSHARAKAH.............................................25
SECURITY OF FINANCING...................................................................................25
PERCENT SHARING OF INVESTMENT..............................................................25
3. MURABAHA............................................................................................................25
DIFFERENCE BETWEEN MURABAHA AND SALE......................................26
BASIC RULES FOR MURABAHAH......................................................................26
4. ISTISNA....................................................................................................................27
ISTISNA’ AS A MODE OF FINANCING...............................................................27
5. SALAM......................................................................................................................27
PURPOSE OF USE: .................................................................................................27
LIABILITY SIDE PRODUCTS....................................................................................28
1. Askari Islamic Investment Certificates..................................................................28
2. Askari Khas Islamic Deposit Account..................................................................28
3. Askari Islamic Term Quality Deposit...................................................................28
ACCOUNT OPENING DEPARTMENT......................................................................28
ACCOUNT OPENING..............................................................................................28
ACCOUNT OPENING FORM.................................................................................28
ACCOUNT OPENING PROCEDURE.....................................................................29
TYPES OF ACCOUNTS...........................................................................................29
PROPRIETARY FIRMS ACCOUNTS.....................................................................29
MINOR’S ACCOUNT..............................................................................................30
ILLITERATE PERSONS ACCOUNT......................................................................30
JOINT ACCOUNT....................................................................................................30
PARTNERSHIP FIRM ACCOUNTS.......................................................................30
PRIVATE/PUBLIC LTD COMPANY’S ACCOUNTS...........................................31
CLOSURE OF AN ACCOUNT................................................................................32
CHARITY FUND......................................................................................................32
INVESTMENT ANALYSIS OF ASKARI ISLAMIC BANK.....................................32
SWOT ANALYSIS.......................................................................................................34
STRENGTHS............................................................................................................34
WEAKNESSES.........................................................................................................35
Opportunities..............................................................................................................35
THREATS..................................................................................................................35
COMPETITIVE ANALYSIS........................................................................................35
RECOMMENDATIONS...............................................................................................36
1. Workshops and Counseling...................................................................................36
2. Innovative Products...............................................................................................36
Marketing Plan...........................................................................................................36
Technological Advancements....................................................................................37
Placements of Employees..........................................................................................37
Priority Banking and Business Development Department........................................37
ATM FACILITIES....................................................................................................37
LACK OF TRAINED STAFF...................................................................................37
LACK OF AWARENESS AMONG PEOPLE ABOUT ISLAMIC BANKING......38
COMPLICATED DOCUMENTATIONS.................................................................38
CONCLUSION..................................................................................................................38
REFERENCES..................................................................................................................39
Online References..........................................................................................................39
INTRODUCTION TO ISLAMIC BANKING
Islam is not only a religion in the ordinary sense of the word, but a
complete system of life. While other religious codes provide guidance
only for the relation between man and his Creator, Islam guides man in
his relationship with God, and gives him the norms which govern his
temporal existence, since Islam is concerned with the spiritual,
political, social economic, moral and all other material aspects of the
human being.
Every social system has its own economic system. Islam being a
comprehensive and distinct social system, possesses a corresponding
economic system of its own. Islamic economics is fast developing into
a different and distinct paradigm of economics. Therefore, a number of
Islamic financial institutions have emerged in various Muslim as well as
some non-Muslim countries.
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Fourth and final stage of prohibition
Says God: "O you who believe! Be conscious of Allah and give up what
remains (due to you) from Riba (usury) (from now onward), if you are
(really) believers. And if you do not do it, then take a notice of war
from Allah and his Messenger, but if you repent you shall have your
capital sums. Deal not unjustly (by asking more than your capital
sums) and you shall not be dealt unjustly (by receiving less than your
capital sums).
52
Government and some banks/DFIs preferred appeals to the Shari at
Appellate Bench (SAB) of the Supreme Court of Pakistan.
State Bank has issued the criteria for establishment of Islamic banks
in private sector and subsidiaries and stand-alone branches by
existing commercial banks to conduct Islamic banking in the
country.
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been established in the State Bank of Pakistan to advise it one
modes, procedures, laws and regulations for Islamic banking
ensuring Shariah compliance and smooth operations of Islamic
banks.
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INTRODUCTION TO ASKARI BANK
Askari Commercial Bank Limited was built-in on October 09, 1991 and
commence its operations in April 1992 as a public limited company.
The bank principally busy in the banking business. It has a varied
customer base comprise of corporate, SMEs, individuals, households
and farmers etc. The registered office of the Bank is situated at AWT
Plaza, The Mall, and Rawalpindi. Army Welfare Trust directly and
indirectly holds a significant portion of the Bank’s share capital.
