Final Report on Meezan Bank

INTERNSHIP REPORT ON MEEZAN BANK ABBOTTABAD(1501)

BY Mubasher Nazir BBA HONS (Finance) ROLL NO: 8768 SESSION 2005-2010

HAZARA UNIVERSITY MANSEHRA

HAZARA UNIVERSITY MANSEHRA.

Internship Report on Meezan Bank Abbottabad

This Internship Report Is Submitted In Partial Fulfillment Of The Requirements Requirements For The Degree Of Bachelor Of Business Administration Awarded Awarded By The Hazara University Mansehra

HAZARA UNIVERSITY MANSEHRA


HAZARA UNIVERSITY MANSEHRA Approval Sheet

Approval Committee

1. Exter Externa nall Exam Examin iner er

Mr. _____________________________ ___________________________________________ ________________ __ Signature_______________

2. Su Supe perrvis visor

Mr. _____________________________ ___________________________________________ _______________ _ Signature_______________

3. Head Head of of Dep Depar artm tment ent

Mr. _____________________________ ___________________________________________ ______________ Signature ________________ ________________


Dedicated To My dearest Parents and My Respected Teachers who motivate and encourage me in every aspect of my life and a few Special Friends who have been supporting supporting and cooperating with me to accomplish this task.


ABSTRACT Modern banking system was introduced into the Muslim countries at a time when they were politically and economically at low ebb, in the late 19th century. With the passage of time, however, and other socio-economic forces demanding more involvement in national economic and financial activities, avoiding the interaction with the banks became impossible. As countries became independent, the need to engage in banking activities became unavoidable and urgent. Governments, businesses and individuals began to transact business with the banks, with or without liking it. This state of affairs drew the attention and concern of Muslim intellectuals . The Islamic banking begins here. The history of interest-free banking can be story of interest-free or Islamic

divided into two parts. First, when it still remained an idea; second, when it became a reality. The literature of the period begins with evaluations and ends with attempts at finding ways and means of correcting and overcoming the problems encountered by the existing banks. During the last few decades interest-free banking attracted more attention, partly because of the political interest it created in Pakistan and partly because of the emergence of young Muslim economists.

Meezan bank is the first Islamic bank and is therefore recognized as one of the pioneer banks that promotes Riba-free (interest free) banking activities all over the country. The bank has develo developed ped an extrao extraordi rdinar nary y resea research rch and develop development ment capabil capabilit ity y by combin combining ing invest investmen mentt bankers, bankers, commercial commercial bankers, Shariah scholars and legal experts to develop develop innovative, innovative, viable, and competitive value propositions that not only meet the requirements of today’s complex financial world, but do so with the world-class service excellence which our customers demand, all within the bounds of Shariah.



TABLE OF CONTENTS

Acknowledgments

i

Preface

ii

Executive Summary

iii

CHAPTER 1 Introduction to Report

1.1

Background Of The Study

01

1.2

Purpose Of The Study

01

1.3

Scope Of The Study

01

Research Methodology

02

1.5

02

Scheme Of Study

CHAPTER 2 Introduction to Banking

03

2.1

Evolution Of Banking

04

2.2

Fairly Growrh

04

2.3

(1628- 1786 BC )

04

2.4

687 BC

04

2.5

Modern Banking

04

2.6

Type Of Banking

05

2.7

Development Of Banking In America

07

2.8

National Bank Act

07

2.9

Banking Act 1935

07

2.10

Banking in Pakistan

07


CHAPTER 3 Introduction To Islamic Banking

09

3.1

Islamic Finance

09

3.2

The Islamic Economy system

09

3.3 3.3

Thee Impor Th mporttance ance Of Econ Econom omiic Goal Goalss

09

3.4

Islamic Theory

10

3.5

The Islam View

10

3.6

Capital can be Invested in a Business venture

11

3.7

Riba

11

3.8 3.8

Comm Commer erci cial al int interes erestt and and usuey suey

12

CHAPTER 4 History Of Meezan Bank

`

15

4.1

1997-2009

15

4.2

Meezan Bank Vision And Missions

16

4.3

Corporate Values

16

4.4

Background Review

19

CHAPTER 5 Comprehensive Business Solution

22

5.1

Corporate And Commercial Banking

22

5.2

Largest Branch Network

23

5.3

Financial Banking

24

5.4

Service Quality

25

5.5

Quaid’s Concept Of Islamic Banking

25

5.6

Riba Free Banking Objective

25


CHAPTER-6 Meezan Team

26

6.1 6.1

Trea Treassury ury And Fina Financ nciial Int Intuit uition ion

28

6.2

Economic Our View

28

CHAPTER 7 What I Have Learn As A Internee

32

8.1

Account Opening

35

8.2

Issuance Of Cheque Book

26

8.3

Certificate Of Islamic Investment

39

8.4 8.4

Inve Invest st In Cert Certif ific icat atee Of Isla Islami micc Inve Invest stme ment nt

39

8.5

Call Deposit Receipt

40

8.6

Cheques For Collection

42

8.7

7th And 8th Weeks At Meezan Bank

43

CHAPTER 9 Financial Analysis

46

9.1

Common Size Analysis

46

9.2

Ratio Analysis

53

CHAPTER 10 Swot Analysis

58

10.1

Strengths

58

10.2

Weaknesses

58

10.3

Op Opportunities

59

10.4

Threats

59

CHAPTER 11


Conclusions

60

11.1

Financings

60 60

11.2

Term Structure Of Investment By 20 Islamic Bank ,1988

61

CHAPTER 12

Recommendation

66

12.1

Performance Appraisal

66

12.2 12.2

Prop Proper er Job Job Rota Rotattion

66

12.3

Fair air Benef nefits

66

12.4

Overload Of Work

67

12.5

Credibility Of Customers

67

12.6 12.6

Cust Custom omer er Rela Relati tion onsh ship ip

67

12.7 12.7

Empo Empowe werm rmen entt Of Empl Employ oyee eess

68

12.8

Marketing Culture

68

12.9

Health Activities

68

References

70

Bibliography

71

Appndex

75


Acknowledgements

Allah is very Kind, Merciful and Compassionate. His benevolence and blessings have enabled me to accomplish this task.

I highly appreciate Mr. ALAM ZEB KHAN, Area Manager and RAFIQUE AWAN, Operation Manager, Meezan Bank Abbottabad for their support and collaboration.

I am extremely thankful to my Supervisor MR. ZIA UR REHMAN, who has supervised me throughout to complete this tough task.

I pay special gratitude to all my honorable teachers who have been teaching me various courses during the last five years at CIIT, with addict zeal and zest.

I wish to express my heartiest and sincere appreciation to my friends for their continuous help, cooperation, and moral support.

