Al- Faysal Bank Limited

INTRODUCTION TO THE MAJOR ISLAMIC MODES OF FINANCING

MORABAHA
This is a mode of sale and purchase of commodities. The agreement is made between the Bank and a Customer, whereby Bank purchases a commodity and sells the same to Customer on a deferred payment basis. The essential features of the Morabaha are: 1. Existence of a tangible commodity/asset of which physical possession can be taken before use or consumption. 2. Such commodity or asset has to be acquired from third party (commodity/asset already in the possession of the Customer, cannot form basis of the agreement). 3. Bank sells the commodity/asset to the Customer.

LOCAL PURCHASE MORABAHA (LPO)

Bank and the client sign a Morabaha Agreement. Client submits a request for purchase of commodity/asset by specifying 1

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Al- Faysal Bank Limited quality, quantity and price. Bank appoints an agent under an Agency Agreement (who could be the client) to purchase the asset/commodity on behalf of the bank. The Agent purchases the commodity under a Purchase Order from third party after obtaining disbursement from the bank through Receipt and submits a Declaration to this effect. Bank sells the commodity/asset to the Client on a cost plus profit basis and the parties agree on a Purchase Price and Due date.

MORABAHA IMPORTS (PAD)

Bank and Client sign a Morabaha Agreement. In terms of the Morabaha Agreement, the Bank appoints the Client as its Agent through an Agency Agreement to import commodities from time to time. Client submits an application to establish letter of credit and the Bank opens it. Upon negotiation, the Bank creates an advance in the name of the Client, value payment of funds to the beneficiary. Upon receipt of documents and arrival of goods, the Bank and the Client enter into a Morabaha through a declaration submitted by the client. Such Morabaha can be spotted, where client pays immediately to retire documents or on a deferred payment basis, if the client wishes to pay later. In case of deferred payment, the Client signs a promissory note for the purchase price agreed and the Bank releases the documents.

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Al- Faysal Bank Limited

IJARAH (LEASING):
Clients use Ijarah financing mainly for financing purchase of plant and machinery. If assets subject to lease are to be freshly acquired, Bank may appoint an agent (could be the client) to do so on its behalf. If Client has already acquired the equipment, Bank will purchase it from Client and lease it back. The process of Ijarah takes place as follows: Bank and Client sign a Lease Finance Agreement whereby Client agrees to take on lease from the Bank for specified assets for an agreed tenor. Bank appoints an Agent for acquisition of assets, if not already in possession of Client. Bank intimates Client of acquisition of assets and delivers to place specified by Client. Term of lease starts from date Client takes possession of assets, whether constructive or physical. Client pays a monthly, or quarterly rental to the Bank for the use of the assets and by virtue of the agreement, becomes owner of asset only after paying a nominal lease end value.

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Al- Faysal Bank Limited

MUSHARAKAH
Under Islamic jurisprudence, Musharakah means a joint enterprise formed for conducting some business in which all partners contribute financially and share the profit as per pre agreed upon ratios, while the loss is shared according to the ratios of financial contribution of each partner. The Musharakah is an ideal alternate to replace interest based lending with far reaching effects on both production and distribution of capital. Profit sharing ratios in a Musharakah depend entirely on the estimated profit the business is able to generate. The Musharakah is a relationship established, by the parties, by mutual contract and therefore all necessary ingredients of a valid contract must be present. The risk of loss inherent in this mode of financing ensures that the Bank fully satisfies itself as to the profitability and feasibility of the business venture as well as to the integrity of its Musharakah partners.

MODARABA
This is a kind of partnership where one partner gives money to another for investing it in a commercial enterprise. The investment comes from the first partner who is called "Rabb-ul4

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Al- Faysal Bank Limited maal" while the management and work is an exclusive

responsibility of the other, who is called "Modarib" and the profits generated are shared in a predetermined ratio. There are two types of Modaraba namely: Al Modaraba Al Moqayyadah: Rabb-ul-maal may specify a particular business or a particular place for the Modarib, in each case he shall invest the money in that particular business or place. This is called Al Modaraba Al Moqayyadah (restricted Modaraba). Al Modaraba Al Mutlaqah: If Rabb-ul-maal gives full freedom to Modarib to undertake whatever business he deems fit, this is called Al Modaraba Al Mutlaqah (unrestricted Modaraba). However, Modarib cannot, without the consent of Rabb-ul-maal, lend money to anyone. Modarib is authorized to do anything which is normally done in the course of business. If they want to have an extraordinary work which is beyond the normal routine of the traders, it cannot be done without express permission from the Rabb-ul-maal. Modarib is also not authorized to keep another Modarib or a partner Mix his own investment in that particular Modaraba without the consent of Rabb-ul-maal. 5