Its share price has remain approximately 12% higher than the average
share price of quoted banks during the last four years. Askari Bank has
expanded into a nationwide presence of 200 Branches, 199 in Pakistan
and Azad Jammu and Kashmir, including 31 Islamic Banking branches,
1 sub branch and an Offshore Banking Unit in Bahrain. A shared
network of over 800 online ATMs covering all major cities in Pakistan
supports the delivery channels for customer service. The Mobile
ATM’s facility is first time started by Askari commercial bank in 2005
dedicated to serving the urban consumer market; Askari is committed
to aggressively market this segment
ACBL has a reporter Bank Network in more than 95 countries with
about 167 banks. Askari Bank is the only bank with its operational
head office in the twin cities of Rawalpindi-Islamabad, which have
relatively limited opportunities as compared to Karachi and Lahore.
Corporate banking division was established in April 1999 with the
primary focus on servicing large corporate and multi-national
companies. Askari Bank had set up a retail-banking group in July 2000;
Askari Investment Management Limited (AIM) is the wholly owned
subsidiary of the Askari Bank. The bank has an offshore banking unit in
Bahrain. In 2006, the bank launched Islamic Banking under the name
"Askari Islamic Banking" The strategy is to provide their customers
with a basket of innovative products to meet their varying needs.
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BOARD OF
DIRECTORS
ENTITY RATINGS
Askari Bank has the following Entity Ratings from the Pakistan Credit
Executive
Rating Agency Limited (PACRA): Audit & Inspection
Committee Division
Short Term A1+
Long Term AA
Asset
International Operations North Products & Operation
Credit Card
Electronic &
Technology Area office Investment Human
Treasury North-I &II products Resource
/Establishment
Area office
Compliance &
Central-
Data I&II
Area
Office
South
I&II
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Area Office-
Quetta
ATM’s Installed in Pakistan
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ASKARI ISLAMIC BANKING
Askari Bank Limited-Islamic Banking (AKBL-IB) is a part of Askari Bank
Limited, works under the prudential regulations of the State Bank of
Pakistan and engaged in business of banking as defined by the
Banking Companies Ordinance 1962.State Bank of Pakistan awarded
license for Islamic Banking branch operations on November 21,
2005.The Authorized capital of Askari Islamic Bank is Rs.50
million.Initially Askari Islamic Banking started its business with the
network of only four branches in Rawalpindi, Peshawar, Quetta,
Karachi, Multan and Islamabad. AKBL entered into its second phase of
development, in which SBP authorized bank to open its more Branches
in the year 2008.It has already fourteen branches in almost all big
cities.
Islamic Banking was launched under the brand 'Askari Islamic Banking',
by opening 6 dedicated Islamic Banking branches in major cities of the
country. Further expansion is planned with improved capabilities for
offering products conforming to the Shariah principles.Askari Islamic
Banking opens the doors for Halal banking solutions. Our objective is to
put in place an efficient banking system supportive to economic justice
and welfare of society in line with Shariah standards.A comprehensive
range of Islamic Banking products and services is being offered, in
order to meet customer's demand of Shariah Compliant Banking, in the
following areas:
Islamic Corporate Banking
Islamic Investment Banking
Islamic Trade Finance
Islamic General Banking
Islamic Consumer Banking
Islamic Banking products have been approved by the Bank's Shariah
Advisor. As per Shariah requirements, funds and products of Islamic
Banking are managed separately from the Conventional Banking side.
All funds obtained, invested and shared in Halal modes & investments,
under supervision of the Shariah Advisor.
At the end of 2011 total branches of Islamic Banking were thirty one.
MISSION STATEMENT
THE MISSION STATEMENT OF THE BANK IS
“TO BE THE LEADING ISLAMIC BANKING SERVICES PROVIDE AMONGST
PRIVATE SECTOR BANK IN PAKISTAN .DELIVERING QUALITY SERVICES
THROUGH INNOVATIVE TECHNOLOGY AND EFFECTIVE HUMAN
RESOURCE MANAGEMENT IN A MODERN AND PROGRESSIVE
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ORGANIZATION CULTURE OF MERITOCRACY, MAINTAINING HIGH
ETHICAL AND PROFESSIONAL STANDARDS, WHILE PROVIDING
ENHANCED VALUE TO ALL THEIR STAKEHOLDERS, AND CONTRIBUTING
TO SOCIETY”
VISION
“TO BE THE BANK OF FIRST CHOICE OF ISLAMIC BANKING SERVICES”
Core Values
The intrinsic values, which are the corner stone’s of our corporate
behavior, are:
Commitment
Integrity
Fairness
Team-work
Service
OBJECTIVES
Deliver solutions that meet customer’ financial needs
Build and sustain a high performance culture
Build trusted relationships with all stakeholders
Build and manage the Banks’ portfolio of business to achieve
strong and sustainable shareholder return.