The last but not least, I would feel incomplete without thanking to my parents who pray for my brilliant success and bright future.

Mubasher Nazir


Abbreviations

MMF

:

Al Meezan Mutual Fund Limited

IFIs

:

Islamic Financial Institutions

MIF

:

Meezan Islamic Fund

AMMF

:

Al Meezan Mutual Fund Limited

RTC

:

Rupees Travelers Cheque

MAC

:

Meezan Aamdan Certificate

COII

:

Certificate of Islamic Investment

MIIDA

:

Meezan Islamic Institution Deposit Account

TT

:

Telegraphic Transfer

DD

:

Demand Draft

MT

:

Mail Transfer

PL S

:

Profit and Loss Sharing

FDD

:

Foreign Demand Draft

LC

:

Letter of Credit


Executive Summary

As per the the requirement for for the degree of BBA (Hon’s) of Hazara University Mansehra, I took up the internship at Meezan Bank, Abbottabad Branch. This report is based on the experience and knowledge knowledge which I got from my internship internship at Meezan Bank. In the first first chapter chapter I have discussed about my time stay in the bank and introduction to the whole report. In second chapter I have discussed about the introduction of the bank. Basic function of Meezan Bank. The story begins with the incorporation of Meezan Commercial Bank limited in Pakistan on October 09, 1991, 199 1, Meezan Meezan Bank Bank Commen Commenced ced (begin (begin)) to operat operation ionss in April April 199 1992, 2, as a pub public lic limited limited company. The bank is listed on the Karachi, Lahore and Islamabad Stock Exchanges and the initial public offering was over subscribed by 16 times. I have also mentioned the products which the bank is offering to its customers and then I have given a brief overview of different policies of the bank. In third chapter I have discussed about the concept of Islamic banking according to our religion. this chapter begins with the Islamic finance and the economic growth of Islamic bankig.further I have have disc discus usse sed d the the goals goals of Isla Islami micc banki banking ng., ., and and Isla Islami micc theo theory ry have have also also disc discus usse sed d Musharakah / Mudarabah and its uses .In forth chapter there is the history of Meezan bank, its origin and basics, vision and mission statement, the corporate values and the organizational structure. In 5th and 6th chapter the business of meezan bank is discussed the products and services of the meezan bank are discussed in this chapter. this chapter also tells us about the branch network of Meezan bank. further I have discussed the meezan team. the 7th chapter is the detail of my whole


inte intern rnsh ship ip that that what what I have have lear learne ned d in 8 week weekss the the chapt chapter er is base based d on the the day day by day day performanc performance. e. In the 8th chapter I have discussed about financial analysis. I do the common size analysis of the and company for this purpose I take the data of last five years. Then I do the ratio analysis and in last I analyze the net income, EAT, deposits, EBIT, loans and advances of the bank during last five years. In 9th chapter I have given the swot analysis of Mezan Bank. Swot analysis is done keeping in the view what I have seen and felt in the branch during my intership. In the 10th chapter I have give the conclusions of my internship that the Meezan bank is now have a good reputation in market. In 11th chapter I have give some personal recommend ions as how bank can improve its performance and then I have write the conclusion about my internship as well as report. And in last I mentioned some important references and web sights from where I get the help during preparation of my reportrnship.


CHAPTER 1

INTRODUCTION TO REPORT 1.1)

Backgroun und d of stud udy y:

Meezan Bank Ltd has grown to become the largest Islamic bank in the country. The bank clai claims ms to be the the Paki Pakist stan an prem premie ierr Isla Islami micc bank bank dete determ rmin ined ed to set set high higher er stan standar dards ds of achievements . The bank comes in to existence by the order promulgated by governor general and standard functioning from Nov 20, 1997 Meezan Bank is the major business partner our government of Pakistan with special emphasis on fost foster erin ing g Pakis Pakista tan n econo economi micc grow growth th thro throug ugh h aggr aggres essi sive ve and and bala balanc nced ed lendi lending ng poli police ces, s, technol technologic ogicall ally y orient oriented ed product productss and servic services es offere offered d through through its large large networ network k of 203 branches . 1.2)

Purpose of study :

The purpose of study is to get more knowledge about the structure and function of the department of MBL has clear picture of its financial health in particular . For this purpose a through financial analysis through common sizing and ratio analysis of the bank, is carried out to is to judge the actual financial standing of the bank . Solid recommendations are given on all aspects to further improve the functioning of the bank .

1.3)

Scope of of the st study :

The time duration of eight weeks is a quite insufficient for conducting complete study and HAZARA UNIVERSITY MANSEHRA.

observation of large bank. Being a specializing in finance, the main focus of study is its financial aspect aspectss includ including ing the financ financial ial health health of the bank and its comparis comparison on with with previo previous us year year performance . Some of the problems faced by the bank have been identified and some remedies have also been suggested to overcome these problems and improve the prevailing financial condition of the bank .

1.4) 1.4)

Rese Resear arch ch Metho ethodo dollogy: ogy:

MBL is one of the leading and establishes bank of the country. It has a large step of departments and a big organizational structure. While working in a branch of the bank , it is not possibly to thoroughly cover all the areas of the bank , as it requires more time and eight weeks are in no way sufficient to do. Different tools and techniques were use together relevant information information for writing the report first interview were taken from the manager and other staff member of the bank. For this purpose some unstructured question were asked and depending on them some conclusion were made. Secondly, the liter & journal from regional head quarter and staff college were also reviewed which gave very useful information about the functioning of the bank. I also also visi visite ted d the the MBL MBL offi offici cial al webs websit itee i.e. i.e.

www.meezanbank.com

whic which h gave gave very very usef useful ul

information about functioning of the bank. My personal observations during the short stay also helped me to collect about this specific branch.

1.5) Scheme of study :

The scheme of study of the report is as under . 1

Part Part one is about the introd introduct uction ion of the study, study, which which include includess its backgrou background, nd, purpose purpose and and scope of the study research methodology and the scheme of study .

2

Part two two is about about the literat literature ure review, review, of the the bank , the the departmentat departmentation ion and its its function, function, and detail study of the credit department . Part three is about the financial analysis of the bank,


which includes the ratio analysis, common size analysis, comparative analysis and index analysis . 3

Part four four is includes includes SWOT SWOT analysis, analysis, problem problemss and recommen recommendation dationss prescribe prescribe for for the bank to further improves its functioning .

CHAPTER 2

INTRODUCTION TO BANKING WHAT IS BANK?