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Al- Faysal Bank Limited

HISTORY OF THE GROUP (ISLAMIC BANKERS)

Faysal Bank Limited (FBL) is a subsidiary of Shamil Bank of Bahrain E.C. (Islamic Bankers) which is controlled and managed by the Dar Al-Maal Al-Islami Trust (DMI). DMI is headed by H.R.H Prince Mohamed Al Faisal Al Saud with its Head Office in Geneva, Switzerland. It has been one of the leading contributors to the development of Islamic-banking in the world, particularly with regard to promoting new modes of investments compatible with Islamic Shariah, through its network of over 20 financial and business companies, represented in 15 countries around the world. Shamil Bank of Bahrain E.C. (Islamic Bankers) came into existence when the board of DMI decided to merge Faysal Islamic Bank of Bahrain and Islamic Investment Company of the Gulf. Based on the pioneering experience of Islamic-banking of both, a new entity, Shamil Bank of Bahrain E.C was formed. The amalgamation process was completed in June 2000, with an objective to further enhance and consolidate the financial base and to optimize the operational economies. This brought forth a dynamic institution for integrating Islamic-banking principles and systems on a global basis. Shamil Bank continues to thrive with its 6

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Al- Faysal Bank Limited Islamic-principles and a strong asset base of US$ 2.9 billion and equity of more than US$ 230 million. The Bank is fully committed to the region and continues to hold a 60 percent controlling interest in Faysal Bank Limited, Pakistan.

INTRODUCTION TO FBL
Faysal Bank Limited (FBL) was incorporated on October 3, 1994 in Pakistan as a public limited company. The shares of the Bank are quoted on Karachi and Lahore Stock Exchanges. FBL commenced business operations effective January 1, 1995, taking over six branches of Faysal Islamic Bank of Bahrain E.C. (FIBB), which had established its presence in Pakistan since 1987. Sixty percent of its share capital is held by Shamil Bank of Bahrain E.C. (Islamic Bankers), and the remaining forty percent by the local public. FBL was the first Bank to start Islamic-banking in Pakistan under the name of FIBB. Its strict compliance to Shariah gives a distinctive edge over other conventional Financial Institutions. The Bank is governed by strict Islamic-banking rules and is not allowed to invest in any government / institutional securities or financial investment schemes that are interest based. Since 1987, FIBB operations have been extended to Pakistan in the form of full commercial operations. FBL, from the time of its inception has been acknowledged as the Best Commercial Bank in 7

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Al- Faysal Bank Limited Pakistan for two consecutive years by two reputable international publications, i.e. Euro Money and Asia Money.

BRANCH NETWORK
Limited (FBL) has eleven branches spread all over the country. The details of branches include: 3 Branches At Karachi 2 Branches At Lahore 1 Branch At Faisalabad 1 Branch At Islamabad 1 Branch At Rawalpindi 1 Branch At Peshawar 1 Branch At Multan 1 Branch At Quetta 1 Branch At Mirpur (Azad Kashmir) 8

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Al- Faysal Bank Limited

All these twelve Branches of Faysal Bank Limited is divided into three Regions:

North Region
Islamabad Branch Peshawar Branch Rawalpindi Branch Mirpur Branch

South Region
3 Karachi Branch Quetta Branch

Central Region
2 Lahore Branch Faisalabad Branch Multan Branch

NOTE:
THE MULTAN BRANCH WAS ESTABLISHED ON 1 S T NOVEMBER 2001 WITH ELEVEN STAFF MEMBERS.

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Al- Faysal Bank Limited

MISSION STATEMENT
VISION
The introduction of a just and equitable financial system by being a world class multi-purpose financial institution, providing a range of specialised services, working on Shariah principles.