Create and leverage strategic assets and capabilities for
competitive advantage.
To facilitate the bank with modern banking technique
To accelerate commercial activities and capture large market
share.
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Code of Ethics and Conduct
CORPORATE INFORMATION
SHARIAH ADVISOR
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Dr. Muhammad Tahir Mansoori
BOARD OF DIRECTORS
Lt. Gen. Javed Zia
Lt. Gen. (R) Imtiaz Hussain
Mr. Kashif Mateen Ansari, FCMA
Mr. Zafar Alam Khan Sumbal
Mr. Muhammad Riyazul Haque
Mr. Shahid Mahmud
Mr. Ali Noormahomed Rattansey, FCA
Dr. Bashir Ahmad Khan
Mr. Tariq Iqbal Khan, FCA (NIT Nominee)
Mr. M.R. Mehkari
AUDIT COMMITTEE
Dr. Bashir Ahmad Khan (Chairman)
Mr. Ali Noormahomed Rattansey, FCA
Mr. Zafar Alam Khan Sumbal
Company Secretary
Mr. Saleem Anwar, FCA
Auditors
]A. F. Ferguson & Co
Legal Advisors
Rizvi, Isa, Afridi & Angell
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1. International Division
International Division strives to place at the disposal of our branch
network, efficient correspondent banking arrangements on global
basis, thereby catering the needs of our client diaspora. In short, this is
made possible through a variety of arrangements with various banks
which, amongst other benefits, ensures placement of suitable Credit
lines at our disposal by our counter-party banks to facilitate Foreign
Trade and Treasury related activities.
Today International Division boasts of multi-faceted correspondent
banking relationships with over 200 Banks in 77 countries around the
world thereby improving the capacity of our branches in serving their
clients.
Alongside, International Division is entrusted to arrange
evaluation/approval of exposure limits favoring various local/overseas
banks and Non-banking Financial Institutions with whom our Treasury
and branches deal on day-to-day basis. Within the context comes the
Country exposure, which is managed and monitored at this division,
whereas our liaison with State Bank of Pakistan, in respect of Foreign
Trade related issues, helps us to provide timely directions and efficient
advisory to our branch network.
Optimum monitoring of business reciprocity with banks compliments
our efforts to manage the business flows and ensure greater
profitability and balanced distribution of business amongst our
correspondents.
In addition and as a part of the ongoing exercise of Know Your
Customer (KYC) compliance with regard to our correspondents,
International Division carries out regular Due Diligence exercises to
ensure that our bank deals only with financial institutions that are able
to meet the prescribed standards and criteria
2. Legal Affairs Division
The LAD is responsible for managing all legal matters pertaining to
Bank and is mainly involved in the Opinion Making, addressing queries,
advising on the laws applicable to Bank and other concerns relating to
carrying out of pre-contractual investigations and securitisation
aspects. This area includes, carrying out of analysis, preparing
research studies and examining, scrutinizing, drafting of documents.
LAD has also to strategies legal actions and supervise implementation
and ensure compliance. Advising on legal viability of the corporate and
commercial lending agreements also falls into the ambit of LAD’s
duties. More frequently LAD suggests ways for the efficient structuring
of the transactions, effecting mortgages, perfection of securities and
provides general assistance to deal with the impacts of Regulatory,
Corporate, Labour and Fiscal Legislation. Attending litigation portfolio,
which includes Recovery cases and suits filed either for or against the
Bank, is also one of the core functions of LAD.
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3. Corporate & Investment Banking Group (CIBG)
As Askari Bank, we understand the unique business requirements of
our corporate and institutional clients, and accordingly, strive to meet
their expectations through the provision of a customized, relationship
based banking approach, through the Corporate and Investment
Banking Group (CIBG).
CIBG is a one-window operation that provides all requisite banking
services for our corporate clientele in an efficient, dependable,
consistent, and competitive manner – the objective being to become
your “bank of first call” for all your financial needs.
CIBG is specifically structured to provide dedicated banking services
and products to its corporate customers through two key divisions.
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Advantages of Ijarah
Ijarah provides the following advantages to the Lessee:
Ijarah conserves the Lessee' capital since it allows up to 100%
financing.