Before going to start we must know that what is bank? Like many other subjects and social sciences no any precise definition can be given for the study of banking also. Different authors have defined and described this subject, keeping in view the particular functions of banking. Mr. Paget says “No one and no body corporate can be a banker who does not open: 1

Current Account

2

Pays Pays cheq cheque uess dra drawn wn upon upon him him

3

Coll Collec ects ts che cheque quess for for the the cus custo tome mers rs

Mr. Kinly says “Bank is an institution which receives deposits and advance s loans”. The definition laid down in the Banking Companies Act 1962 is “Bankers means a person, transacting the business of accepting for the purpose of lending or investment, of deposits of money from public, repayable on demand or otherwise and withdrawals by cheques, drafts or orders or otherwise and includes any Post Office Saving Bank.” In view of the above definitions, in simple words a bank can be defined as an institution dealing in money, accepting deposits and advancing loans. Definition

There are different opinions about the origin of the word “Bank”. According to some authors the


word word bank is derive derived d from Latin Latin word word “Bancus” “Bancus” or “Banque” “Banque” which means means a bench. bench. The explanation of this origin is attributed to the fact that the Jews in Lombardy transected the business of money exchange on benches in the market place. When the business failed, the people destroy the bench. Incidentally the word bankrupt is said to have been evolved from this practice.

Origin:

Thee oppo Th oppone nent ntss of this this opin opinio ion n argu arguee that that if it was was so, so, then then how how is it that that the the Ital Italia ian n moneyc moneychang hangers ers were were never never called called Bunchi Bunchier er in the middle middle ages. ages. Other Other author authoriti ities es hold hold the opinion that Bank is derived from German word back which mean joint stock fund. Later on, when the German occupied major part of Italy, the Back was italicized into Bank.

2.1) Evolution of banking

The word Bank derived from the the words “ bancus or banque which means a bench . The word bank is derived from the German word Bank which joint Stock Fund .

2.2) Early growth

Babylonians who developed banking system as early as 2000 BC .Temples of Babylon were used as Banks .

2.3) 1628 – 1786 BC .

king Hammurabi the founder of the Babylonian empire dew up a code where in he laid down standard uses of procedure for banking operations by temples and great land owners . Sumerians , Babylonians, Hittites and Assyrians standardized the vales of goods in silver , copper, bronze or electrum .

2.4) 687 B.C

Gyges , king of Lydia, casted electrum ingots of identical shape and uniform weight. As an official guarantee of values in 687 BC. In Greece, the temples of Ephesus and Delphi were the biggest Banks .


The earliest known public bank is said to be the bank of Venice which was established in 1157 AD . Soon Venice and Genoa become the most important money market . Modern banking originated in the 14th century in Barcelona. In 1401 a German public bank are formed. Bank of Genoa in 1407, by the 16th century , some more public banks were formed in Venice, Milan, Amsterdam, Hamburg and Nuremberg . Bank of Amsterdam was also founded in 1609 . In 1690 , the bank of Hamburg came in to Existence .

2.5) Modern Banking

1700, the banks of England was not only issuing issuing notes but also conducting conducting accounts for customer . 1

In 1946 1946 the the labor labor Govern Governmen mentt nation nationali alized zed the the bank of of Englan England. d.

2.6) Types of Banks :

1

Commercial Ba Banks nks

2

Merchant Banks

3

Mortgage Banks

4

Saving Banks

5

Consumer Ba Banks

6

Investment Ba Banks

7

Devel velopment Ba Banks

8

Coope operative Ban Banks

9

Exempt Banks

10 Cent Centra rall Banks Banks

1.Commercial Banks:


The commercial banks receive from the general public which are repayable on demand upon written orders of depositors. The commercial banks are also distinguished for providing short term term fina financ ncee to trade trade , comme commerc rcee and and indus industr try y to enabl enablee thes thesee sect sector or to expan expand d thei their r productive activities .

2.

Merchant banks :

Merchant Merchant banks are those which have been mainly mainly financing financing the domestic domestic and internation international al trade in united king Dom . During the late 18th and 19th century the trade between countries was financed by bills of exchange by well reputed merchant houses for which they would charge a commission for their service .

3.Saving Banks :

The basic purpose of these banks is to inculcate the habit of savings in the people . The saving bank deposits are not repayable upon the written orders of the depositor but the depositor or his agent has to appear personally at saving bank to make withdrawal , and for this purpose he must present a pass book, a certificate of deposit or some similar documents to prove his right to receive payment.

4. Mort Mortga gage ge Bank Bankss :

These banks mainly deal in loans for the acquisition or construction of real estate against the security of mortgages . Saving and loans associations and farm _loan associations are some of the well known forms of the mortgage banks .

5. Cons Consum umer er Bank Bankss :

These banks provides finance for purchasing consumption goods for the use of the borrowers . sales finance and credit unions are some of the popular forms of consumer banks

6. Inve Invest stme ment nt Bank Bankss :


The investment banks asset business houses and government bodies to raise money through the sale of stocks and bonds for usually long term purposes .

7. Deve Develo lopm pmen entt Bank Bankss :

The banks have been established to provide long-term development finance to the trade, commerce, and industry.

8. Coop Cooper erat ativ ivee Bank Bankss :

These are the banks established and registered as a cooperative venture to provide banking facilities to the members of the cooperative .

9. Eximp Ba Banks :

These are the banks which provide finance for promotion of import and exports to trade, comme commerc rcee and and indu indust stry ry .The .The bank bank are are cont contri ribut butin ing g grea greatl tly y towa toward rd the the expa expans nsio ion n of international trade . 10. Central Central Banks Banks :

Central Central banks occupy unique unique position in the banking structure structure of a country , because they have been entrusted with the responsibility of controlling the money supply, interest rates and financial market of the country for the purpose of economic development .

2.7) National Bank Act :

Was passed by the congress in 1863 , which required each new national bank to deposit united states Bonds equal to one- third of its capital with comptroller of currency . National notes equal to 90 % of the par or market value of the deposit bonds, whichever was lower .In 1913, the federal federal Reserve Act was passed ,and it reduced reduced the requirement requirement of the reserve for the banks if they formed themselves into commercial banks .

2.8) Banking Act 1935:

Laid the foundation for the modern federal Reserve system by establishing the federal open market operations and buying and selling of government securities . 1939, commercial


banking system was functioning satisfactorily with as many as 14,531 commercial banks in the united states . 1940 to 1945, while the holding of Government Government securities securities by the banks increased to almost almost

four times . the post war period saw some recession in the banking system , but soon it was over , and the banks regained their stature by 1962.

2.9) Banking In Pakistan :

There were 487 offices of scheduled sched uled banks in the territories now constituting Pakistan The committee committee recommended recommended that the Reserve Reserve Bank of India should continue continue to function function in Pakistan until 30th sep 1948 . By 30th June 1948, the number of offices of scheduled banks in Pakistan declined from 487 to only 195 . Quaid-i Quaid-i-Az -Azam am Muh Muhamm ammad ad Ali Jinnah Jinnah inaugu inaugurat rated ed the state state bank of Pakista Pakistan n on July July 1st,1948 . The first Pakistan notes were issued in Oct, 1948 in the denominations of Rs 5,10 and by August 1949 the state Bank of Pakistan withdrew the Reserves Bank of India notes of the values of Rs 125.02 cores with the help of the Pakistan notes .