VALUES
The mission statement translates into our objectives: To comply with the spirit of Islamic Shariah this will govern our entire business by translating it into modern financial products and services. To strive for halal profit, prudent growth and pursuit of improved efficiency. To focus on serving our customers and shareholders by building relationships based on trust and mutual benefit. To inculcate a culture of teamwork within the Bank by introducing staff training and development programmes.

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Al- Faysal Bank Limited

MANAGEMENT HIERARCHY OF FAYSAL BANK

Pr es i de nt

C EO / CG M Count r y Gene ral

Manager

Cre di t D ep artm en t

O pe rati on s Dep art me nt

Consumer Banking

Corporate Banking Group

Country Operations Manager

Head of Consumer Banking

Country Risk Manager

Corporate Head

Corporate Head

Corporate Head

Regional Operations Manager

Regional Head of Consumer

Ban k in g

Regional Corporate Head Branch Relationship Officer

Branch Manager

Branch Sales & Service Manager

Branch Operations Manager

Personal Services Officers

Credit Officers

Officers

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Al- Faysal Bank Limited

BOARD OF DIRECTORS
H.R.H Prince Mohamed Al Faisal Al Saud Mr. Farook Bengali Mr. Khalid A. Janahi Mr. Mahmood A. Faruqui Mr. Nasir Ali Shah Bukhari Mr. Ziad H. Rawasdeh Dr. Said Sa'ad Mr. Tariq Iqbal Khan Chairman President & CEO Director Director Director Director Director Director (NIT Nominee)

EXECUTIVE COMMITTEE:
Mr. Khalid A. Janahi Mr. Hasan S. Al-Jabari Mr. Farook Bengali Chairman Member Member

MANAGEMENT HIERARCHY
The highest authority in the management of Faysal Bank Limited is the President. He is responsible for the overall 12

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Al- Faysal Bank Limited functions of the bank. He sits at the Karachi Head Office of the Faysal Bank Limited and controls the functions of the Bank. Next authority after the president is CEO (Chief Executive Officer) or CGM (Country General Manager). He is responsible for the overall functions of the Bank. He assists the president in his work. Then the functioning of the bank is divided into three main categories. Credit Department Operations Department Consumer Banking.

CREDIT DEPARTMENT
The main purpose of this department is to extend loans to its clients for the productive purpose. Credit Department is also called Corporate Banking Group.

OPERATIONS DEPARTMENT
Operations department of the Faysal Bank Limited is responsible for the overall operations of the bank, Customer 13

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Al- Faysal Bank Limited Services Department, Remittance Department, Clearing

Department, Accounts Department, etc. all come under it.

CONSUMER BANKING
Consumer Banking is the Marketing Department of the Faysal Bank Limited. The Head of Consumer Banking Department is present at Head Office of Faysal Bank Limited Karachi. He prepares the new Deposit Schemes of the Bank and makes the marketing strategies of these products. He then communicates these plans to all the branches of the bank. He is being assisted by Corporate Head and Corporate Head is being assisted by Regional Head of Consumer Banking. At Faysal Bank Limited, consumers are treated very well. They are of the opinion that customers must be satisfied with the services provided by the Bank. All of the Branches try to make sure that customers are satisfied with the services being provided by the Bank.

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Al- Faysal Bank Limited

DEPOSIT SCHEMES AND OTHER FACILITIES OFFERED

At FBL "full service" does not simply mean offering a range of products and services. It also means we provide personalized service. We believe in dedicating ourselves towards achieving an outstanding quality in all activities. Therefore, our strength emanates from the quality of service we provide to our customers as well as the competitive products that we offer in Consumer Banking. At FBL, we are aggressively expanding by developing new array of deposit and investment products in line with the Islamic principles as well as focusing on developing business in Consumer Finance. Faysal Bank endeavors to build and strengthen customer relationship and their loyalty by providing them with innovative banking products and services. We realize every customers financial needs are different. As a result, we have developed a broad range of savings and term deposit accounts, each offering specific benefits to individuals, businesses and corporate clients. Above all, we are always looking for new ways to make banking as straightforward and friendly as possible in conjunction with Islamic principles. 15

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Al- Faysal Bank Limited

PRODUCTS
Pak Rupee Current Account The Faysal Sahulat Account Pak Rupee Savings Account The Faysal Savings Account Pak Rupee Rozana Munafa Account Pak Rupee Rozana Munafa Plus Account Pak Rupee Faysal Izafa Account Pak Rupee Faysal Premium Account Other Products

