Adul Wali Khan University Mardan Business Internship Report On

Karkhano Branch peshawar Submitted By: Abid Ali Shah (MBA/149) Cell No: 0314-9966033
SESSION: 2009-2011

PREFACE:
Today the intrest based economic system has resulted in concentrating the wealth in the hands of selected few creating monopolies and widening the gap between the rich and the poor. In contrast Islam encourages circulation of wealth and regards its role as important to an economy as the flow of blood to our human body. Economic justice requires a workable economic system supported by an efficient banking system. Interest based banking has proved to be inefficient as it fails to equitably distribute wealth which is necessary for the well being of mankind. On the other hand Islamic banking is efficient and ensures equitable distribution of wealth.Thats why last few years have witnessed a dramatic increase in Islamic banking the world over. At least two hundred Islamic banks and financial institutions have been set up. According to a research report, the growth rate of these institutions is 15% per annum. At least two hundred billion US dollars are invested in this system. Many multinational banks have opened Islamic banking windows or subsidiary of Islamic banking. The information on Islamic banking is also available in books, CDs and websites in the form of database, multimedia directories, and encyclopedias. On the Shariah side, there are a number of scholars on Shariah boards of Islamic banks who have compiled Fatwas, resolutions and articles on various issues of Islamic banking and finance. In Pakistan we have at least two very comprehensive reports on Islamic banking system produced by Islamic Ideological Council 1980 and the Commission for Islamization of Economy in 1992. Therefore Islamic banking is not a utopian idea. There is a need to develop insight educate and train the bankers in the Islamic economic and banking system.

ACKNOWLEDGEMENT:

All praise to Almighty Allah, the most merciful and compassionate, who give me skills and abilities to complete this report successfully. I am grateful to my parents who are always been a source of encouragement for me throughout my life and from start to the end of this report. I feel deeply indebted to all my teachers for provision of inestimable, priceless and valuable co operation and support. I would also like to thanks Meezan Bank Limited for provision of valuable guidance and information. I found every one very co-operative and helpful for providing me the theoretical as well as practical knowledge about the function and operation of the bank. Last but not least I would prefer to convey the credit to Hiast Authorities without whose on time support and guidance it would be difficult for me to achieve this task successfully.

Abid Ali Shah (MBA/149)

ABSTRACT:
This Report is specially meant for the student of MBA. It is concerned to a brief study of the operation, Function, tasks and services of Meezan Bank of Pakistan. Banking play very important role in the commerce and economic development of a country. Now-a-days banks are using different modern technologies, which influence the managerial activities that are why I decided to do my internship Training in the bank. Meezan Bank Limited, a publicly listed company, was incorporated on January 27, 1997 and started operations as an investment bank in August that year. In January, 2002 in a historic initiative, Meezan Bank was granted the nations first full-fledged commercial banking license as a dedicated Islamic Bank, by the State Bank of Pakistan. MBL is the largest Islamic Bank in Pakistan with a network of 201 branches in 54 cities. In preparation of this Report I have tried my best to provide all possible information about the operation, function and tasks of MBL in brief and comprehensive form. The report begins with the purpose of making such report than detailed introduction of MBL discussed. It also includes management structure of MBL and different products and services offered by MBL along with their features. It also includes a brief department worked during internship and SWOT of MBL. I have also tried my best to use simple and easy words. To discuss the financial position of MBL financial statements and ratios are also shown. The internship report ends with some recommendation after identification of some problems observed during the course of internship.

Chapter 1

INTRODUCTION TO REPORT

1. INTRODUCTION TO REPORT:

BACKGROUND OF STUDY:
The study is about the general operations and management of Meezan Bank Limited main saddar branch Hyderabad, and focuses on its function and operations, which was conducted through interviews in the branch. Every student of MBA (Management of business administration) has to under go an internship program of six-eight weeks in any organization to get exposure to the real time business environment and to attain practical knowledge about daily operation of that entity. The real purpose of this internship program is to provide an opportunity to the students to see the practical applications of their background professional studies. The repot is a reflection of my experience when I was internee in MBL, main saddar branch, Hyderabad. Meezan Bank Limited, a publicly listed company, was incorporated on January 27, 1997 and started operations as an investment bank in August that year. In January, 2002 in a historic initiative, Meezan Bank was granted the nations first fullfledged commercial banking license as a dedicated Islamic Bank, by the State Bank of Pakistan

1.2

PURPOSE OF STUDY:

It is necessary for the student of MBA that they should be acquainted with practical applications of business studies and should gain business experience. In this connection every student is required to undergo an internship of at least six weeks in any organization. It not only gives us a chance to interact with the people already working there this enable us to get to know the financial institutions concerns atmosphere and business stature in Hyderabad. Purpose of the study was two pronged.

1.2.1 General Purpose

This study offers knowledge and experience of courses studied. To improve the writing and analytical skills of students.

To familiarize the student with the practices and working environment during the internship.

Specific Purpose:
A partial fulfillment as a requirement for the completion of MBA degree. To objectively observe the operations of Meezan Bank of Ltd in general and the operations of MBL, main saddar branch Hyderabad in specific. To get acquaintance to the banking operations. To make recommendations or implementation plans for the improvement of the operations of MBL, main saddar branch Hyderabad in the light of our professional studies.

1.3

SCOPE OF THE STUDY:

The study covers two areas with its variables, which affects the operations of the branch directly, or indirectly. These two areas of variables are: Branch specific variable. Bank specific variable.

The branch specific variables are the variables under the control of the branch management and directly affect its operations e.g. Layout of the branch. Customers relations. Departments in the branch ATM Online banking.

The bank specific variables are those variables, which are not in control of the branch management e.g. 7 History of MBL

Services provided by MBL

Role of MBL

Chapter 2

DATA COLLECTION & METHEDOLOGY

2.Data Collection & Methedology:

During my internship while I was compiling I use the following research methodologies.

Data Sources:
Both primary and secondary have been used in the compilation of this report. The methodology used is as under:

2.1 PRIMARY DATA:

During the compilation of this report, I relied mainly on the primary data. The tools used for the collection of primary data are interviews and observation. To get primary data I also performed some practical work.

2.2 SECONDARY DATA:

The secondary data was mainly used for as a background material and for purpose of references. The major sources of secondary data were the annual report 2010, management accountants journals, newspaper, books, and MBL website.

2.3 Research Approaches

Keeping in view my limitations during and the nature of the study, two research approaches were adopted. These research approaches are: Survey. Observation

2.4 LIMITATIONS:
The Study was subject to the following limitations, the absence of which could made this report more accurate, systematic and factual: have

The very limited period of time was available to conduct the detailed analysis, which delayed procurement of comprehensive and complete per day visit, which also cause some difficulties in obtaining adequate information.

The bank officials because of secrecy of the bank matters didnt answer the number of questions. The non cooperative behavior of some staff members.