CHAPTER 3

INTRODUCTION TO ISLAMIC BANKING

3.1 Islamic Finance

Islamic finance was practiced predominantly in the Muslim world throughout the middle Ages, fost foster erin ing g trad tradee and busin busines esss acti activi viti ties es with with deve develo lopm pmen entt of cred credit it . In Spai Spain n and the 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 debt- based instrument . The system encourages risk sharin sharing g promot promotes es entrep entrepren reneur eurshi ship, p, discour discourages ages specul speculati ative ve behavio behavior, r, and emphas emphasize izess 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 participant 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 .

Distribution Of Wealth The distribution of wealth is one of most important and controversial subject concerning the economic life of man which has given birth to global revolution in today’s world and affected every sphere of human activity from international policies down to the private life of the individual .

3.3 The Importance Of The Economic Goals

Islam is opposed to monasticism, and views the economic e conomic activities of man quite lawful, HAZARA UNIVERSITY MANSEHRA.

meritorious and sometimes even obligatory and necessary . it approves of the economic progress of man , and consider lawful lawful or righteous righteous livelihood livelihood an obligation obligation of the secondary order order . Notwithst Notwithstanding anding all thus, it is no less truth that it does not consider economic economic activity to be the basic problem of man .

3.4 Capitalist View / Islamic theory :

1

Capital :

Defined as “the “the produced means of production” a commodity which which has already undergone one process of human production, and is again being used as a means process of production .

2

Labor :

That is to say exertions on part of man .

3

Land :

Defined as “natural resources” those thing which are being used as means of production without having previously undergone my process of human production .

4

Entrepreneur Or Organization:

The fourth factor that brings together the other three factors, exploits them and bears risk of profit and loss in production .

3.5) The Islamic View :

From Islamic point of view there are two kinds of people who have right to wealth . HAZARA UNIVERSITY MANSEHRA.

5

Those Those who have have primary primary right right that that is to say, say, those those who have a right right to wealth wealth direc directl tly y in consequence of participation in the production. In other words it is those very factors of production which have taken a part in the process of producing some kind of wealth .

6

Those who who have a secondar secondary y right, right, that is to say, say, those those who have have not taken taken a direct direct part part in the process of production, but it has been enjoined upon the producers to make them cosharers in their wealth .

3.6 Capital Can Be Invested In a Business Venture

1

Privat vate Bu Busines ness

The man who invest capital may himself run the business without the help of any partners or shareholders. In this case the return which he gets may be called profit from the legal or popular point of view, but in economic terms, this reward would be made up of . 2

Profit Profit in as as much much as capital capital has been invest invested ed .

3

Wage Wages, s, as earn earnin ing g of of mana manage geme ment nt .

4

Partnership;

The second form of investment is that several persons may jointly invest capital, jointly manage the business and jointly bear the risk of profit and loss. In the terminology of the Fiqh, such a venture is called Shirkat-Aqd or Partnership in contract .

1

Co-operation Of Capital And Organization (Mudarabah)

The third form of investment is that one person may invest capital while another may manage the business, and each may have a share in the in the profit . In the terminology of Fiqh, it is called Mudarabah.The person who invest his capital Rabb-ul-Mal will get his share in the form of profit while the person who has actually managed the business will get it in the form of wages .


3.7) Riba

2

Defi Defini nittion ion of Riba Riba

The word Riba means excess, increase or addition, which correctly interpreted according to Shariah terminology, implies any excess compensation without due consideration . 3

This defini definition tion of Riba is is derived derived from from Quran Quran and is unanimously unanimously accepted accepted by all all Islamic Islamic scholars

.

4 TYPES OF RIBA There are two types of Riba . 1. Riba Riba An Nas Nasiyah iyah 2 .Riba Al Fadl Riba An Nasiyah :

Defined as excess, which result from predetermined interest which a lender

receives

over and above the principle (Ras ul Maal).

1

Riba Al Fadl :

Defined as excess compensation without any consideration resulting from a sale of goods . Riba Al Fadl will be covered in greater detail later .

3.8) Commercial Interest And Usury :

In 17th century two new technical terms of interest emerged after the established of banking system.

2

Tijarti Sood :

Interest paid on loan taken for productive &profitable purposes . 3

Sarfi Sood :

Interest paid on loan taken for personal need and expenses . Islamic banking:


The interest free system envisages the gainful use of one’s 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 which as under .

4

PLSPLS- Savi Saving ng Acco Accoun untts

5

PLS PLS Ter Term m Dep Depos osit it Acco Accoun unts ts

6

Inve Invest stme ment nt Of PLS PLS Dep Depos osit itss

Musharikah Financing : “A business relationship established under a contract by the mutual consent f parties for

sharing of profit and losses arising a joint enterprise venture”

Ijarah ( Leasing

Ijara as “an agreement whereby a person agrees to transfer the usufruct of a property to another person for a mutually agreed rent, terms, and conditions while the ownership of the corpus of the leased property remain vested in lesser .

Mudarabah Financing :

Mudarabah is a business in which a person participates with his money while the other with his skill or efforts or both his skill and efforts . NIT Units and Mutual Funds are the best example of Modaraba in Pakistan .

Types Of Mudarabah :

1

Al Mu Muda dara raba bah h Al Mu Muqa qayy yyad adah ah

2

Al Mu Muda dara raba bah h Al Al Mu Mutl tlaq aqah ah

1. Al Muda Mudara rabah bah Al Muqa Muqayya yyadah dah :

Particular business or particular place for the the mudarib, in which case he shall invest the money in the particular business or place . This is called Al Mudarabah Al


Muqayyadah .

2. Al Mudarrabah Al Mutlaqah : Rab-ul-maal gives full freedom to mudarib undertake whatever business he deems, fit this is called Al Mudarabah Al Mutlaqah .

Uses Of Musharakah / Mudarabah : 1

Asset Side Financing :

1.

Short / medium / long term financing

2.

Project financing

3.

Bridge financing

4.

Export financing

5.

Working capital Liability side Financing :

1.

Current / Saving / Mahana Amdani / Investment .

2.

Inter Bank Lending / borrowing .

3.

Term Finance Certificate . Istisna :

“ Advances payment of goods to be manufactured assembled, built or constructed, or caused so to be done, at an agreed price in which the goods with specifications are to be delivered at be delivered at a specified future date and place .” 1

Salam :

(Advances payment against delivery) “ A sale whereby the seller agrees to supply specified goods to a buyer by a future date in consideration of price paid in advances at a time specified in the contract .”