Ijarah gives the Lessee the right to access the equipment on
payment of the first installment. This is important as it is the
access and use (and not ownership) of equipment that generates
income.
Ijarah arrangements aid corporate planning and budgeting by
allowing the negotiation of flexible terms
Ijarah is not considered Debt Financing so it does not appear on
the Lessee' Balance Sheet as a Liability. This method of "off-
balance-sheet" financing means that it is not included in the
Debt Ratios used by bankers to determine financing limits. This
allows the Lessee to enter into other lease financing
arrangements without impacting his overall debt rating.
MUSAWAMAH
Musawamah is the negotiation of a selling price between two parties
without reference by the seller to either costs or asking price. While
the seller may or may not have full knowledge of the cost of the item
being negotiated, they are under no obligation to reveal these costs as
part of the negotiation process. This difference in obligation by the
seller is the key distinction between Murabaha and Musawamah with
all other rules as described in Murabaha remaining the same.
Musawamah is the most common type of trading negotiation seen in
Islamic commerce.
MUDARABAH
This concept refers to the sale of goods at a price, which includes a
profit margin agreed to by both parties. The purchase and selling price,
other costs, and the profit margin must be clearly stated at the time of
the sale agreement. The bank is compensated for the time value of its
money in the form of the profit margin. This is a fixed-income loan for
the purchase of a real asset (such as real estate or a vehicle), with a
fixed rate of profit determined by the profit margin. The bank is not
compensated for the time value of money outside of the contracted
term (i.e., the bank cannot charge additional profit on late payments);
however, the asset remains as a mortgage with the bank until the
default is settled.
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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.
BAISALAM
Salam means a contract in which advance payment is made for goods
to be delivered later on. The seller undertakes to supply some specific
goods to the buyer at a future date in exchange of an advance price
fully paid at the time of contract. It is necessary that the quality of the
commodity intended to be purchased is fully specified leaving no
ambiguity leading to dispute. The objects of this sale are goods and
cannot be gold, silver or currencies. Barring this, Bai? Salam covers
almost everything, which is capable of being definitely described as to
quantity, quality and workmanship
I. Collection of Deposit
Since interest bearing deposits entail Riba, Islamic banks offer two
different kinds of deposits.
Current account
Investment account
1. Current account: The deposited capital is guaranteed and made
available to the client on demand. No reward is paid on the
deposit but is mainly used for transactions and safety keeping.
2. Investment account: Deposits remain with the bank for a certain
previously agreed period. Customers open investment account to
yield financial return based on trust financing. The depositor is
the financing partner, while the managing partner is the bank.
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II. Financing contracts
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3. Mudharaba
It is a partnership in profit whereby one party provides capital (rab al-
maal-the bank) and the other party provides the know how/labour
(Mudharib).Thebankcontributes 100% of the capital. Profits are shared
on an agreed ratio. If there is any loss the bank takes 100%
responsibility unless there was a case of misconduct, negligence or
breech of contract on the part of Mudharib.
4. Ijara
Contract (leasing) or Ijara Muntahia bi at-tamleek (lease ending in
property ownership Ijara Is the same as leasing thus leasing practiced
in interest – free banks are similar to its conventional practice. During
the life of the asset, the risk of ownership remains with the bank, while
the lessee is liable for misuse of the asset.
Ijara Muntahia bi at-tamleek (lease ending in property ownership)
This is a form of leasing contract, which includes a promise by the
lesser to transfer the ownership of the leased property to the lessee.
Example, the bank purchases the asset say a house. The client rents it
from the bank, as he enters into an agreement to buy the shares from
the bank over an agreed time frame. He then buys out small shares
from the bank from time to time ending up with 100% ownership.
INTERN JOB
52
JOB DESCRIPTION
I worked at Askari Islamic commercial Bank limited as an internee.
First of all the Credit Administration Officer told us the rules and
regulations and a brief history of the bank. Later on the bankers in
each department told me the basic operations of their departments.
AREAS LEARNT
I worked almost in all the departments of bank, so I tried to learn as
much as possible from the bankers of each department but due to time
constraint I just could understood the basics of banking as banking is a
vast field. But I think that what I learnt will help me a lot to understand
the subjects studied in the University and how these are practiced by
bankers.
Following are my detailed department wise functions understanding of
Askari Islamic Bank Head Office Islamabad.
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SHARIAH ADVISOR
According to the Instruction and Regulation Issued by the State Bank of
Pakistan for Islamic Banks that they should have a shariah advisor
According to Annexure 1 of IBD Circular No: 02 of 2008 (March 25,
2008)1 So Askari Bank have appointed a renowned and eminent
Scholar and recipient of the President’s medal for pride of Performance
(in Academics) for the year 2004, Professor Dr. Muhammad Tahir
Mansoori, He is presently Chairman of Islamic Law department at the
Islamic research Institute of the International Islamic University,
Islamabad.