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Chapter 3

INTRODUCTION TO MEEZAN BANK LIMITED

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3. INTRODUCTION TO MEEZAN BANK LIMITED:

3.1 INTRODUCTION TO ISLAMIC BANKING:

Islamic Finance: Islamic finance was practiced predominantly in the Muslim world throughout the middle Ages, fostering trade and business activities with development of credit. In Spain and the Mediterranean and Baltic states , Islamic merchants became indispensable middleman for trading activities. In fact European financier and businessmen later adopted many concepts, techniques, and instruments of Islamic finance. The financial system is founded on the absolute prohibition of the payment or receipt of any predetermined. Granted rate of return .this closes the door to the concept of interest and precludes the use of debtbased instrument. The system encourages risk sharing promotes entrepreneurship, discourages speculative behavior, and emphasizes the sanctity of contracts. 3.2 The Islamic Economic System: One of the forms of capitalism, which has been flourishing in non Islamic societies, is the interest based investment. There are normally two participants in such transaction. One is the investor who provides capital on loan and other manager who run the business. The investor has no concern whether the business run in to profit or loss he automatically get interest. 3.3 Riba: Definition of Riba The word Riba means excess, increase or addition, which correctly interpreted according to Shariah terminology, implies any excess compensation without due consideration . (This definition of Riba is derived from Quran and is unanimously accepted by all Islamic scholars)

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TYPES OF RIBA There are two types of Riba . 1. Riba An Nasiyah 2. Riba Al Fadl 1. Riba An Nasiyah: Defined as excess, which result from predetermined interest which a lender receives over and above the principle (Ras ul Maal). 2. Riba Al Fadl: Defined as excess compensation without any consideration resulting from a sale of goods. Commercial Interest And Usury: In 17th century two new technical terms of interest emerged after the established of banking system. Tijarti Sood : Interest paid on loan taken for productive &profitable purposes. Sarfi Sood : Interest paid on loan taken for personal need and expenses. 3.4 Islamic banking: The interest free system envisages the gainful use of ones saving with other on the basis of profit and loss sharing in a defined manner. Effective from Jan 01, 1981, the Nationalized commercial banks and now all other commercial banks in Pakistan have introduced the profit and loss sharing (PLS) Deposit Scheme features of which as under . PLS- Saving Accounts PLS Term Deposit Accounts Investment Of PLS Deposits

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3.5 Modes of Islamic Banking :

MURABAHA Literally it means a sale on mutually agreed profit. Technically, it is a contract of sale in which the seller declares his cost and profit. Islamic banks have adopted this as a mode of financing. As a financing technique, it involves a request by the client to the bank to purchase certain goods for him. The bank does that for a definite profit over the cost, which is stipulated in advance. IJARAH Ijarah is a contract of a known and proposed usufruct against a specified and lawful return or consideration for the service or return for the benefit proposed to be taken, or for the effort or work proposed to be expended. In other words, Ijarah or leasing is the transfer of usufruct for a consideration which is rent in case of hiring of assets or things and wage in case of hiring of persons. IJARAH-WAL-IQTINA A contract under which an Islamic bank provides equipment, building or other assets to the client against an agreed rental together with a unilateral undertaking by the bank or the client that at the end of the lease period, the ownership in the asset would be transferred to the lessee. The undertaking or the promise does not become an integral part of the lease contract to make it conditional. The rentals as well as the purchase price are fixed in such manner that the bank gets back its principal sum alongwith with profit over the period of lease. MUSAWAMAH Musawamah is a general and regular kind of sale in which price of the commodity to be traded is bargained between seller and the buyer without any reference to the price paid or cost incurred by the former. Thus, it is different from Murabaha in respect of pricing formula. Unlike Murabaha, seller in Musawamah is not obliged to reveal his cost. Both the parties negotiate on the price. All other conditions relevant to Murabaha are valid for Musawamah as well. Musawamah can be used where the seller is not in a position to ascertain precisely the costs of commodities that he is offering to sell. ISTISNA_A It is a contractual agreement for manufacturing goods and commodities, allowing cash payment in advance and future delivery or a future payment and future delivery. Istisnaa can be used for providing the facility of financing the manufacture or construction of

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houses, plants, BAI MUAJJAL

projects

and

building

of

bridges,

roads

and

highways.

Literally it means a credit sale. Technically, it is a financing technique adopted by Islamic banks that takes the form of Murabaha Muajjal. It is a contract in which the bank earns a profit margin on his purchase price and allows the buyer to pay the price of the commodity at a future date in a lump sum or in installments. It has to expressly mention cost of the commodity and the margin of profit is mutually agreed. The price fixed for the commodity in such a transaction can be the same as the spot price or higher or lower than the spot price. MUDARABAH: A form of partnership where one party provides the funds while the other provides expertise and management. The latter is referred to as the Mudarib. Any profits accrued are shared between the two parties on a pre-agreed basis, while loss is borne only by the provider of the capital. MUSHARAKAH: Musharakah means a relationship established under a contract by the mutual consent of the parties for sharing of profits and losses in the joint business. It is an agreement under which the Islamic bank provides funds, which are mixed with the funds of the business enterprise and others. All providers of capital are entitled to participate in management, but not necessarily required to do so. The profit is distributed among the partners in preagreed ratios, while the loss is borne by each partner strictly in proportion to respective capital contributions. BAI SALAM: Salam means a contract in which advance payment is made for goods to be delivered later on. The seller undertakes to supply some specific goods to the buyer at a future date 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.

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3.6 INTRODUCTION TO MEEZAN BANK LIMITED:

Meezan Bank Limited, a publicly listed company, was incorporated on January 27, 1997 and started operations as an investment bank in August that year. In January, 2002 in a historic initiative, Meezan Bank was granted the nations first full-fledged commercial banking license as a dedicated Islamic Bank, by the State Bank of Pakistan. Meezan Bank has clearly established itself as the largest Islamic Bank in Pakistan with the largest Islamic Banking branch network in the country. The banking sector is showing a significant paradigm shift away from traditional means of business and is catering to an increasingly astute and demanding financial consumer, who is also becoming keenly aware of Islamic Banking. Meezan Bank bears the critical responsibility of leading the way forward in establishing a stable and dynamic Islamic Banking system replete with dynamic and cutting-edge products and services. During the eight years of its operations as an Islamic commercial bank offering universal banking services to customers, Meezan Bank has been one of the fastest growing banks in the history of Pakistans banking sector. Average growth in deposits has been 55% per annum during this period while the branch network grew from 4 to 201. The Bank has established a strong and credible management team comprised of experienced professionals, that have achieved a strong balance sheet with excellent operating profitability and strong ratios, which places the Bank at the top of the Islamic Banking industry. The Bank has been assigned a long-term entity rating of A+ with a Stable outlook and a short-term entity rating of A1. The Banks main shareholders are leading financial institutions of the Region namely, Noor Financial Investment Company, Kuwait, a leading investment company based in Kuwait; Pak-Kuwait Investment Company, a AAA rated financial entity in the country and the Islamic Development Bank of Jeddah. The established position, reputation, strength and stability, of these institutions add significant value to the Bank through Board representation and applied synergies. The Bank has an internationally renowned Shariah Supervisory Board Chaired by Justice (Retd.) Maulana Muhammad Taqi Usmani, an internationally renowned figure in the field of Shariah, particularly Islamic Finance. He holds the position of Deputy Chairman at the Islamic Fiqh Academy, Jeddah and in his long and illustrious career has also served as a Judge in the Shariat Appellate Bench, Supreme Court of Pakistan. The Board also includes Sheikh Essam M. Ishaq (Bahrain), Dr. Abdul Sattar Abu Ghuddah (Saudi Arabia) and Dr. Imran Usmani who is also the resident Shariah Advisor of the Bank. Dr. Imran is assisted by a

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team of professionals who strictly monitor the regular transactions of the Bank and are also responsible for Product Development.