CHAPTER 4

HISTORY OF MEEZAN BANK

4.1) MEEZAN BANK

To be a premie premierr Islami Islamicc bank bank offeri offering ng a one-sto one-stop p shop shop for innovativ innovativee value-a value-adde dded d product and services to our customers within the bounds of Shariah, while optimizing the stake holder holder’s ’s value value throug through h an organi organizat zation ional al cultur culturee based based on learni learning, ng, fairne fairness, ss, respect respect for individual enterprises and performances .

1997

Al Meezan Investment Bank is established 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 supreme court of Pakistan reject the appeal and direct all laws on inte intere rest st bank bankin ing g to ceas ceasee but but the the Gover Governm nment ent set set in a high high leve levell commi commiss ssio ion, n, task task and and committees to institute and promotes Islamic banking .

2001 :

Muhammad Taqi Usmani as a chairmen established the shariah supervisory Board at Al Meezan Investment Bank . State Bank of Pakistan set a criteria of Islamic commercial bank in private sector sector and subsid subsidiar iaries ies and stand stand alone alone branch branches es by existi existing ng commer commercia ciall banks banks to conduct conduct Islamic banking in the country .

2002 :

Al Meezan convert itself in to a full fledge Islamic commercial bank . The first Islamic banking license is issued to the bank and is renamed Meezan Bank . President general Pervaz Musharraf HAZARA UNIVERSITY MANSEHRA.

Inaugurates the new Islamic commercial Bank at a formal ceremony in Karachi.

2003-----2009 :

2

Meezan Bank establ established ished itself itself a pioneer pioneer of Islamic Islamic Banking Banking in Pakist Pakistan an and wide range of products are developed .

3

Thee stat Th statee Bank Bank establ establis ishes hes a dedi dedica cate ted d Isla Islami micc banki banking ng develo developm pment ent by merging the Islamic economic division .

4

Meezan Meezan bank becom becomes es the first first custom customer er of Islami Islamicc issuance issuance by signi signing ng the firs firstt memo memora randu ndum m of und under erst stand andin ing g MOU MOU with with pak Kuwai Kuwaitt Taka Takafa fall company ltd .

5

Meeza Meezan n banks banks become becomess the first first Isla Islami micc bank bank to intro introdu duce ce 8am to 8pm banking at selected branches in Karachi

6

Meez Meezan an bank bankss ope open n up up its its 100 100th branch

7

Wit With 166 166 bran branch ches es in 40 cit cities acr across oss Paki Pakisstan. tan. Wor Works star startt on the construction of Meezan Banks new Head Office building

. 4.2) Meezan Bank Vision and Missions :

1

Vision:

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

2

Miss Missio ion n st statem atemen entt :

To be a premier Islamic bank offering a one-stop shop for innovative value-added product and services to our customers within the bounds of Shariah, while optimizing the stake holder’s value through an organizational culture based on learning, fairness, respect for individual enterprises and performances .


4.3) Corporate Values :

3

Core Values :

Shariah Compliance, Integrity, Professionalism, Service Excellence, Social Responsibility . 4

Bran Br and d Perso ersona nallity ity :

A sober and established, strong, empathic, professional person; who is an extremely loyal and dependable friend and business partner, and is committed to offering comprehensive value-based Shariah compliant financial solutions . 5

Staff :

Commit Committed, ted, motiva motivated ted and profes professio sional nally ly traine trained d employ employees ees who are empath empathic ic to their their customer ‘s needs . Relationships : Are long tem with Meezan Bank . we recognize and our customer’s needs

and strive to ensure their fulfillment . All customers are treated professionally and in a friendly manner . It is our endeavor to ensure that they receive efficient and timely service . The Meezan Bank experience is a unique one . Are long tem with Meezan Bank . we recognize and our customer’s needs and strive to ensure their fulfillment . All customers are treated professionally and in a friendly manner . It is our endeavor endeavor to ensure ensure that that they they receiv receivee efficient efficient and timely timely se. experience is a unique one .


The Meezan Meezan Bank Bank


4.4 BACKGROUND REVIEW :

AL Meezan Bank started its commercial operations in sept in 1997 and got its scheduled commercial status in May 2002 Meezan Bank Limited .The soundness of the Bank , which is normally measured by reference to the Tier 1 capital Adequacy Ratio, is above 80%. The internationally acceptable standard, which is also the minimum requirement of the state Bank of Pakistan, is 8%. MBL capital adequacy ad equacy ratio placed the bank at the top of the industry .

Meezan Bank Limited is the first schedule Islamic Islamic bank in Pakistan, which has been licensed by the state Bank of Pakistan to operate as an Islamic Commercial bank .The bank pira pirate tess stri strict ctly ly unde underr the the prin princi cipl ples es of Isla Islami micc Shar Sharia iah h . our our in depen dependa dabl blee Shar Sharia iah h Supervi Supervisor sory y board, board, compri comprisin sing g of intern internati ationa onally lly renowne renowned d Islami Islamicc schola scholars, rs, regula regularly rly reviews the bank’s activities .

6

Justic Justicee (Retd) (Retd) Muhamm Muhammad ad Taqi Taqi Usmani Usmani (Paki (Pakista stan) n) Chairm Chairman an

7

Dr. Dr. Abdul Abdul Satt Sattar ar Ghudd Ghuddah ah (Sua (Suadi diaa Arabi Arabia) a)

8

Shikh Shikh Essa Essam m M. M. Ish Ishaq aq (Bah (Bahra raim im))

9

Dr. Dr. Muham Muhamma mad d Imra Imran n Usma Usmani ni (Pak (Pakis ista tan) n)


CHAPTER 5

COMPREHENSIVE BUSINESS SOLUTIONS Meezan Bank has one of the largest offering of Shariah driven products and services under one roof roof .The .The Bank has develop developed ed an extrao extraordi rdinar nary y resear research ch and develop developmen mentt capabi capabilit lity y by combining investment bankers, commercial bankers shariah scholars .The introduction of many products which satisfy business needs and meets world-class service standards .