SERVICES
Global Transaction Service Safe Deposit Locker Service Travelers Cheque Pak Rupee and Foreign Currency Evening Banking Service Fast Telebanking Service ATMs

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Al- Faysal Bank Limited

DEPOSIT SCHEMES
CONSUMER PRODUCTS
CURRENT ACCOUNT
We may open a Faysal Sahulat Account with a minimum balance of Rs.10,000/- only. The account offers unlimited transaction facilities. We may avail all banking facilities with the current account if we maintain the minimum balance requirement. With a monthly average balance of only Rs.100,000/-* we can enjoy the following valuable banking services absolutely free:

Countrywide cash withdrawal facility - Minimum transactional amount Countrywide cash deposit facility - Minimum transactional amount Payorders per year Cheque leaves per year

365 withdrawals per year Unlimited Unlimited Unlimited 365 365

Demand Drafts drawn on FBL, local365 per year network Small Locker (where available) ATM Card (when available) 01 01

*Subject to change as per Bank's policy

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Al- Faysal Bank Limited

SAVINGS ACCOUNT
We may open a Faysal Savings Account with only Rs.20, 000/-. There is no restriction on the number of transactions in this account and we get our profit every six months. Profit is calculated each day at the day's closing balance. Profit will be subject to deduction of Withholding Tax at rates levied by the Government of Pakistan and Zakat, where applicable. Current expected rate of profit are as follows: Tier Limit UPTO Rs.25,000/Rs.25,001/- to Rs.50,000/Rs.50,001/- to Rs.100,000/OVER Rs.100,000/Expected rate of profit 00.50 03.00 04.50 07.00 %p.a. %p.a. %p.a. %p.a.

ROZANA MUNAFA ACCOUNT

For Individual / Corporate Customers
To provide specialized solutions for corporations and

individuals, Faysal Banks Rozana Munafa offers the perfect combination of a savings account matched with the flexibility of a current account. "A saving account that thinks like a current account".

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Al- Faysal Bank Limited We can open this account with an average daily balance of Rs.200, 000/-. their profits are calculated each day at the days closing balance as long as our monthly average balance remains above the minimum required balance. Profits will be disbursed every six months and will be subject to Withholding Tax at rates levied by the Government of Pakistan. Zakat will be deducted where applicable. The higher our deposits, the higher the profit. Current expected rate of profit are as follows: Tier Limit UPTO Rs.200,001/Rs.1,000,001/Rs.3,000,001/Rs.10,000,001/Rs.25,000,001/Rs.50,000,001/Rs.500,000,001/Rs.200,000/Rs.1,000,000/Rs.3,000,000/Rs.10,000,000/Rs.25,000,000/Rs.50,000,000/Rs.500,000,000/and ABOVE Expected rate of profit 07.00 07.30 07.70 07.80 07.90 08.00 08.25 08.50 %p.a. %p.a. %p.a. %p.a. %p.a. %p.a. %p.a. %p.a.

to to to to to to

For Investment Banks only: Tier Limit UPTO Rs.100,000,000/Rs.10,000,001/- and ABOVE Expected rate of profit 06.75 %p.a. 07.00 %p.a.

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Al- Faysal Bank Limited

ROZANA MUNAFA PLUS ACCOUNT

For Individual / Corporate Customers
To provide the best possible returns for individuals,

corporates and personal businesses, Faysal Banks Rozana Munafa Plus, offers us the opportunity to earn profit every day of the year. "Get the advantage of a term deposit with the convenience of a savings account and the flexibility of a current account". We can open this account with an average daily balance of Rs.500,000/-. To avail a high profit on this account, they offer us a tiered profit structure. Profit will be calculated daily on the closing balance at the interim rate of return as long as our monthly average balance is above the minimum balance required. If monthly average balance falls below the minimum requirement, then normal PLS savings account rate will apply but each day at the day's closing balance. Profits will be disbursed every month and will be subject to Withholding Tax at rates levied by the Government of Pakistan. Zakat will be deducted where applicable. The higher our deposit, the higher the profit. Unlike other savings accounts, Rozana Munafa Plus does not keep us waiting. In fact, profit is disbursed to our account each and every month, giving us the advantage of a monthly income certificate (term deposit).Current expected rate of profit are as follows:

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Al- Faysal Bank Limited Expected rate of profit 07.00 07.10 07.25 07.40 07.55 07.70 07.85 08.00 %p.a. %p.a. %p.a. %p.a. %p.a. %p.a. %p.a. %p.a.