OPERATIONAL DEPARTMENT
There is a sound operational department in Islamic banking services
division. There working is to supervise, describe regulations and
Opening of New Branches. This is very active department of Islamic
Banking services department.
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SUPERVISION & REGULATIONS:
All rules and regulations for day to day activities of the Islamic Banking
branches are supervised by the Operational Department, e.g. Murabha
contracts of the Islamic Banking branches are supervised by this
department. This department checks the whole process of the
Branches and makes regulations for the branches.
OPENING OF NEW BRANCHES:
All the activities related to opening of new branches will be located and
supervised by operational department. It includes
Feasibility of new branches
Location of Branches
Contracts with Owner of Building
Renovation of the Building
Establishment
Staff arrangement in New Branches.
Askari Islamic Banking offers car Ijarah for consumer’s sector clients.
Under the Prudential Regulation R-9 Consumer Financing “the vehicles
to be utilized for commercial purposes shall not be covered under the
prudential regulations for consumer financing. Any such financing shall
ensure compliance with Prudential Regulations for Corporate/
Commercial Banking for SME’s financing. These regulations shall only
apply for financing vehicles for personal use including light commercial
vehicles also used for personal purposes”. For applying the said
prudential regulation the Ijarah facility under consumer finance is only
offered to individual consumers. For corporate clientele the facility is
provided through corporate Ijarah.
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MAIN FEATURES OF ASKARI IJARAH BI SAYYARAH:
Prompt Processing Time
Facility to Acquire More than One Vehicle.
Family Income Evaluation Plan.
Low Security Deposit.
Competitive Profit Rates.
AT BRANCH LEVEL
Marketing Officer
Credit Analyst
In charge Consumer Finance
Branch Manager
AT HEAD OFFICE
In charge IBD Car Ijarah
Head IBD Consumer Banking
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Approved by Islamic Banking Division Credit Committee (IB-DCC)
consists of three members on board
52
limitation AKBL-IB offers the facility to its clientele for three, four and
five years.
SECURITY DEPOSIT
As per prudential Regulation R-11 “While allowing auto loans, the
bank/ DFIs shall ensure that the minimum down payment( Security
Deposit) does not fall below 10 % of the value of vehicle. Further,
banks / DFIs shall extend auto loans only for the ex-factory tax paid
price fixed by the car manufacturers. In other words, banks/ DFIs
cannot finance the premium charged by the dealers and / or investors
over and above the ex-factory tax paid price of cars, fixed by the
manufacturers.”The management of AKBL-IB keeping in view R-11
regulation set minimum security deposit of 15 % of the value of the
vehicle with a maximum of 80 % of the value of vehicle. Moreover, the
State Bank of Pakistan restricts to finance the own/premium demanded
by the car dealers for urgent delivery of vehicle. Only banks are
allowed to finance the ex-factory price of the vehicle.
PRODUCT FEATURES
Shariah Compliant
Prompt Processing
Competitive Rentals
Clubbing of Family Income
Actual Documentation and Other Charges
PRODUCT TYPES
Askari Home Musharakah Purchase
Askari Home Musharakah Construct
Askari Home Musharakah Improve
Askari Home Musharakah Transfer
1. AHM PURCHASE
Financing amount ranges from Rs. 0.300 million to Rs. 50 Million
52
Financing Tenure: 1 to 20 years
2. AHM CONSTRUCT
Financing amount ranges from Rs. 0.300 million to Rs. 20Million
Financing Tenure: 3 to 20 years
3. AHM IMPROVE
Financing amount ranges from Rs. 0.300 million to Rs. 5 Million
Financing Tenure: 1 to 07 years
4. AHM TRANSFER
Askari Home Musharakah help clients to switch from existing interest
based loans to Shariah compliant scheme. AKBL pays off the entire
amount outstanding against client.
Financing amount ranges from Rs. 0.300 million to Rs. 50 Million
Financing Tenure: 1 to 20 years
ELIGIBILITY CRITERIA
A Pakistani National
Age between 21 to 65 years
A permanent employee with at least six months of service with
present employer
A self employed individual with at least 3 years of business
Income verification / documentation required
DOCUMENTS REQUIRED
Copy of NIC
2 colored photographs
Copy of rent agreement (residence + office)
Copy of last paid utility bills
Bank statements of last one year
Copy of recent pay slip
Employer’s certificate
3 years proof of business Legal status proof of business
Membership certificate/practice license for self employed
individuals
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Diminishing Musharakah involves taking shares in the ownership of a
specified asset and then gradually transferring complete ownership.