5.1 5.1

Corp Corpor orat atee And And Comm Commer erci cial al Bank Bankin ing g:

Murabaha – import & Export Facilities Musharakah – guarantees Diminishing Musharakah – Bill Discounting by using Dollar Salam or Murabah Ijarah – Islamic Export refinance Mudarabah Istijrar Istisna

Retail Banking :

Rupee Saving Account certificate of Islamic Investment Current Account Monthly Mudarabah Certificate Dollar Saving Account Dollar Mudarabah certificate Karobari Munafa Account Meezan Amdan Certificate Meezan Islamic Institution Deposit Account Meezan Providence Certificate

Consumer Financing :

Car Ijarah-Islamic Auto Finance Easy Home – Islamic Housing Finance


24/7 Banking :

ATM / Debit Card ATM outlets SMS Alerts Special Banking :

Ladies Banking -8am to 8pm Banking Meezan bank continue to educate the market by offering various business value propositions in a transparent and open manner, in addition to addressing commonly asked questions about Islamic Banking and how it differs from the conventional system . Investment Banking & Sharaiah Advisory Services :

Syndication Structuring Sukuk Structuring Privatization Mandates conventional Bank Conversion Advisory Services Mergers & Acquisitions Islamic Banking Training

5.2

LARGEST BRANCH NETWORK

Meezan Bank has established 100 branches in 31 cities across Pakistan . This is a milestone that is not only the success story of Meezan Bank but also continuing success story of Islamic Banking in Pakistan . All branches provides all the facilities to customers Meezan Bank continue to build its vision The cities in which bank presently operates are as follows .


Southern Region

Central Region

Hyderabad Karachi Nawbshah Quetta Sukkur Tando-Allah –Yar

Bahawalpur Dera Ghazi Khan Faisalabad Gujranwala Kasur Islamabad

Southern Region

Central Region

Multan Rahim Yar Khan Sadiqabad Sargodha Sahiwal Sheikupura Sialkot

Mandi Bahauddin Rawalpindi

Northern Region

Abbottabad Dera Ismail khan Peshawar

Northern Region

Swat

5.3) FINANCIAL BACKING:

Shareholding structure Pakistan Kuwait Investment Co Noor Kuwait Investment Co Islamic Development Bank, Jeddah Others Paid up capital

% 30 46 9 15 1 00

Rs.in million 1,478 2 ,242 459 74 7 4 ,9 2 6

5.4) SERVICE QUALITY :

Meezan Bank’s service mission is :


“ To develop a committed service culture which ensures the consistent delivery of our products and servic services, es, within within the highes highestt quality quality servic servicee parame parameter ters, s, promot promoting ing Islami Islamicc values values and ensuring recognition and a quality qua lity banking experience to our customers”.

5.5) QUAID”S CONCEPT OF ISLAMIC BANKING:

“We must work our sestiny in our own way and present to the world an economic system based on true Islamic concept of equality of manhood manh ood and social justice”.

5.6) RIBA—FREE BANKING OBJECTIVES :

2

To prov provid idee Sha Shari riah ah-- com compl plia iant nt produ product ct and and ser servi vice cess as as a feas feasib ible le and and

3

valu valuab able le alte altern rnat ativ ivee to conve convent ntio ional nal inte intere rest st base based d finan finance ce..

4

To cont contin inue ue explo explori ring ng devel developi oping ng and deli delive veri ring ng new new pro produc ducts ts and and

5

Serv Servic ices es that that fulf fulfil illl all all bank bankin ing g nee needs ds of our our cus custo tome mers rs

6

To ach achie ieve ve sus susta tain inab able le gro growt wth, h, max maxim imum um mar marke kett sha share re,, and and high high

7

Prof Profit itab abil ilit ity y in all all area areass of bank bankin ing g and and othe otherr affi affili liat ated ed

8

Islamic financial services .

9

To mai maint ntai ain n abso absolu lute te worl world d cla class ss serv servic icee exce excell llenc ence, e, wit with h a dedi dedica cate ted d

10

Focus Focus on value value and and rec recogn ognit itio ion n for for our cust custom omer ers. s.

11

To buil build d and sus susta tain in a high high perf perfor orma manc ncee cultu culture re in in acco accord rdan ance ce with with

12

Isla Islami micc val value uess and and Shar Sharia iah h pri princ ncip iple les. s.

13

To effe effect ctiv ivel ely y manag managee meeza meezan n Bank’ Bank’ss port portfo foli lio o of busi busine ness sses es to to

14

Achi Achiev evee stro strong ng and and sus susta tain inabl ablee retu return rn to to our our depos deposit itor orss

15

And shareholders.


CHAPTER 6

MEEZAN TEAM The business segments of the banks are : Corporate Banking Investment Banking HAZARA UNIVERSITY MANSEHRA.

Commercial Banking Treasury & Financial Institutions Asset Management

Corporate Banking :

Corporate Banking plays an important role in the growth of the bank’s financing activities and profitability. During the year Meezan Bank maintained a cautions approach in booking new assets and focused on reducing large exposures to a single obligor so as to mitigate concentration of risk . Corporate Banking successfully introduced a new product called Tijarah this product is designed to allow customers to raise funds for financing of stocks of finished goods .Istisna which is introduced in 2008 was very successfully and extensively deployed across the Meezan bank network .

Investment Banking :

The investment banking department was set-up in 2006 and focuses primarily on the following activities : 1Syndicated & Structured finance 2 Project Project Finance 3Corporate & Financial Advisory Services Investment banking has developed unique Shariah structuring capability in a very short period of time and is actively involved in innovative product development initiatives required to meet the long term project finance needs of customers .

Commercial Banking :

Commercial Banking target the middle market . This market represent the back-bone of Pakistan ‘s economy and has high growth potential. Since the inception of this department in 2005, 2005, Meez Meezan an Bank Bank has has main mainta tain ined ed a caut cautio ious us and and well well bala balanc nced ed appro approac ach h in booki booking ng commercial Banking assets as a result of which portfolio assets quality has been very good –


evidenced by timely payment of all obligations .Customers with a turnover of less than Rs.800 million in this business segment, that includes small and medium scale enterprises (SME) . The (SME) target with an annual turnover of Rs. 300 million and total financing is 75 million .

Consumer Finance :

Consumer Finance is responsible for managing the retail assets products of auto finance----Car Ijarah and house mortgage ---- Easy Home . With pioneering and prime- mover initiatives in both products, the department has now established itself on sound business infrastructures, penetrated key market segments, and built recognizable brand identities in not only the Islamic but the overall banking sector . Car Ijarah application is usually processed within two days, while the document intensive and comp comple lex x proc proces esss of Easy Easy Home Home – home home mort mortga gage ge base based d on the the conc concept ept of Dimi Dimini nish shin ing g Musharakah is available in a record setting average of 15 days .

Auto Finance :

The auto finance business has a 7 years track record and its portfolio now stands at Rs.4,356 million comprised of over 9000 active vehicle contracts. Growth has been steady during this period, within depressed and uncertain economic conditions . Housing finance :

The nation’s first Islamic Housing Finance facility .Meezan Bank’s Easy Home completed its 5th year in December 2009 and consolidated its market position by undertaking rs. 1.5 billion new disbursement during the year.