The bank has developed an extraordinary research and development capability by combining investment bankers, commercial bankers, Shariah scholars and legal experts to develop innovative, viable, and competitive value propositions that not only meet the requirements of todays complex financial world, but do so with world-class service excellence which our customers demand, all within the bounds of Shariah. Meezan Bank has a strong technology focus. It has invested heavily in state-ofthe-art software applications namely Temenos T-24 and Oracle. It has also recently upgraded its hardware platform and also has a hot disaster recovery site in place to cater to any unforeseen eventualities. By implementing robust and aggressive strategic and tactical initiatives on the side of consumer banking, Meezan Bank aims to fulfill its prime target of providing customers accessibility and convenience, within an atmosphere and culture of dedicated service and recognition of their needs. The Bank has a rapidly growing branch network across all major cities nation-wide. At Meezan Bank, we believe in adding value to our customers lives and businesses through dynamic and competitive products and services that fulfill their needs while conforming completely to the dictates of Shariah. At the same time, we endeavor to deliver competitive risk-adjusted returns to our stakeholders

3.7 HISTROY OF ISLAMIC BANKING IN PAKISTAN:

1947 The inception of Pakistan as the first Islamic Republic created in the name of Islam. 1980 CII presents report on the elimination of Interest genuinely considered to be the first major comprehensive work in the world undertaken on Islamic banking and finance. 1985 Commercial banks transformed their nomenclature stating all Rupee Saving Accounts as interest-free. However, foreign currency deposits in Pakistan and foreign loans continued as before. 1991 Procedure adopted by banks in 1985 was declared un-Islamic by the Federal Shariat

17

Court (FSC). The Government and some banks/DFIs made appeals to the Shariat Appellate Bench (SAB) of the Supreme Court of Pakistan.

3.8 HISTORY OF MEEZAN BANK LIMITED:

1997 Al-Meezan Investment Bank is established with a mandate to pursue Islamic Banking. Mr. Irfan Siddiqui appointed as first and founding Chief Executive Officer. 1999 The Shariat Appellate Bench of the Supreme Court of Pakistan rejects the appeals and directs all laws on interest banking to cease. The government sets up a high level commission, task forces and committees to institute and promote Islamic banking on parallel basis with conventional system. 2001 The Shariah Supervisory Board is established at Al-Meezan Investment Bank led by Justice (Retd.) Muhammad Taqi Usmani as chairman. State Bank of Pakistan sets criteria for establishment of Islamic commercial banks in private sector and subsidiaries and stand-alone branches by existing commercial banks to conduct Islamic banking in the country. 2002 Meezan Bank acquires the Pakistan operations of Societe Generale and concurrently Al Meezan Investment Bank converts itself into a full fledged Islamic commercial bank. The first Islamic banking license is issued to the Bank and it is renamed Meezan Bank. President General Pervez Musharraf inaugurates the new Islamic Commercial Bank at a formal ceremony in Karachi. 2003 Meezan Bank establishes itself as the pioneer of Islamic Banking in Pakistan and quickly establishes branches in all major cities of the country. A wide range of products are developed and launched consolidating the Banks position as the premier Islamic Bank of the country Al Meezan Investment Management Limited (AMIM), the asset management arm of Meezan Bank, introduces Meezan Islamic Fund (MIF), the countrys first openend Islamic Mutual Fund. 2004 The State Bank establishes a dedicated Islamic Banking Department (IBD) by merging the Islamic Economics Division of the Research Department with the Islamic Banking Division of the Banking Policy Department. A Shariah Board has been appointed to regulate and approve guidelines for the emerging Islamic Banking industry. The

18

Government of Pakistan awards the mandate for debut of international Sukuk (Bond) offering for USD 500 million. The offering is a success and establishes a benchmark for Pakistan. Meezan Bank acts as the Shariah Structuring Advisor for this historic transaction. 2005 Meezan Bank becomes the first customer of Islamic Insurance (Takaful) by signing the first Memorandum of Understanding MoU with Pak-Kuwait Takaful Company Limited (PKTCL). The signing of this MoU has ushered Pakistan into a new era of Islamic Insurance (Takaful). 2006 A number of new dedicated Islamic Banks, namely Bank Islami and Dubai Islamic Bank, commence operations in Pakistan.Meezan continues its leadership position in the industry by more than doubling it branch network to a total of 62 branches in 21 cities, clearly establishing itself as the largest Islamic Bank of the country. Meezan Bank, becomes the first Islamic bank to introduce 8 am to 8 pm banking at selected branches in Karachi. 2007 Meezan Bank opens up its 100th branch. Two new dedicated Islamic Banks start operations in Pakistan, namely Emirates Global Islamic Bank and Dawood Islamic Bank. 2008 With 166 Branches (including 35 sub-branches) in 40 cities across Pakistan, Meezan Bank is clearly positioned as the leading Islamic Bank in the country. Work starts on the construction of Meezan Banks new Head Office building.The financing and investment portfolio of local Islamic banks reached Rs. 185 billion in December 2008 compared to Rs. 137.6 billion in December 2007. Market share in the overall banking increased to five per cent at end December 2008 compared with four per cent at end December 2007. Total assetsof Islamic banking reached Rs. 271.1 billion in December 2008 compared to Rs. 205.2 billion in December 2007. 2009 Branch network of six dedicated Islamic banks increases to 480 Branches (Including SubBranches) with Meezan Bank having a 42% share of the Islamic Banking branch network in the country with 201 branches in 54 cities accross the country. Islamic Banking's share grows to over 5.5% of the total Banking industry

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3.9 VISION

Establish Islamic banking as banking of first choice to facilitate the implementation of an equitable economic system, providing a strong foundation for establishing a fair and just society for mankind.

3.10 MISSION

To be a premier Islamic bank, offering a one-stop shop for innovative value added products and services to our customers within the bounds of Shariah, while optimizing the stakeholders value through an organizational culture based on learning, fairness, respect for individual enterprise and performance.

3.11 SERVICE MISSION

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To develop a committed service culture which ensures the consistent delivery of our products and services within the highest quality service parameters, promoting Islamic values and ensuring recognition and a quality banking experience to our customers.

3.12 Meezan Bank entity rating of AA- for medium to long term and A1 for short-term
Meezan Bank entity rating upgraded by JCR-VIS: Meezan Bank has received entity ratings of AA- (Double A Minus) for medium to long-term and A-1 (A-One) for shortterm. These ratings have been assigned by JCR-VIS Credit Rating Company, which has also set Meezan Banks outlook on medium to long-term rating as Stable. Meezan Banks ratings are based on its shareholding with world-renowned financial institutions, pioneering role in the industry, strong management initiatives in continuously introducing various range of Islamic products. DEFINITIONS BEING USED BY JCR-VIS CREDIT RATING COMPANY Medium to Long Term AA+, AA, AAHigh: High credit quality. Protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. Short Term A-1: High certainity of timely payment. Liquidity factors are excellent and supported by good fundamental protection factors. Risk factors are minor.

3.13 MEEZANS BRANCH NETWORK:

Alhamdolillah, Meezan Bank has established 201 branches in 54 cities across Pakistan. This is a milestone that is not only the success story of Meezan Bank but also the continuing success story of Islamic Banking in Pakistan. With this extensive network, our existing and potential customers are now closer than ever in attaining Islamic Banking at their doorstep. All branches provide real time online banking facilities to customers. As the first and largest dedicated Islamic Bank in Pakistan, Meezan Bank team continues to build on its Vision of establishing "Islamic Banking the Banking of First Choice". One of the key objectives of the Bank is to have its footprint strategically placed throughout

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the country enabling the public to avail the benefits of Shariah Compliant Banking in their neighborhood.