Actual purchase of the units at different stages.
Rent is adjusted according to the remaining share of the financier in
the property.
SECURITY OF FINANCING
As per prudential Regulation R-15 “Banks/DFIs may allow housing
finance facility for construction of houses against the security of land /
plot already owned by their customers. However, the lending bank/DFI
will ensure that the loan amount is utilized strictly for the construction
purpose and loan is disbursed in trenches as per construction
schedule”
The management of AKBL-IB keeping in view R-15 regulation collect
the ownership documents (Registry) from the customer get registered
it and keep it in safe custody. In case if the client defaults the amount,
the bank recovers the financed amount after selling it off.
3. MURABAHA
Murabaha is one of the most commonly used modes of financing by
Islamic Banks and financial institutions.
Murabaha is a particular kind of sale where the seller expressly
mentions the cost of the commodity purchased, and sells it to another
person by adding some profit thereon. Thus, Murabaha is not a loan
given on interest; it is a sale of a commodity for cash/deferred price.
The Bai’ Murabaha involves purchase of a commodity by a bank on
behalf of a client and its resale to the latter on cost-plus-profit basis.
Under this arrangement, the bank discloses its cost and profit margin
to the client.
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In other words rather than advancing money to a borrower, the bank
will buy the goods from a third party and sell those goods to the
customer at an agreed price.
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4. 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.
In Istisna’, price must be fixed with consent of all parties involved. All
other necessary specifications of the commodity must also be fully
settled.
5. SALAM
In Salam, the seller undertakes to supply specific goods to the buyer at
a future date in exchange of an advanced price fully paid at spot. The
price is in cash but the supply of purchased goods is deferred.
This mode of financing can be used by the modern banks and financial
institutions especially to finance the agricultural sector.
PURPOSE OF USE:
To meet the need of small farmers who need money to grow their
crops and to feed their family up to the time of harvest. When Allah
declared Riba haram, the farmers could not take usurious loans.
Therefore Holy Prophet allowed them to sell their agricultural products
in advance.
To meet the need of traders for import and export business. Under
Salam, it is allowed for traders to sell the goods in advance so that
after receiving their cash price, they can easily undertake the aforesaid
business. Salam is beneficial to the seller because the price is
received in advance and it is also beneficial to the buyer because the
price in Salam is lower than the price in spot sales.
The permissibility of Salam is an exception to the general rule that
prohibits forward sale and therefore it is subject to strict conditions.
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LIABILITY SIDE PRODUCTS
Askari Islamic Investment Account (AIIC)
Askari Khas Islamic Deposit Account (AKIDA)
Askari Islamic Term Quality Deposit (AITQAD)
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Signatures/thumb impression of the account holder.
General terms and conditions applicable to the operating of an
account specified by the bank.
TYPES OF ACCOUNTS
1. Individual Account
2. Joint Account
3. Proprietorship Accounts
4. Partnership Accounts
5. Private Limited Companies Accounts
6. Public Limited Companies Accounts
7. Trust Account
8. Societies, Associations and Club, etc.
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The name of proprietor with full particulars.
Proprietor has to submit a declaration of proprietorship, signed in
his personal capacity.
The proprietor may authorize person to operate the account.
MINOR’S ACCOUNT
Accounts in the names of minors are opened with complete name of
minor and Guardian as well.
Birth certificate is required in case of minor.
Natural Guardian can open such account without courts order, other
requires orders of court.
The account will be operated by the guardian even if minor attains the
age of majority. On attaining adulthood minor can open a new account,
in which funds can be transferred from minor account.
JOINT ACCOUNT
Joint accounts can be opened with mutual agreement of two or more
parties who can be relatives, friends or business associated. The can
take shape of:
Any one to sign
Either or survivor
Any two or more to sign
All to sign jointly
All have to sign the AOF and any change in instructions, SS card
will be signed only by authorized signatories.
Any joint account holder can stop the payment.
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Copies of CNIC of all partners.
Specimen Signatures Cards signed only by authorize signatories.
Attested copy of partnership deed duly signed by all the
partners.
Attested copy of registration certificate in case of registered firm.
Letter of authority duly signed by all the partners on behalf of
the firm.
A letter of partnership signed by all the partners in joint and
several capacities.