Branch Network & Deposits :

Meezan Bank has maintained an aggressive branch expansion policy and added 66 new branches and sub branches to its network, bringing the total network to 166 branches in 40 cities across country. The Bank’s Deposit portfolio grew to Rs. 70.23 4 billion during the year .


6.1 Treasury & Financial Institutions : 2009 was an eventful year .Rising interest rates, coupled with a freeze in the local stock

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

6.2 Economic Overview:

2009 was a tumultuous year of the world financial sector , starting with Sub-prime mortgage crisis in US that eventually led to the collapse of the financial giant Lehman Brothers and started the biggest downturn faced by the financial industry since the Grat Depression of 1992. Relative to this cataclysmic crisis faced by the international financial markets, the Pakistan banking sector has remained relatively stable. They external current account deficit grew to US$ 14 billion, equivalent to 8.4% of GDP which is approximately three and a half percentage points higher than the initial projection for the year 2009 and more than twice of last year’s level in absoluter terms. As a result, foreign exchange reserve dropped sharply and the Pak Rupee depreciated buy over 30% during the year. Initial results are satisfactory and gave stabilized the commodities, has provided significant relief to the economy, as a result of which foreign exchange reserves are also now stable and inflation, although still high, has also decreased to levels of around 20%

Operating Results

Despite the gloomy economic outlook, Meezan continued with its branch expansion strategy, By the Grace of Allah, the Bank now has 166 branches located in 40 cities in Pakistan, an addition of 66 branches including 35 sub branches during 2009, This significant achievement of establishing an extensive network within a short span of 7 years enabled Meezan Bank to maintain its leading position an among the Islamic Banks operating in Pakistan. As a result the


Bank was able to record strong growth in deposits, that increased by 29%-compared to the banking sector as whole that grew by approximately 6% during the year. A grew financial highlights are given below: Rs . in million

Deposits

2009

2008

Growth in %

70,234

54,582

29

Financing and investments

54,055

45,112

20

Trade Business

93,379

73,123

28

Branches

166

100

66

CHAPTER 7 WHAT I HAVE LEARNED AS AN INTERNEE 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 hav e learned from different department .

1st week

7.1

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

•

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.

7.2

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

The requirement for opening these types of a/c are •

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 personality

•

•

The other information related to the a/c filled on choice of applicant.


The signatur signatures es are done on form form as well as on the specime specimen n signat signature ure card from from

•

where the signature will be scanned as a record in computer



Partnership



Limited company



Trusts



Clubs



Association etc.

The requirement for opening these types of a/c are

7.2. 7.2.1 1

For For par parttners nershi hip p

•

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.

7.2. 7.2.2 2

•

For For Join Jointt Stoc Stock k Com Compa pany ny

Resolution of Board of Directors for opening open ing 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

7.2.3 7.2.3

•

For Clubs, Clubs, societ societies ies and Associ Associati ations ons

Certificate copies of Certificate of registration By- law / rules ®ulations 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 CN IC of the authorized person(s) As understanding understanding signed by all authorized authorized persons persons on behalf of the institute institute mentioning mentioning

•

that when any change takes place in the persons authorized to operate on the a/c, the banker will be informed immediately.

7.2.4

For Ag Agents nts a/ a/c

•

Certificate of power of Attorney

•

Attested photocopy of CNIC of the agent.

7.2.5

Trusts a/ a/c

•

Attested copy of Certificate of o f 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.

•

I filled up some forms for practical practices and knew about the nature of the 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.

4th Week

7.3

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 Pakistan’s 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 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. HAZARA UNIVERSITY MANSEHRA.

•

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 don e 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.

5th Week

7.4

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.

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 branch’s business.

7.5

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

•

I started my day with the daily lecture about Bank. 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 kno wn as SWIFT Message. In it I knew that how can get and send money from and a nd to foreign countries. He told us its procedure procedure and function. function. I knew about how the message message can create 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 what inform informati ation on is requir required ed for its its activa activatio tion n and what what inform informati ation on it gives 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.

8th Week

7.6

I started my 8 th 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.

•

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 “Allah has permitted trade and forbidden Riba”.

•

I learnt about difference b/w Islamic and Convention Co nvention Banking up to some extent.

•

Then I moved to next department that was ACCOUNTS DEPRTMENT.(with the hold of 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 abo ut its functions.

•

I learnt that 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 chequ e procedure and its use in different ways.



Chapter 8 FINANCIAL ANALYSIS

8.1

LIQUIDITY RATIO

It is the relationship between the current assets and current liabilities of a concern.

Current Ratio = Current Assets/Current Liabilities

Y e ar Current Assets Current liabilities Current Ratio

2006 6 812 76 1 3 242 44 6 2 .1

2007 1 021 2 2 69 4 848 4 4 0 2.10

2008 9 37 35 77 3 607 7 6 6 2 .59

2009 7 108 6 85 50 65 5 1 3 1.4

Liquidity Current Ratio 3 2.59

2

2.1

2.1 1.4

1 0 1

2

2006

2007

3

2008

4

2009


Solvency Ratio

Debt equity Ratio = Debt liabilities/ Net assets

Y e ar Debt liabilities Net assets Debt equity Ratio

2006 2 440 87 94 6 812 76 1 3 .5 8

2007 368 26 824 1 021 2 2 69 3.60

2008 5 7 864 13 7 5 70 66 56 10.13

Debt Equity Ratio 20 10 0

Series1

1

2

3

4

3.58

3.6

10.13

12.4

2006

2007

2008

2009


2009 74 325 5 79 5 974 9 78 12.4

Profitability ratio

Y e ar Net Profit margin Gross profit margin Return on capital employed

2006 18.5 43.83 .0 1 8

2007 17.80 45.86 0.0020

2008 16.27 46.39 . 0 022

2009 8.27 54.61 .0 0 2 4

Profitability ratio 0.02 0.01 0

Series1

1

2

3

4

0.018

0.002

0.0022

0.0024

2006

2007

2008

2009

Return on capital employed =(PBIT / Capital employed)*100 PBIT = Core banking income before provision

Capital Employed = Equity + Long term liabilities


20 09

6341 + 11025091 = 11031432

20 08

5720 + 57864137 = 57869857

20 07

4763 + 36826824 = 36831587

20 06

3821 + 24408794 = 24412615

Investment Ratio Y e ar Earning Per Share Price Earning Ratio Dividend Per Share

2006 1 .1 6 15.92 16

2007 1.88 10.51 10

2008 1 .9 6 15.2 20

2009 1.26 17.03 8.6

Earning Per Share 4 2 0

Series1

1

2

3

4

1.16

1.88

1.96

1.26

2006

2007

2008

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.


Price Earning Ratio 20 15.92

17.03

15.2 10.51

10 0

Series1

1

2

3

4

15.92

10.51

15.2

17.03

2006

2007

2008

2009

Here the management has recovered their position and improved.