The Bank is currently segmented into three Regions of Pakistan. The cities in which the Bank presently operates are as follows: Southern Region Hub (Lasbela) Hyderabad Karachi Mirpurkhas Nawabshah Quetta Sakrand Sukkur Tando Adam Tando-Allah-Yar Central Region Arifwala Bahawalpur Burewala Chiniot Daska Dera Ghazi Khan Faisalabad Gojra Gujranwala Gujrat Hafizabad Jhang Kasur Khanpur Khushab Lahore Lalamusa Northern Region Abbottabad Attock Dera Ismail Khan Dina Gujar Khan Haripur Havelian Islamabad Jhelum Kohat Mansehra Mardan Muzaffarabad Nowshera Peshawar Rawalpindi Swat

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Mandi Bahauddin Mian Channu Multan Okara Rahim Yar Khan Sadiqabad Sahiwal Sargodha Sheikhupura

3.14 CORPORATE SOCIAL RESPONSIBILITIY:

Meezan Bank Limited and Islamic Relief sign MOU for launching Islamic Microfinance: Meezan Bank signed an MOU with Islamic Relief, an independent International Relief and Development Organization founded in 1984 in UK with offices in more than 25 countries, for launching Islamic Microfinance in Pakistan. Under the MOU, Meezan Bank will assist Islamic Relief to enhance its Islamic Microfinance operations in Pakistan by capacity building, training and product development support. Public awareness seminars on Islamic Banking: Meezan Bank conducted 24 Islamic Banking seminars in 14 cities across Pakistan during 2009. Customers appreciated this initiative by Meezan Bank and requested that such seminars should be held more frequently since these help them in gaining a better understanding of Islamic Banking. Launch of MBA in Islamic Banking at Riphah University, Islamabad: Meezan Bank Limited and Riphah International University, Islamabad signed an MOU for jointly launching a programme on Islamic Business and Finance for students and finance professionals. Meezan Bank will provide expertise in structuring the course, provide faculty for conducting credit hour courses and for conducting workshops & seminars and share case studies and proprietary research.

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Chapter 4

INTRODUCTION TO DEPARTMENTS

24

(4.A) DEPARTMENTS OF MEEZAN BANK LIMITED

There are 5 main departments at the branch:
CUSTOMER SERVICES DEPARTMENT OPERATIONS DEPARTMENT CASH DEPARTMENT CREDIT DEPARTMENT FOREIGN CURRENCY DEPARTMENT

4.1 CUSTOMER SERVICES DEPARTMENT

Account opening and closing is the function of customer services department. The banks customers includes individuals (single or joint), firm (partnership/proprietorship), Autonomous corporations, Limited companies, Charitable Institutions, associations, Educational Institutions or local bodies. Brief Explanation of these accounts is as follows 4.1.1 Products offered by this department: a) Riba Free Rupee Savings Account Current account Saving Account b) Riba Free Dollar Savings Account Foreign Currency Account 25

4.1.2 BASIC OF ACCOUNT OPENING Account opening is the basic and first relationship, which is established between Bank and the customer. In account opening extreme care has to be exercised in case of completion of account opening documentation. Whenever a client comes in the bank in order to open an account the first information that is given to him/her about the types of accounts, which can be opened, so far this purpose the client is given detailed information about the accounts and their respective profit rates.

4.1.3 TYPE OF ACCOUNTS OPENED 4.1.4 Sub-categories of Accounts and the Basic Requirements: MINOR ACCOUNT Bay form and copy of passport minor National Identity card of Guardian Signature requirement of guardian INDIVIDUAL ACCOUNT Copy of national identity card Complete account opening form Letter of introduction if required Visiting Card (if the person is employed) CURRENT SAVING TERM DEPOSIT

JOINT ACCOUNTS

26

As evident from the name these accounts can be jointly opened by any number of persons. The minimum number of persons required to open a joint account is two but there is no maximum limit. Requirements: National Identity card of all Applicants. Signature of all Applicants. Zakat Affidavit of all Applicants (zakat Examption). Operation of account clearly mentioned. The options available to operate the account are: Jointly Either or Survivor Other(s)(Please specify)

CLUB /SOCIETY/ASSOCIATION [Requirements]: Certified copy of resolution Certified copy of rules Copies of National Identity cards of all directors/passports Completed account opening form Specimen Signature Card

TRUSTS ACCOUNTS Completed account opening form Specimen Signature Card Certified copy of trust deed Copy of rules/by laws Copies of National Identity cards of all trustees

CORPORATE ACCOUNTS ACCOUNTS OF SOLE PROPRIETOR (Requirements) 27

Declaration Letter Copy of NIC/Passport of the proprietor National Tax Certificate Declaration of Sole Proprietor on company letterhead Business registration Certificate Specimen Signature Cards and completed account opening form.

ACCOUNT OF PARTNARSHIP (Requirements) Partnership Deed, certified copy. Photocopies of NIC of all partners. Partnership Mandate (Prescribed Format).

ACCOUNT OF LIMITED COMPANIES (Requirements) List of Directors of company. NIC of all Directors. Copy of certificate of Incorporation. Memorandum of Association. Article of Association. Copy of Board Resolution. Latest Copy of Form-29 Stamp of Company, which is to be affixed on Certificate of Commencement of Business the account opening form.

ACCOUNTS OF LITERATE [Photo Account] These accounts can be opened individually or jointly. For men, the right hand thumb impression and for women, the left hand thumb impression is taken on account opening form. The customer is given advice to come to bank by himself in order to withdraw any cash or deposit the cheque. Requirements: 28 Photocopy of NIC of Account Holder.

Two-three passport size photographs.

4.1.5 PROCEDURES FOR ACCOUNT OPENING First of all, after inquiring from the customer what type of account he/she wants to open, the account opening form is got filled from the customer and signed it. Along with the account opening form, the customer is also signed two Specimen Signatures Cards. After fulfilling all the formalities of account opening, the computer generated account number is given to the customer that is of special series depending on the type of account. REQUISITION SLIP A requisition slip is given to the customer to sign it so that the customer can get chequebook. Chequebook is issued after one day of receiving the requisition slip. LETTER OF THANKS After opening the account A Letter Of Thanks is send to the customer in order to thank the customer for opening an account in the Bank. This letter tells all the information regarding his/her accounts, which are kept very confidential.

ACCOUNT OPENING REGISTER After an account is opened, an entry is made in the account opening register, which has the following columns: Date Account Number Name & Address Telephone Number Initial Deposit

Customer Services/Relation Officer enters the new account opened in computer and the Specimen signature Cards are also scanned so that whenever a cheque of the respective account comes for encashment, the signatures can be verified. 4.1.6 Overall functions performed by Customer Services Department: 29 ACCOUNT OPENING

ACCOUNT CLOSING GENERAL CLIENT DEALING

4.2 OPERATIONS DEPARTMENT

4.2.1 FUNCTIONS PERFOMED: 4.3.1.1 CLEARING 4.3.1.2 REMITTANCE

4.2.1.1 CLEARING In clearing process, if the account holder of MBL receives the cheque of other bank like City Bank, Habib Bank Limited etc, and he submits it in MBL branch to be cashed. At the same time the clearing process starts. First the bank name, Cheque number and the amount are written in the register. After this three kind of stamps are required first bank name stamp, secondly clearing stamp of next date and If the cheque is not local then the inter city clearing stamp is required. Some cheques are local and some are outstation. The institution N.I.F.T. provides the services in clearing the cheque. They send the different cheque to different banks. The N.I.F.T service is only in few cities, like Karachi, Lahore, Rawalpindi. The cheque of inter city is send through N.I.F.T. And where, the N.I.F.T service is not available so the cheque is sent through T.C.S. The clearance of cheque is informed through advice. Some cheque is not passed so they should return so Rs. 100 is deducted and if the cheque is inter city then the postage charges is deducted. For this purpose the Debit & Credit voucher is used. When the cheque is cleared the today stamp is required. Some cheque is drawn on MBL. This is called outward clearing. These cheques will be entered in the outward clearing register. And the advice is sent for the clearance of cheques. The account holder account is credited. Inward clearing Outward clearing

INWARD CLEARING In the morning, the bank receives its own cheques, which have been presented by the customers in some other bank to be deposited in their account. NIFT provides the facility of bringing cheques for inward and also takes the cheques of outward clearing to other banks. The cheques received in inward clearing are the cheques drawn on bank and the bank has to pay for them. For this purpose the bank makes clearing in computer by 30

checking the balances of the respective customer, if their balances are up to the mark then that cheque is cleared and the respective customer account is debited with the respective amount. If the balances are short then that cheque is bounced back to the related bank. Reasons for returning a cheque: All required stamps of Clearing, Crossing and Endorsement are not present on cheques. Cheque is post date. Refer to drawer Effects not cleared, may be presented again Amounts in words and figures differ.