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CLOSURE OF AN ACCOUNT
Account holder upon written request or on prescribe form of the bank
can close his/her account. He may or may not mention the reason of
closure of account; signatures are verified from the SS card. The
number of unused cheques shall be noted on the application form. The
balance available paid by bank through pay order/slip prepared in
favor of account holder. ACBL charges Rs.200 as account closure
charges.
CHARITY FUND
A penalty amount goes to charity account. Askari bank has a specific
account and treatment for charity account. If some of the branches are
involve in some non Shariah compliant transaction then they are
terminating that. But if they are are doing some voide transaction then
the income of branch becomes charity.
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Annual
2008
Annual
2009
Annual
2010
PERCENTAGE RATE OF
ISLAMIC FINANCIAL INSTRUMENTS
FROM (2008-2010)
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Annual
Annual
2010
2010
SWOT ANALYSIS
A SWOT analysis is an analytical tool that can help analyze a
business. "SWOT" stands for strengths, weaknesses, opportunities, and
threats. This type of analysis represents an effort to examine the
interaction between the particular characteristics of your business and
the external marketplace in which you compete.
The internal portion of a SWOT analysis looks at the individual
strengths and weaknesses of your specific business. Similarly, the
external analysis looks at the opportunities presented by the
marketplace and the threats that you face in your chosen market.
STRENGTHS
Implementation of advance technology in all branches recently Askari
bank has purchased new software because of it the staff can perform
much faster.
Professional staff, right person hired on the right place.
With the passage of time askari bank has expand their branches and
now running almost 140 branches.
Askari bank is providing quality services to it customers.
One distinctive feature of the bank is that it is the only bank working
for the welfare of army officers, which was established by the Army
Welfare Trust.
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WEAKNESSES
Askari bank has lesser number of branches as compare too many other
branches. Due to this problem army officers cannot avail the benefits
of their own bank.As far as deposits rate are concern askari bank has
very low deposits rates.
Need to work more on agriculture and Islamic banking.
Plan makers of ACBL are not competent they are not focusing on the
marketing (new product development, attract new customers)
Opportunities
Askari bank is surrounded by many competitors. It has an opportunity
to do aggressive marketing to increase its business.
Offshore, Islamic and corporate banking
THREATS
AIBL has many competitors, which are continuously increasing its
products and marketing aggressively. It may cause its customers to
shift to competitors.
Some other banks have competent taskforce, which is also threat for
AIBL because human resource is the most valuable resources.
COMPETITIVE ANALYSIS
In competitive analysis we analyze that on which ground our company
has a competitive edge on its competitors.A competitive advantage is
an advantage over competitors gained by offering consumers greater
value, either by means of lower prices or by providing greater benefits
and service that justifies higher prices. Askari bank has some
competitive edge on the following ground.
Union bank gives free ATM card but requires you to maintain
Rs.100000/-Avg monthly balance, otherwise deducts Rs.200/month
while Askari bank does not deduct any charges.
Askari bank is offering I Net facilities but Alfalah bank is not offering
such facility.
Union bank charges Rs. 20/ leaf for cheque book and Askari charge Rs.
5/ leaf.
If you are an account holder of Askari bank then you can enjoy the
online information facility you can also transfer your funds but ABN
AMRO do not provide such type of facilities.
AIBL provide online utility bills payment facility like PTCL, Mobile Bills
etc, but Standard chartered do not provide this facility to its account
holders.
The withdrawal limit of Askari ATM card is Rs. 25000 but HSBC
withdrawal limit is 15000.
BOK is not offering ATM card do you believe?
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BOP charges Rs. 10 for each ATM transaction but Askari do not cut any
charges on ATM transaction.
ACBL provide you free account statement twice in a year but after that
deduct Rs.50 if you want to take more than provided limit and hand
over you on the spot but Standard chartered gives you monthly
statement, deducts Rs.50 per statement and usually hand over you
after 1 day.
The initial deposit of ACBL current account is Rs. 5000 but initial
deposit of S.C current account is Rs. 25000.
Minimum balance requirement for profit of ACBL SB account is
Rs.10000 while standard chartered requirement is Rs. 25000.ACBL
provides free online transfer up to Rs 1.0 million and every branch is
online.
Free issuance of traveler’s cheques with incentives for retention
beyond one month. As far as profit rates are concern Askari bank offers
very low profit rate currently Askari profit rate is 9% for 5 years but
Faysal bank is giving 11% for one year.
Askari bank cut Rs.175 ATM charges after every six months but Bank
Alfalah does not cut any ATM charges from its customers.As compare
to HBL, ABL, UBL, NBP, and MCB, askari bank has very less number of
branches.