Tier Limit UPTO Rs.500,001/Rs.1,000,001/Rs.3,000,001/Rs.10,000,001/Rs.25,000,001/Rs.50,000,001/Rs.100,000,001/Rs.500,000/Rs.1,000,000/Rs.3,000,000/Rs.10,000,000/Rs.25,000,000/Rs.50,000,000/Rs.100,000,000/and ABOVE

to to to to to to

FAYSAL IZAFA ACCOUNT

At Faysal Bank, they realize every customers financial needs are different. As a result, they have developed Faysal Izafa Account, which provides an option of growth or a monthly income plan. Faysal Izafa Account is a term deposit account for corporate and individual customers designed to help our money grow securely and swiftly. An account can be opened with an investment of Rs.25,000/-. This account gives us the option of one month to five years deposits. On six month deposit profit is paid monthly. Current expected rate of profit is between 07.80% to 10.75% p.a. 21

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Al- Faysal Bank Limited Profit on the Izafa Account will be subject to deduction of Withholding Tax at rates levied by the Government of Pakistan and Zakat, where applicable.

OTHER PRODUCTS:
In addition to the special savings and investment schemes, we can choose from a host of our regular notice deposit schemes with maturities of 7 and 30 days. Profit will be subject to deduction of Withholding Tax at rates levied by the Government of Pakistan. And Zakat, where applicable. Current expected rate of profit on notice deposits is between 05.00% to 05.50% p.a.

SERVICES OFFERED
Inter-Branch Transfer of Funds
We can both deposit and withdraw cash from any of our branches, regardless of which branch in which we account in. We need only to carry our cheque book. have the

Safe Deposit Locker Facility

All our branches offer lockers for lease, in a variety of sizes at very competitive rentals. Locker facility is available to all customers maintaining minimum balance requirements in their respective account categories. 22

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Al- Faysal Bank Limited

Travelers Cheques
We may purchase Muslim Commercial Bank (MCB) Rupee Travelers Cheques at any of our branches. Faysal Bank branches also issue American Express, US Dollar and Pound Sterling Travelers Cheques to provide maximum convenience and ease to our customers.

Evening Banking
In addition to the regular morning banking hours, all our branches are open for business from 3 p.m. to 5 p.m. We may deposit cash and cheques, use our locker, open accounts and conduct a host of other banking transactions during these hours.

Fast Telebanking Service

When banking with them we need not come to the bank for routine work. Faysal Bank offers telebanking facility (currently at selected branches). We are assigned a unique PIN with which we can access information pertaining to our account over the telephone. We can also open related accounts, transfer funds into pre-designated accounts, request for statement by instant fax through a phone call, amongst many other services.

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Al- Faysal Bank Limited

Automatic Teller Machines

In order to give its customers maximum convenience, Faysal Bank has recently tied in with MCB to use their network of over 100 ATMS country-wide. This means that we can be in any location where MCB ATM is located and still have access to our Faysal Bank account 24 hours every day. All we have to do is carry our ATM card with us.

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Al- Faysal Bank Limited

DEPARTMENTS OF FAYSAL BANK LIMITED

1. CUSTOMER SERVICES DEPARTMENT
Customer Services Department is one of the important departments in the bank. Faysal Bank Limited also has a full fledge Customer Service Department. This department performs a variety of functions. Every customer is first received by this department and is assisted here as well. The functions which are performed by Customer Services Department include: Account Opening Account Closure Balance Confirmation Statement of Accounts DD/TT/PO application Stop Payment Request Information about Deposit Schemes

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Al- Faysal Bank Limited Cheque Book Requests etc. Remittance Department A major function of any bank is to transfer the funds from one place to another. Faysal Bank Limited uses the following modes to transfer the funds. Demand Draft Telegraphic Transfer Payment Order

DEMAND DRAFT (DD)