If any of these reasons exists then that cheque is returned through NIFT and deducts Rs. 300 from customer account as cheque returned charges. Then the report of returning any cheque is sent through fax to the head office Karachi. After this put the entry in Cheque return register showing the following columns:

Date Title of account Account number Cheque number Bank and Branch name Reason to return

OUTWARD CLEARING: All the cheques of other banks which are deposited to MBL are presented in outward clearing. This is said as outward clearing because they are presented on the very next day after depositing a cheque. SERVICES PROVIDED BY CLEARING FUNCTION I. TRANSFER OF AMOUNT II. TELLING ACCOUNT BALANCES III. ISSUING CHEQUES BOOKS

31

I. TRANSFER OF AMOUNT If a customer holds two accounts in the bank and he/she wants to transfer money from one account to other account, customer writes a cheque and fills deposit slip in which he/she writes account number to which amount is to be transferred. After making transfer entry in the computer, affix transfer stamp in the middle of the cheque, crossing on the upper left and banks endorsement stamp on the backside of the cheque. II. TELLING ACCOUNT BALANCES Whenever clearing officer receives phone call from the customer inquiring about his/her account balance after confirming the name, address and other information he tells the balance through computer. III. ISSUING CHEQUE BOOKS It is also the duty of department to issue a chequebook when an officer receives request from the customer. 4.2.1.2 REMITTANCE Another important department in MBL is Remittances Department. The remittances department transfers the funds from one bank to other bank and from one place to another place. In remittances department the collection take place. The MBL made payment of only open cheques on the counter and prohibits the payment of crossed cheques. MBL transfers money from one place to another by the following means: a) Pay order b) Demand drafts c) Inward collection d) Outward collection a) PAY ORDER: Pay order is an order to pay money but this payment is to be made within city. In other words it can be said that the payee and the payer should be in one city. In pay order the payment can be made in A) Cash B) Clearing C) Transfer PROCEDURE: In case of pay order first of all the customer has to fill a pay order application form in favoring section: name, account number, amount, beneficiary name, address, etc. 32

The data is entered in already set format of pay order in computer and pay order print out is taken. An authorized person and manager operations are signed pay order. The original copy of the pay order is given to the customer and carbon copy is kept with bank for office record. b) DEMAND DRAFT An order to pay money to the payee who is residing outside the city. DD can be for a customer who may or may not have an account in the bank but the other persons account must be maintained with the bank for which the payer has demanded the DD. c) INWARD COLLECTION When the bank receives cheques of any other bank from its any branch situated in the some other city, then those have been dealt as inward collection. 4.2.1.3 OTHER FUNCTIONS UNDER OPERATIONS DEPARTMENT a) LOCKERS Lockers operations shall not be permitted under power of attorney of a customer. A customer wishing to allow another person or agent may be requested to open a new locker account under joint names and close the existing account. In offering this facility branches have to be selective and should provide lockers to the customers whose identity and integrity is verified, who should maintain account with the branch and have potential for deposits and other banking business. It is reiterated that honesty, creditability and good reputation of the customer is of utmost importance in the selection of customer for lockers. KEY FEATURES: Procedure b) Cheque Books Handling Application on Prescribed Form duly filled Saving/Current Account with MBL 02 Passport size Photographs Available in selected branches Available in 3 sizes (small, medium and large) For all eligible Account Holders Key security Deposit PKR 3000

33

Application for New Cheque Book

4.2.1.4 RIBA FREE TERM DEPOSITS OFFERED BY BANK The following products are handled under the operation department. Certificate of Islamic Investment Monthly Mudarabah Certificates Dollar Mudarabah Certificates Meezan Amdan Certificates Meezan Providence Certificat

4.3 CASH DEPARTMENT

The cash department is the most important department of the bank. It receives cash from customers and then deposits it into the accounts of the customers and maintained their balances. This is the most important and critical department in a Bank. There are two basic functions performed by the cash department. These are 4.3.1 Receipts An individual who has account in the Bank can deposit money in his account. For deposit of the money the individual has to fill the deposit slip in which the account holder writes his name, Account number, amount of the money both in figures and in words. After filling the deposit slip the Cash amount along with the deposit slip is submitted with the cashier. The cashier collects the cash and counts it and after verification the cashier stamps the deposit slip. One part of the deposit slip is given back to the customer and the other part of the deposit slip remains with the bank for the record purposes . The cashier also record the deposits made by the customers in credit sheets daily. The deposits of all customers of the bank are controlled by mean of ledger account. Every customer has its own ledger account and has separate ledger cards in which his / her total record is kept. Bill collection is also one of the main functions of bank. Cashier has to prepare a list of bills serial number, a copy of which is to be sent to the corresponding organization.

34

4.3.2 Payments The procedure of clearance of a cheque or payments is as following. First of all the customer presents his cheque to the cashier. The cashier records the account number and the amount, which is to be drawn. Then the cashier check the cheque number in the computer for the verification whether the account holder has such amount in his account which he is demanding or not. If the computer passes the cheque, the Passing officer signs the cheque and sent it to the cash counter then cashier pays the written amount to the customer and then in the end cashier records the amount paid in computer. 4.3.3 In cash department following books are maintained. Scroll book Paying book Cash balance book

SCROLL BOOK When cash is received at the customer it is recorded in the scroll book. PAYING CASH BOOK The cashier makes entry in the paying cashbook when cash is paid. CASH BALANCE BOOK The consolidated figure of receipt and payment of cash is entered in cash balance book.

4.4 CREDIT / FINANCE DEPARTMENT

The basis function of the bank is to accept deposit and lend money to the borrowers against a spread so to be able to give some profit to the depositors as well as to earn profit for the bank. The main function of the credit department is to lend money to the customer. MBL lends money in the form of clean advances against promissory notes as well as secured advances against tangible and marketable securities. Islamic Financing for the following: Corporate SME Personal

4.4.1 Type of customer and products offered by MEEZAN BANK LIMITED Consumer finance Easy Home (housing finance)

35

Car Ijara (auto finance) Working Capital Finance Project Financing for existing Corporate having expansion or BMR requirements Islamic Export Refinance Facility (Part I and Part II) Trade Related Services Working Capital Finance Project Financing, Expansion or BMR Requirements Islamic Export Refinance Facility Trade Related Services

Corporate Banking

Commercial Banking

SME Banking Working Capital Finance Project Financing, Expansion or BMR Requirments Islamic Export Refinance Facility Trade Related Services

Investment banking Syndications & Structured Finance Project Financing Financial Advisory Services

4.5 FOREIGN CURRENCY DEPARTMENT

The account dealing with the foreign currency is called foreign currency account. Meezan home Remittance provides Quick Remittance in major currencies i.e. USD GBP

36

Euro JPY
CHF SGD AUD

4.5.1 Product of MBL for foreign currency Riba Free Dollar Savings Account Foreign Currency Account Meezan visa dibit card Dollar Mudarabah Certificates

With a minimum of only $100 you can open a Dollar Saving Account with us under a Mudarabah arrangement that is strictly in conformity with the principles of Islamic Shariah. The return earned on the Mudarabah pool is calculated every month and the profit ratio for all investors is declared at the beginning of the month. If you maintain a minimum average monthly balance of $ 500, you shall be eligible to receive profits that shall be credited to your account every month.If any person wants to import goods from foreign, an account is required and for international trading the FC is needed. MBL provide foreign currency on Pak rupee at booking rate and the central office sent Rates In foreign currency department the remittance is sent through Foreign Telegraphic Transfer. The account holder can sent the amount in foreign bank account. If any transaction is made the daily report is given to the central office Karachi daily. Different accounts can be open like joint account or company account. The thankful letter is sent for opening the foreign currency account to account holder and introducer. When any transaction is made the bank inform stock exchange daily. The foreign currency note is counted and recorded in the cash memo book. The people in the foreign country sent the amount through S.W.I.F.T. Weekly and monthly report of all the transaction is given to the stock exchange. Cheque book is also issued to the account holder & the foreign currency Account number is given to him. In this FBC & FBR is done. Debit Credit Voucher is used. The charges are deducted while closing the foreign currency account. And the cheque book is return while closing the account. The branch sent excess foreign currency to its main branch. If any branch needs foreign exchange they sent to this branch