RECOMMENDATIONS
Marketing Plan
A comprehensive marketing should be introduced for the introduction
of their products in detail to their customers, and to make people of
aware of their presence in Islamic banking.
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Technological Advancements
Askari Islamic Commercial Bank should develop a modern connectivity
architecture to effectively maintain an online connection of the branch
with other branches and also the ATM link, which may include using
modern technologies like fiber cables, routers etc. Also backup links
should also be developed,
Also a proper IT department should be established in all branches, with
professional having the knowledge to maintain a secured connection
with other banks. Also scheduled backups of data should be done with
in the bank.
Placements of Employees
There are some departments in the bank that do not have enough
employees, while some have more than needed. All this creates
inefficiencies and so the operations manager should look at the
department of the branch and see where inefficiencies lie, in
consultation of with the heads of the departments and hire individuals
where there are less employees or rotate employees from other
departments.
Priority Banking and Business Development Department
There is no priority banking department at Askari Islamic Commercial
Bank, like that of other bank. A priority banking department should be
developed so as to give even more exclusive and customized services
to high end customers with large deposit accounts. Also Business
Development Department should be developed in all branches, so that
they can actively find prospect customers to take up products from
Askari Islamic Commercial Bank.
ATM FACILITIES
Automated Teller Machines have gained importance because
customers can access their bank accounts in order to make cash
withdrawals and check their account balances even in the hours when
the branch is closed. Many ATMs also allow people to deposit cash or
checks, transfer money between their bank accounts, pay bills and
many more facilities. ASKARI BANK LTD ISLAMIC BANKING BRANCH has
not started its ATM system till now. This is also a great cause of not
attracting the deposit of people. People do not even want to wait till
next morning for opening of branch and then taking cash or check their
account balances. This facility is provided by all the banks around the
country.
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Many of the Bank officers lacking the essence, spirit and philosophy of
Islamic banking, they can’t persuade a client. They are confused about
the consequences and difference between Islamic & Conventional
banking. If this problem persist how an Islamic bank can improve.?
According to my knowledge & experience this is the biggest problem
with Islamic Banks. Most of the top management of the bank is hired
from a non Islamic bank, which just have experience but nothing about
Islamic banking concept. They know how to maximize profit because
they have experience of the materialistic banking system.
COMPLICATED DOCUMENTATIONS
An Islamic bank has complicated documentation as compared to
conventional banks. Manual Working is also a hurdle in the way of
Islamic banks to compete with other financial institutions; Islamic
banks need special softwares which can facilitate Islamic transaction,
its cash flows, expected return etc. All the softwares need to be
compatible with international general accounting standards
CONCLUSION
After doing internship in ASKARI BANK LTD ISLAMIC BANKING BRANCH,
I am in a position to conclude that the Islamic Banking Services
provided to the customers are properly screened and checked by the
Shariah Advisor in comparison with conventional banks. The working
environment of the Bank is very much friendly and cooperative.
The Askari Islamic Bank has a unique status among other Islamic
Banks because of its low profit rates, security deposits and quick
processing methods for processing of applications. There is a good
training system for the internees as well. The staff currently working in
the Bank is highly cooperative and experienced.
I found there a good environment of skilled persons who are working
for asking bank. At Head office level all the staff is trained and efficient
having good knowledge of Shariah as well as Islamic Banking &
Finance. But at Branch level the employees are not skilled and nor
having good knowledge of Islamic Banking.
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I personally checked and according to my observation all the
transactions are according to Shariah and if any problem there the
whole amount goes to Charity. It is very difficult to summarize six
weeks internship in some pages but the conclusion is “Askari Islamic
Banking Services is providing best HALAL Islamic Products to
their clients”
REFERENCES
Askari Bank Limited IBSD. (2010). Financial Statements of years 2008, 2009 and 2010.
Askari Bank Head Office, Islamabad, Pakistan.
Mr. Ali Khan (2010). Murabaha Monitoring Sheet: Askari Bank
Mr. Asif Malik (2010) Home Musharkah and Car Ijarah:
Mr. Sheikh Kamran (2010) Operations and Reporting.
Askari Bank (2010) Investment record. Askari Bank Head Office Islamabad ,Pakistan.
Online References
www.askaribank.com.
http://www.pakistanbanks.org/members/profiles/askari_profile.html
http://www.alhudacibe.com/askari.php
http://en.wikipedia.org/wiki/History_of_banking
http://en.wikipedia.org/wiki/Bank
http://www.bankjobs.pk/branch-banking/2009/02/15/branch-manager-askari-bank/
http://www.historyworld.net/wrldhis/PlainTextHistories.asp?historyid=ac19
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