Demand Draft is used to transfer funds from one city to another. Client who wants to transfer his funds from one city to another fills a form requesting the bank to prepare a DD. DD applications form contains columns requiring information for the preparations of DD e.g. Beneficiary Name Applicants Name Address 26

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Al- Faysal Bank Limited Amount to be sent, etc. Bank deducts some charges against DD. These charges include: Commission a. Upto Rs. 10,000 0.200/minimum Rs. 20 minimum Rs. 40

b. 10,001 to 100,000 0.150/-

100,001 to 1,000,000 0.0750/- minimum Rs. 15 Over 1,000,000 0.0500/- minimum Rs. 750 Postage Excise = Rs. 35 = Rs. 2

Advance Tax = .2% If a client is a tax payer then advance tax is exempted provided that he submits the tax exemption certificate.

TELEGRAPHIC TRANSFER
Telegraphic Transfer is another mode of transfer of funds. It is the quickest mode of transfer of funds from one city to another. 27

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Al- Faysal Bank Limited For TTs clients have to submit the application on a prescribed form of the bank. Client can deposit money into the bank or can request the bank to deduct the amount against the TT along with the charges against the issuance of TT from his account. The changes against the issuance of TT charged by Faysal Bank include: Commission Upto Rs. 10,000 10,001 to 100,000 0.200/0.150/minimum Rs. 20 minimum Rs. 40 minimum Rs. 150 minimum Rs. 750

100,001 to 1,000,000 0.0750/over 1,000,000 Telex charges = Advance Tax = 0.0500/Rs. 50 (flat) .2%

If a client is a tax payer then advance tax is exempted provided that he submits the tax exemption certificate duly signed and stamped. After receiving the application for the TT, bank immediately issues the receipt to the customer and immediately fills the TT issuing form which is duly signed and test number is the corresponding bank by fax to whom TT is issued. The corresponding bank after proper verification i.e. test agreement, 28

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Al- Faysal Bank Limited etc., pays the amount to the beneficiary. For the identification of proper person, Name, ID number and Bank Account Number is used.

PAYMENT ORDER (PO)

Payment order normally called pay order is another

instrument of transferring fund. It is an instrument which is used to transfer funds within the city. If any party wants to make payment to another party within the city, it can make payment through Pay Order. Bank deducts certain charges against the issuance of Pay Order. Commission = Rs. 50 (flat) Excise duty = Rs. 2

Advance Tax = .2% If a client is a taxpayer then advance tax is exempted provided exemption certificate is duly signed and stamped. A client who is willing to get a Pay Order from Faysal Bank Limited will have to fill an application form which contains the following information: Beneficiary Name Amount of Pay Order Applicants Name Charges deducted by the bank etc. 29

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Al- Faysal Bank Limited Payment Order is handed over to the client in the typed form and duly signed by the bank.

2. FOREIGN EXCHANGE DEPARTMENT

In this department the dealing is made in foreign currency. In Faysal Bank Limited four types of foreign currency accounts are available. US Dollar Pound Sterling Japanese Yen Dutch Mark

FUNCTIONS OF FOREIGN EXCHANGE DEPARTMENT

This department performs the following functions. Account Opening Account Closing FC IN/Outward Remittances 30

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Al- Faysal Bank Limited Issuance of Travellers Cheques

3. CASH DEALING DEPARTMENT

Cash dealing department of Faysal Bank Limited is given the full responsibility of handling all receipts and disbursement of cash, as a result of transaction in both local and foreign currencies. It is also responsible for the book keeping of these transactions and the safe custody of cash. The following are the major functions of the Cash Dealing Department. Cash Receipts Encashment of Cheques. Clearing Department Clearing is a system in which banks exchanges cheques and other negotiable instruments drawn on each other. A clearing house facility is provided by the State Bank of Pakistan for offsetting of cross obligations between the different banks. The major function of clearing department is to receive the cheques which are drawn on some other bank. The customer can get the money in his account at Faysal Bank Limited from the 31

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Al- Faysal Bank Limited cheques drawn on another bank. The bank accepts these cheques and collects the amount from the bank on which cheques are drawn through clearing house. Bank charges some commission for this function. The representative of all banks in Pakistan attend the State Bank session which is performing the duties of clearing house on each business day at some fixed time. They deliver cheques that their bank may have negotiated by other banks. The responsibility of smooth operation of the clearing function lies with the State Bank of Pakistan. When there are many banks in the country, each will receive a number of cheques drawn on each other and deposited for collection. A clearing house is a place where these cheques are brought and mutual claims of each bank on each other are offset and a settlement is made by the payment of a difference.