(4.B) ORGANIZATIONAL STRUCTURE OF MBL:

4.1 SHARIAH SUPERVISORY BOARD
37

The letter and spirit of Islamic Banking rest upon absolute adherence to the Shariah. The foundations of a strong Shariah underpinning at Meezan Bank were laid from the beginning. A world renowned Shariah Supervisory Board and a highly qualified and experienced in house Shariah Advisor are fundamental aspects of the Bank's core USP. The primary role of this board is to maintain and further strengthen this commitment and to ensure strict Shariah compliance in all the Bank's operations. The members of the Shariah Supervisory Board of Meezan Bank are Internationally-renowned scholars, serving on the boards of many Islamic banks operating in different countries. The members of the Board are: Justice (Retd.) Muhammad Taqi Usmani (Chairman) Dr. Abdul Sattar Abu Ghuddah Sheikh Essam M. Ishaq Dr. Muhammad Imran Ashraf Usmani (Advisor)

4.2 BOARD OF DIRECTORS:

The Board of Directors of Meezan Bank are: H. E. Sheikh Ebrahim Bin Khalifa Al-Khalifa (Chairman)(Minister of Housing, Ministry of Housing, Kingdom of Bahrain) Mr. Naser Abdul Mohsen Al-Marri (Vice Chairman) Mr. Jassar Dakheel Al-Jassar

38

Mr. Rana Ahmed Humayun Mr. Mohammed Azzaroog Rajab Mr. Ahmed Abdul Rahim Mohamed Mr. Nawal Ahmed Mr. Alaa A. Al-Sarawi Mr. Mian Muhammad Younis Mr. Irfan Siddiqui (President & Chief Executive Officer) Mr. Ariful Islam (Chief Operating Officer)

4.3 SHAREHOLDING STRUCTURE

Share Holders Rs. in million %

Noor Financial Company, Kuwait

Investment

3,429

49.11

39

Pakistan Kuwait Investment Company (Pvt.) Limited

2,095

30.00

Islamic Development Bank, Jeddah

651

9.32

Others Paid up Capital

808 6,983

11.57 100 %

4.4 THE MEEZAN TEAM

Meezan Bank is managed by a team of professional bankers committed to the cause of Islamic Banking. This single unifying factor unleashes the tremendous power of a dedicated and motivated team committed to fulfilling the Vision and Mission of this Bank. The business segments of the Bank are: Corporate Banking Investment Banking Commercial Banking and SME

40

Consumer Banking Treasury & Financial Institutions Asset Management (managed through a subsidiary Al Meezan Investment Management Limited.)

Retail Banking is organized in seven regions across Pakistan, namely South-I Region, South-II Region, South-III Region, Lahore Region, Faisalabad Region, Multan Region, and North Region.

Chapter 5

MY WORK EXPERIENCE

4.5 ORGANIZATIONAL STRUCTURE

41

42

Chapter I

5. MY WORK EXPERINCE

Introduction to Report

43

It was very good experience of internship at Meezan Bank . I was introduced to different aspect of money , banking and finance and found this field very interesting .This report comprises my eight weeks of internship at Meezan Bank . Now first of all I described the job description of the branch employees and what I have learned from different department .

5.1

1st week

I started my first day of internship with the introduction of bank employees and with introduction of bank departments. In This week just know how work done in the various departments in the bank Like: Finance Marketing IT Operation Management etc I knew about the purpose of the bank and the functions of the bank and judge the practical performance of the departments. I started my second day of internship with the lecture of the bank officer. He told us about Riba and its types: Riba al Nasiah Riba al Fadl Then he told about important element Basic Mode of Financing in which Mudaraba and Musharaka lies. I learnt about characteristics and procedure of Mudaraba and Musharaka. Then I moved to Accounts Department for learning something new. I learnt about IBTDR (Islamic Bank Term Deposit Receipts) and knew what its meaning and functions. Basically IBTDR involves Accounts: Saving Deposit accounts Term Deposit accounts

44

I knew about different types of saving accounts like MBA (Meezan Bachat Account), KMA (karobari Munafa Account), COII, MMC, MAC and etc. these are MUDARABA based deposits products.

I learnt about the profit rates of the accounts and procedures to open these accounts.

I learnt about also CDR (Call Deposit Receipts) and its procedure and knew its purpose and how to fill it an proceed.

5.2

2nd & 3rd week

I started this week with the lectures of the Bank officer about bank and its performance. I learnt the actual means of practical work in the bank. First of all I started my work in the ACCOUNT OPPENING DEPARTMENT of the bank in which I learnt how an account can be opened in a bank, which documents are necessary to attach it with the account opening form and how many kinds of account are used in bank like Single Joint personal Sole proprietorship personality The other information related to the a/c filled on choice of applicant. The signatures are done on form as well as on the specimen signature card from where the signature will be scanned as a record in computer Partnership Limited company Select the nature of a/c Attested photo of applicant Then the permanent address NIC copy. occupation The reference of any person who has already the a/c or any respected

The requirement for opening these types of a/c are

45

 Trusts Clubs Association etc. The requirement for opening these types of a/c are 5.2.1 For partnership Attested photocopy of CNIC of all partners Attested copy of Partnership Deed duly signed by all partners of firm. Attested copy of Registration Certificate with register of Firm. In case the partnership is unregistered this fact should be clearly mentioned on the a/c opening form Authority letter, in original, in favor of the person authorized to operate on the a/c of the firm. 5.2.2 5.2.3 For Joint Stock Company Resolution of Board of Directors for opening of a/c specifying the person(s) authorized to operate the company a/c Memorandum and articles of association. Certificate of incorporation Certificate of Commencement of Business Attested photocopies of CNIC of all directors List of directors on Form 29 issued by the Registrar Joint Stock Company For Clubs, societies and Associations Certificate copies of Certificate of registration By- law / rules &regulations Resolution of the Governing Body / Executive Committee for opening of a/c authorized the person to operate the a/c and attested copy of the CNIC of the authorized person(s) As understanding signed by all authorized persons on behalf of the institute mentioning that when any change takes place in the persons authorized to operate on the a/c, the banker will be informed immediately.

46

5.2.4 5.2.5

For Agents a/c Certificate of power of Attorney Attested photocopy of CNIC of the agent. Trusts a/c Attested copy of Certificate of Registration Attested photocopy of CNIC of all the trustees Certified copy of instrument of Trust.

"The most difficult task related to bank for a common citizen is to open an a/c in any bank" said Sir Tanveer. Then the two applicant forms are filled in front of me. It took too much time to gather the information from applicant. form. I practically performed how letter of thanks attached to the forms and send to the customer. I learnt about the different types of stamps, which are necessary for the account opening and learnt about the use of the stamps at the right place. I learnt how to attach signature specimen card to the account opening form for bank record. I filled up some forms for practical practices and knew about the nature of the

5.3

4th Week

I started my week of internship with the daily lectures of the bank officer (Mr. Subtain [OGII]) who is the organizer of internship program for internees in meezan bank. I learnt about the role of STATE BANK OF PAKISTAN in Pakistans economy from the lecture and know about the prudential regulations briefly not explanatory which are Regulation M-1 Know Your Customer (KYC) Regulation M-2 Anti-Money Laundering Measures Regulation M-3 Record Retention Regulation M-4 Correspondent Banking

47

Regulation M-5 Suspicious Transactions In account opening department I learnt the use of ATM card and learnt how to fill ATM form. Then I know how to receipts are filled. I learnt how on line payments are made and how cash or receipts are transferred. First of all I learnt about ATM PIN ISSUANCE procedure and knew why it is necessary for customer or account holder. Then he showed us module in computer that how he enters the data of customer and how it proceeds. After proceeding computer shows a pin number that is issued for that customer who filled the form for ATM. And this work is done means pin issuance by Head Office. Then I learnt about the term ATM Cash Replenish. He told us that how it works and what its procedure and why it is used.