Dividend Per Share 25 20

20 16

15 10 5

10

8.6

0 1

2006

2

2007

3

2008

4

2009


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

Capital Adequacy Ratio (Capital to Risk (Weighted) Assets Ratio) Year Average Ratio Average Equity

2 00 6 1 .67 16.70

2 00 7 1.57 15.64

2 0 08 1 .7 0 10.30

200 9 .82 18.39

Average Ratio 2 1.67

1.5 1

1.7

1.57

0.82

0.5 0 1

2

3

4

2006 2007 2008 2009


Average Equity 20 16.7

15

18.39

15.64 10.3

10 5 0 1

2

3

4

2006 2007 2008 2009


CHAPTER 9

SWOT ANALYSIS

9.1

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 Internationallyrenowned 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 Khan Regi Regiona onall Mang Manger er - Nort North, h, Meez Meezan an Bank Bank at 21st 21st RCCI RCCI achi achiev evem ement ent awar awards ds ceremony held at the Convention Center in Islamabad.

•

Dedicated and professional staff

•

Shariah board of renowned scholars


•

Healthy working environment

•

Strong shareholding

9.2

Weaknesses

•

High charges for different activities such as online or Demand Draft as compared to competitors.

•

lack of promotions and advertising of their products produ cts 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 towa toward rdss the the inju injunct nctio ions ns of Isla Islami micc Shar Sharia iah h in perso persona nall and coll collect ectiv ivee matt matter ers. s. Acco Accord rdin ingl gly, y, one one can can easi easily ly imag imagin inee that that in an econ econom omy y wher whereb eby y most most of the the bus busin ines essm smen en are are not not hon hones estt in fair fairly ly pres presen enti ting ng the the fina financ ncia iall stat statem emen ents ts of thei their r busine businesse sses, s, how diffic difficult ult it is to introd introduce uce a profit profit-and -and-lo -loss ss shari sharing ng based based financ financial ial solution.

•

Meezan Bank Limited has no Credit card facility

•

Restricted Shariah based policies


9.3

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.

•

Doing business with companies having Islamic mindset. I-e Islamic financial Institutions.

•

Increase branch network within the country.

9.4

Threats

•

New New comp compet etit itor orss sett settin ing g up thei theirr Isla Islami micc bank bankin ing g sect sectio ions ns and and they they have have the 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 Reviewing this SWOT analysis analysis from time to time would help evaluate evaluate the bank's position. 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.



CHAPTER 10 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 BBA.


CHAPTER 11

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

11.1 11.1

PERF PERFOR ORMA MANC NCE E APPR APPRAI AISA SAL: L:

In the case case of perfor performan mance ce apprais appraisal, al, managem management ent should should evaluat evaluatee the perfor performan mance ce 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 work and satisf satisfact action ion,, his practi practice ce will will surely surely encoura encourage ge and motiva motivate te the employ employees ees for improv improving ing their their indivi individual dual perfor performan mances ces,, which which will will lead lead toward towardss overall overall improv improvee in the situation.

11.2 11.2 PROP PROPER ER JOB JOB ROT ROTAT ATIO ION: N: 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 intere intereste sted d during during workin working g in differ different ent departm department ents. s. The best best way to improv improvee employ employee’ ee’ss performance is to revolve them within organization often a specified period of time. They will not only have leaning and training training opportunities opportunities butt also they feel attractive attractiveness ness in doing new job and his performance improves.


11.3 1.3 FAIR FAIR BENEF ENEFIT ITS: S: 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, that’s why they are 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.

11.4 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 employees in each department. department. In absence of any of the employee 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 above- mentioned recommendation.

11.5 11.5 CREDIB CREDIBIL ILIT ITY Y OF CUST CUSTME MERS: RS: 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.

11.6 11.6 CUST CUSTOM OMER ER RELA RELATI TION ONSH SHIP IP:: 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


t he

customers.

Meezan Bank should understand that the commitment to satisfy customer’s 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.

Althou Although gh Meezan Meezan Bank Bank has been improv improving ing its corporate corporate behavio behavior, r, even even then then they they should should contin continue ue their their effort effort for better better corpor corporate ate behavi behavior. or. There There is a need of improv improving ing custom customer er 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

t he

bank

in

the

long

run.

11.7 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.

11.8 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.

11.9 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.

FINDINGS:-


Meezan Bank Limited provides so much facilities to their customers but some problems also arise with these facilities. 1) Space Space of the the bank bank is very very limi limited ted.. 2) Generator Generator is available available but its its not working working due to which the problem problem of light light arise arise and due to which the working of the bank stop and customer faced so much problems. 3) UPS is also availab available le but it work work hardly hardly for for 2 min’s. min’s. 4) Parking Parking area is is not availabl availablee for both both customers customers and and employees. employees. 5) Wate Waterr prob proble lems ms..

SUGGESTION 1) There should should be a proper proper waitin waiting g room for custome customers. rs. 2) As it is an Online Online Banking System System if there there is no light light everything everything is shutdown shutdown so they should maintain their electric problem. 3) There should should be proper proper parking parking system system for employees employees and customer customer.. 4) As it is well well know organizatio organization n a minor problem problem like availabil availability ity of drinking drinking water water should not be there.


References: • www.meezanbank.com • vww.encarta.com • http://wvvxv.historyworld.net •MeezanBank • Meezan Bank Annual Report 2009


BIBLIOGRAPHY Akbar Au. (2008) . A Hand out on Commercial Lending , 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. Internship Reports, Islamic University Islamabad, Hazara University Mansehra Bank Alfälah Ltd. (2005). Credit Manual, Karachi. Bank Alfalah Ltd,. (2005). Manual. Karachi. Bank Alfalab Ltd,, (2006). Annual Report. Karachi. Robert, F.M. Williams, S.F Haka and M.S, Bettner. (1999). Accounting; tile basis for business decisions, New York; Irwin McGraw-Hill. Sekaran. Uma, (1999). Research ivfethod for Business. 3”d edition, New York: John Wiley and Sons Inc. Van I Lorne, JC and J.M. Wachowicz, Jr. (2000). Foundation of Financial Management, 11th edition, New Jersey; Print ice-Hail, Inc. Whether, William B. JR and Davis, Keith, (2000). Human Resource and Personnel .Yfanageinent. New York: McGraw-I-Till, Inc.

W. Heinz, K. Harold (1999). Management; A global perspective, 10th edition, New York, McGraw 1-1111 Publication Dr Asrar H. Siddiqi

(2002)

Practices and Law of Banking In Pakistan

Dr . Muhammad Imran Ashraf Usmani (2002) Islamic Banking



Final Report on Meezan Bank

Recommend Documents