4. CREDIT OPERATIONS DEPARTMENT

In this department of Faysal Bank Limited, the loans are advanced by the bank to its customers. Loans are given in lump sum amount to the customers to meet the capital requirements of customers. When customers want loan to finance a large project, bank asks them to provide 32

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Al- Faysal Bank Limited feasibility report of that project in order to ensure safe return of loan. Faysal Bank Limited extends loan for different maturity period. There are short term, intermediate term, and long term loans offered to its customers. Maximum period of loans given to client is 180 days. For extending loans there is an agreement signed between the bank and the client in which purpose of loan, amount of loan, rate of profit being shared by the bank and the client, etc. are agreed. Difference between Faysal Bank Limited and other

commercial banks is that Faysal Bank Limited believes on Islamic banking. In Islam interest is void therefore Faysal Bank Limited believes on Islamic values. Faysal Bank Limited does not charge interest on loans. It makes an agreement with the client and charges its share of profit. A current account is opened for the client when his/her loan is sanctioned. If the client is unable to submit profit to the bank then there is no compounding charged from him and his outstanding profit remains there without any charge.

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Al- Faysal Bank Limited

BASIC REQUIREMENTS FOR EXTENDING LOANS

In Faysal Bank Limited, the basic requirement for the extension of loan is that the person who wants to get credit from Faysal Bank Limited must be an account holder of the bank. It is not required that the customer should be an account holder of that particular branch in which credit application is submitted. If a customer is an account holder of any other branch then his credit worthiness can be checked from that particular branch.

TYPES OF LOAN OFFERED BY FAYSAL BANK LTD

Faysal Bank Limited offers different categories of loans to its clients. Loan against foreign currency. Loan against property. Loan against shares. Loan Against Foreign Currency

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Al- Faysal Bank Limited Faysal Bank Limited extends loan against the security of foreign currency. The profit margin charged by Faysal Bank Limited against the foreign currency loan is 12% to 14%. The maximum limit for the extension of loans is 75% and 25% is margin retained by the bank e.g. if the client has $10,000 in his account then he can get maximum of $7,500 as a loan amount. Following is done against: Foreign currency account mainly in dollars Fixed deposit receipt in dollars.

LOAN AGAINST PROPERTY

A customer of Faysal Bank Limited can get loan against the collateral of property. The profit charged by the bank against the property ranges from 14% to 16%. The rate of profit depends upon the value of property. If the property is located in good place and documents of the property are complete then bank will charge a profit rate of 14%.

LOAN AGAINST SHARES

Faysal Bank Limited also extends loan against the security of shares. But now a days due to the economic instability the loans 35

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Al- Faysal Bank Limited against the security of shares is not given. The bank charges minimum commission from its valued clients.

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Al- Faysal Bank Limited

COMPETITORS OF FAYSAL BANK LIMITED

Mainly all the banks in the Private Sector are the competitors of Faysal Bank Limited. Faysal Bank Limited has a competitive edge over other commercial banks. This competitive edge is that Faysal Bank Limited is the only bank in Pakistan who is truly adopting the concept of Islamic Banking.Other commercial bank also claiming that they are doing the Islamic banking but in actual sense, Faysal Bank Limited is the only bank which is following the real concept of Islamic Banking. Faysal Bank Limited invests its funds in only Islamic modes of finance e.g. Musharaka business, Modaraba business, Ijara, etc. Due to this factor, many people invest their money in the Faysal Bank Limited and banks deposits are increasing year by year.

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Al- Faysal Bank Limited

SWOT ANALYSIS
After as follows. viewing Faysal Bank Limited the strengths,

weaknesses, opportunities and threats which we have identified are

STRENGTHS
Computerization
The main strength of Faysal Bank Limited is that all of its branches are fully computerized and they have latest softwares available to keep the records of their are: That it reduces manual work. It provides good customer services. customers accounts and other important information. The advantages of computerization

Staff
The second strength of Faysal Bank Limited is that it has staff which is well qualified and capable of performing the task which is assigned to them.