5.4

5th Week

I started my working day with some work, which has to complete from the previous week with account opening forms. I learnt about inward and out ward clearing and learnt how the transactions are made. I learnt how to write the inward clearing cheques in the transaction record book. I learnt to deduct the return cheques from the added amount of all cheques. I learnt the entry of pay orders in the record book. Know how of employees.

48

THEN I started my work again in Accounts Department. The officer also does/handle the other work Like REMITTANCE department. I learnt about the PAY ORDER and DEMAND DRAFT. He told us the difference of Pay Order and DD. I learnt also about the procedure of it. I also saw the Pay Order cheque and knew about its attributes. But DD is not made in Sahiwal Branch. But sometimes if necessary then they made it. But mostly Pay Orders are made and send it to other cities also. Only Meezan Bank provide this opportunity of Pay Order to send outside the city also. I also learnt about the facility of LOCKERS and its functions. Lockers have 3 types of it: Small Size Lockers Medium Size Lockers Large Size Lockers The officer told us its functions and charges and I knew about that how can hold locker and which documents are required for getting the lockers. Lockers are the fire proof. I attended the weekly meeting of bank manager with employees and attended the lecture about modern way of banking delivered by the bank manager for the success if the branchs business.

5.5

6th & 7th week

I started my day with the daily lecture and general discussion about banking and scope of banking in Pakistan in coming years. I revised all practices according to account opening departments and cleared my all confusion related to that department trough got work in that field. I gave my feedback as a internee about the environment of the bank and about my work experience in that department

49

I started my day with the daily lecture about Bank. After that I went to ACCOUNTS DEPARTMENT and started my work. First of all I cleared my all confusions about the previous topics then I started to learn further.

I learnt about FTT (Foreign Telegraphy Transfer) also known as SWIFT Message. In it I knew that how can get and send money from and to foreign countries. He told us its procedure and function. I knew about how the message can create and what sources are used for it. Then I learnt about SMS ALERTS. He told us its function and I knew about that what information is required for its activation and what information it gives to customer through SMS.

I learnt what are the Local Posting and Online Transferring and how it is done. Then I learnt what Stop Payment is and how it is performing and what its terms and conditions. I knew about what Account Closing is and what its procedures to close it and what charges are required for it. Then I saw the module of daily Accounts and Expense Entries posting. And knew about the reason of entering it.

5.6

8th Week

I started my 8th week of internship with the lecture of the Bank Manager who is Mr. Shoaib, the lecture was about Islamic banking and its differences in convention banking. I knew about the Shariah and the sources of Islamic Shariah. Then I learnt about Islamic Banking and knew what its actual meaning. In Islamic Banking a term Riba Free is used which means Avoid Interest. Islamic Banking is a system of Trade where Goods and Services are sold and Capital is invested to earn Halal profit by taking Risk.

50

Interest Free Banking is subset of Islamic Banking concept representing a number of Banking Operations which avoid Interest. I learnt about Convention Banking which is based on Pricing money and earning Interest. Apparently Islamic and Convention Banking may look same but Islamic Banking is permissible means AllahChapter 6 trade and forbidden Riba. has permitted I learnt about difference b/w Islamic and Convention Banking up to some extent. Then I moved to next department that was ACCOUNTS DEPRTMENT.(with the hold ofANALYSIS OF ORGANIZATION IT deptt, Remittance deptt) I started my work in Accounts Department. The Officer who is Mr. Faysal gave the overview of his working that he does. I learnt about cheques how to fill them and knew about its functions. I learnt that in banking cheque is known as Dr. Instrument. Then I learnt about cross cheque and cross cheque has two types: Simple crossing Special crossing

I knew also another type of cheque that is Order Cheque and its

purpose and

function. That day I learnt about cheque procedure and its use in different ways.

5 51

5 52

6. ANALYSIS OF ORGANIZATION:
(A) SWOT ANALYSIS: 6.1

Strengths:
First exclusive Islamic bank. The largest Islamic Bank in Pakistan with a network of over 204 branches in 54 cities. And ending this year they have increase his branches in Pakistan to 280 branches. Strong growth of its Islamic banking SBU. The members of the Shariah Supervisory Board of Meezan Bank are Internationally-renowned scholars, serving on the boards of many Islamic banks operating in different countries. Meezan Providence Certificate is a long-term investment certificate specially designed to cater to the needs of corporate and business concerns for purposes of investing their Provident, Pension and Gratuity Funds. As any prudent investor, your main concerns would be total security along with the best returns possible, especially as these funds are a trust from your employees and one that bears an important responsibility. Karachi, August 20, 2008: Meezan Bank, the largest Islamic Bank in Pakistan has been conferred the Best Islamic Bank Award by Rawalpindi Chamber of Commerce and Industry. The Chief Minister of Punjab Mr. Shahbaz Sharif bestowed this award to Mr. Saleem Khan Regional Manger - North, Meezan Bank at 21st RCCI achievement Chapter I awards ceremony held at the Convention Center in Islamabad. Dedicated and professional staff Shariah board of renowned scholars Healthy working environment Strong shareholding

Introduction to Report

5 53

6.2

Weaknesses:
High charges for different activities such as online or Demand Draft as compared to competitors. lack of promotions and advertising of their products and services. Lengthy & extensive documentation Centralized procedures making process slow Weak marketing strategy, Target market not identified Offering fewer services than the competitors Risk Averse, approach of Head office. The Islamic economic system is not something that can work in isolation of the geo-political and legislative system, as well as, and more importantly the society's behaviors towards the injunctions of Islamic Shariah in personal and collective matters. Accordingly, one can easily imagine that in an economy whereby most of the businessmen are not honest in fairly presenting the financial statements of their businesses, how difficult it is to introduce a profit-and-loss sharing based financial solution. Meezan Bank Limited has no Credit card facility Restricted Shariah based policies

6.3

Opportunities:
House financing sector can be targeted to maximize the profit. Growing demand of Islamic financial product and services. Venturing into Islamic groups out side the countries as opportunity to expand business in UAE and Golf states. i-e financial institutions. Coming up with. Products for the SME to targeting the medium level customers.

54

Doing business with companies having Islamic mindset. I-e Islamic financial Institutions. Increase branch network within the country.

6.4

Threats:
New competitors setting up their Islamic banking sections and they have the infrastructure, skill, ability, resources & attitude to capture the market more than the Meezan bank. High Interest Rate from SBP SBP has not special policy regarding Islamic Banking. Disassociation of Maulana Taqi Usmani from the Shariah advisory board of Meezan Bank. Govt. policies are mostly for conventional banking system not for specially designed for Islamic banking. Change in Government's attitude towards Islamic banking. Fears on the credibility of Islamic banking ethical compliance and monitoring systems.