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Al- Faysal Bank Limited

Fast Service
The Faysal Bank Limited is one of the leading banks in the private sector. The act which makes them capable to achieve this position is the quality and speed of services which they provide to their customers.

Employee Service
The Faysal Bank Limited is the one of few banks in the private sector which provide the employees written policy which helps them to know the opportunities present ahead. The rules and regulations of the banks are briefly described in the policy manual and it is a sort of a guidance for employees to know what is right and what is wrong.

WEAKNESSES
Small Network
The Weakness Of Faysal Bank Limited is that it has small network of branches all over Pakistan. It has only 12 branches all over the country and if we compare this proportion with any Govt. bank than this proportion is very small.

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Al- Faysal Bank Limited

Disbelief in Advertising
The other weakness of Faysal Bank Limited is its disbelief in advertising. We can hardly find any advertisement of the bank in print media or in electronic media. So management should consider this and should realize the importance of advertising. Only then they would be able to attract more customers and the market.

OPPORTUNITIES
Govt. Policies
The economic and industrial reforms brought into country by the present Military Govt. seems promising. This has not only increased the confidence of people within the country but also people outside the country are now more interested to have funds invested in Pakistan. So now this is the time to avail this opportunity and attract those investors to come in Pakistan and invest funds. This is because when someone comes in the country and deposit funds in the banks then the balances of the deposit in the bank increases and the banks invest those funds to earn returns and in that case the bank flourishes.

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THREATS
Greater Competition
The major threat for Faysal Bank Limited is the intensified competition among the private banks in the country. There are many private banks now a days operating in the country and every bank is trying to improve its functioning and try to give more facilities to customers because in return they will get more deposits from the clients. So if Faysal Bank Limited want to have an edge from its competitors than it has to improve its functioning and try to give more facilities and services to its customers.

Impact of Privatization
Now Days the Govt. is in an attempt to privatize the national banks so that the banks improve their functioning and customers have better service options. Like recently, MCB and Allied Bank have been privatized. So this has increased the competition among the private banks. If Faysal Bank Limited wants to compete with other banks and wants to increase its shares in the market then they have to improve their services and also have to spend on advertisement.

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Al- Faysal Bank Limited

FUTURE PLANS
Going forward, the Bank is poised for growth of its financing base through selective Morabaha (Financing Resale of Goods), Musharakah (Mutual Paticipation Financing), Modarabah (Certificate of Investment) and Ijarah (Leasing) transactions. FBL's equity base is extremely strong and it plans to aggressively expand its business by introducing Islamic deposit and investment products as well as focusing towards developing business in the consumer finance segment. They planned to open three more branches for which they have gained approval from the state bank and they hope to have all the three branches operating by the end of 2002.

CONSUMER FINANCING INTRODUCING SOON

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Al- Faysal Bank Limited

OBSERVATIONS AND CONCLUSION

We observed Faysal Bank Limited as a financially sound bank. Its profits are increasing year by year, its staff is very good and sincere with the bank. But due to the present economic slump, the business of the bank is reduced. Foreign currency business of the bank is almost stopped. Now the bank is concentrating on its Rupee Business and in this regard bank has recently introduced a new scheme called Faysal Izafa. The bank is also opening its branches in near future in Sialkot. This will help the customer of Sialkot to get better services from such a good bank in the private sector. We found the rules and regulation of the bank very good and strict e.g. a limited staff is allowed to enter cash department and Security system is very good and modern.

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Al- Faysal Bank Limited

SUGGESTIONS AND RECOMMENDATIONS

After making this term report on Faysal Bank Limited,Abdali Road, Multan, we have suggested some recommendations for the bank which will help the bank to improve its service and the bank would be able to compete with other banks in the private sector. There is a great burden of customers on each branch of Faysal Bank Limited. We suggest that Faysal Bank Limited should open new branches so that burden of work should be shifted. Credit cards should be started and marketing practices should be increased. Marketing practices should be done in a best possible manner and marketing strategy started at any of the Faysal Bank Limited branch should be adopted by each branch of Faysal Bank Limited. There is a great need of online banking. It should be introduced in the bank at its earliest. Bank should also start ATM Card in the near future and the Bank should also spend on advertising and promotion.

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