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

55

(B) RATIO ANALYSIS: Liquidity Ratio:

It is the relationship between the current assets and current liabilities of a concern. Current Ratio = Current Assets/Current Liabilities

Year Current Assets Current liabilities Current Ratio

2006 6812761 3242446 2.1

2007 10212269 4848440 2.10

2008 9373577 3607766 2.59

2009 7108685 5065513 1.4

Liquidity Current Ratio

3 2 1 0 1 2006 2 2007 2008 3 2009 4 2.1 2.1 2.59 1.4

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Solvency Ratio:
Debt equity Ratio = Debt liabilities/ Net assets Year Debt liabilities Net assets Debt equity Ratio 2006 24408794 6812761 3.58 2007 36826824 10212269 3.60 2008 57864137 5706656 10.13 2009 74325579 5974978 12.4

Debt Equity Ratio

20 10 0 Series1 1 3.58 2006 2 3.6 2007 3 10.13 2008 2009 4 12.4

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Profitability ratio:

Year Net Profit margin Gross profit margin Return on capital employed

2006 18.5 43.83 .018

2007 17.80 45.86 0.0020

2008 16.27 46.39 .0022

2009 8.27 54.61 .0024

Profitability ratio
0.02 0.01 0 Series1 1 0.018 2006 2 0.002 2007 3 0.0022 2008 4 0.0024 2009

Return on capital employed =(PBIT / Capital employed)*100 PBIT = Core banking income before provision Capital Employed = Equity + Long term liabilities 2009 2008 2007 2006 6341 + 11025091 = 11031432 5720 + 57864137 = 57869857 4763 + 36826824 = 36831587 3821 + 24408794 = 24412615

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Investment Ratio:
Year Earning Per Share Price Earning Ratio Dividend Per Share 2006 1.16 15.92 16 2007 1.88 10.51 10 2008 1.96 15.2 20 2009 1.26 17.03 8.6

Earning Per Share

4 2 0 Series1 1 1.16 2006 2 1.88 2007 3 1.96 2008 4 1.26 2009

In 2008the per share earning is good but it decreases in 2009 1.96 to 1.26 so the management has to give attention here.

59

Price Earning Ratio

20 10 0 Series1 1 15.92 2006 2 10.51 2007 2008 15.92 10.51 3 15.2 2009 4 17.03 15.2 17.03

Here the management has recovered their position and improved.

Dividend Per Share

25 20 15 10 5 0 1 2006 20 10 8.6 3 2008 2009 4

16

2 2007

The dividend has decreased 20 to 8.6 R.s. This is very bad for companys good will or stock market. Management has to focus over it other wise the company has to bear more loss in future.

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Capital Adequacy Ratio (Capital to Risk (Weighted) Assets Ratio):

Chapter 7
Year Average Ratio Average Equity 2006 2007 2008 1.67 1.57 1.70 16.70 15.64 RECOMMENDATION 10.30 & 2009 .82 18.39

CONCLUSTION
Average Ratio 2 1.5 1 0.5 0 1 1.67 1.7 0.82 2 3 4 2006 2007 2008 2009

1.57

Average Equity 20 15 10 5 0 1 16.7 18.39 10.3

15.64

2 3 4 2006 2007 2008 2009

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6 62

7.RECOMMENDATION & CONCLUSTION:

RECOMMENDATIONS:
On the basis of my experience with bank during the course of internship, I recommend following suggestions:

7.1 PERFORMANCE APPRAISAL:

In the case of performance appraisal, management should evaluate the performance of the employees on merit and recommend their increments and promotions only on the basis of real performance. Employees should be treated unbiased and appraisal should be performance based not favoritism and likeness based. This not only appreciates the employee but also improves his work and satisfaction, his practice will surely encourage and motivate the employees for improving their individual performances, which will lead towards overall improve in the situation.

7.2 PROPER JOB ROTATION:

Employees should be rotated after certain periods in order to enhance their capabilities and make them able to compete in the changing environment of the market. In this way, they will feel interested during working in different departments. The best way to improve employees performance is to revolve them within organization often a specified Chapter I period of time. They will not only have leaning and training opportunities butt also they feel attractiveness in doing new job and his performance improves.

7.3 FAIR BENEFITS:

Although most of the employees are unsatisfied but even then turnover rate is low. This is due to the reason that some of them are on contractual bases so that they cannot avail market offered opportunities. On the other side they may not be getting better opportunities. Although the return is low for them yet it is reasonable, thats why they are

Introduction to Report

6 63

still hero. They should be awarded with more benefits to improve their performance and overall productivity, as satisfaction of internal customers leads towards satisfaction of external employees.

7.4 OVER LOAD OF WORK:

The problem, which I have noticed faced by the employees in absence of an employee, can be removed by hiring two employees in each department. In absence of any of the employee other will be able to do whole work and employee from other department have not to interfere in this department This will decrease over load of work. Problem of shortage of employees can also be removed by adopting the abovementioned recommendation.

7.5 CREDIBILITY OF CUSTMERS:

Cheques, which are drawn on Meezan Bank branch and returned unpaid in clearing, are not reflected in the statement of account of the customers. These cheques must be reflected in the accounts so that credibility of the customers may be assessed.

7.6 CUSTOMER RELATIONSHIP:

Knowing the customers and their needs is the key to business success. By attitude the manager can improve the relationship with the customers. By having the understanding, what a customer wants, the manager can improve the relationship with the customers. Meezan Bank should understand that the commitment to satisfy customers needs must be fulfilled within a professional and ethical framework. They should observe a culture of high ethical standards, based upon development of right attitude. Although Meezan Bank has been improving its corporate behavior, even then they should continue their effort for better corporate behavior. There is a need of improving customer relations in Meezan Bank. For attitude improvement special courses should be arranged under specialized teachers, through lectures, seminars and other interactive techniques. It will cost the bank but will be more profitable for the bank in the long run.

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7.7 EMPOWERMENT OF EMPLOYEES:

Commitment is a function of empowerment down the line, therefore, the future of Meezan Bank lies in the fact that they should remain committed and necessary empowerment should flow regularly to lower levels of hierarchy, so that the performance delivery is made more flexible. With the empowerment of lower level employees they will feel secure in the organization and they will work with devotion for the betterment of the organization.

7.8 MARKETING CULTURE:

The employees should be given special training for marketing. Proper action should be taken for marketing so that the increased sale of different products will result in increase of the profit of the bank. The employees of the bank should be trained with the basic concepts of the marketing under the guidance of the experts.

7.9 HEALTHY ACTIVITIES:

There is lack of healthy and entertainment activities like excursions on weekend, parties and other important days, celebration in their tidy life. Such activities should be encouraged at once in a month.

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CONCLUSIONS:
One of the most important aims of the student life is to express him / her correctly and adequately. This was believed in my mind when I first decided to go to Islamic Meezan Bank Limited to complete my internship program. The organization has been not growing both in size and profit for past few years and but repute in the market is good. The employee turnover is very high which they have to cut down as they are losing a number of good trained employees due to its poor policy. The year 2008 is expected to offer increased competition in the secured assets business as more Islamic banks are in the market. With their focused strategy and product development initiatives planned for the year, Meezan Bank is strongly positioned to meet these challenges. The bank has very well repute in the market. Overall bank is going well and doing a good business but there are few problems for that I have tried to give few recommendations that might help company to improve. So finally this internship program has helped me a lot in gaining practical knowledge of job that will help me in the practical life once I complete my MBA.

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BIBLIOGRAPHY:
Decenzo. David, A. and Stephen P. Robbins, (2004,). Human Resource Management. USA: John Willey and Sons Inc. Ohani, MA. (2008) Advanced Accounting, Lahore; PaR-Imperial Book Depot. Meezan Bank Ltd. (2005). Credit Manual, Karachi. Meezan Bank Ltd,. (2005). Manual. Karachi. Meezan Bank Ltd,, (2006). Annual Report. Karachi Dr Asrar H. Siddiqi (2002) Practices and Law of Banking In Pakistan

Dr . Muhammad Imran Ashraf Usmani (2002) Islamic Banking.

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