1

MEEZAN BANK LIMITED

Internship Report
Mohsin Mahmood
Program: B.COM (IT)
Roll# 500
Government College Model Town, Lahore

Branch: Quaid-e-Azam Industrial Estate, Lahore

Internship Duration: September-October 2012 (6 Weeks)
Submission Date: 25th October, 2012

Contents:
ACKNOWLEDGEMENT .............................................. 4
ISLAMIC BANKING .................................................... 6
INTRODUCTION TO MEEZAN BANK LIMITED: .......... 9
MEEZANS BRANCH NETWORK: ............................. 11
APPLICATION PROCEDURE: .................................... 12
BASIC OF ACCOUNT OPENING ............................... 16
CREDIT / FINANCE DEPARTMENT: ......................... 22
FOREIGN TRADE DEPARTMENT ............................. 23
Letter of Credit: ...................................................... 24
Import Financing: ................................................... 26
Exports ................................................................... 30
Conclusion: ............................................................. 31

The Opening
In the name of Allah,
Most Benevolent, Ever-Merciful.
All prays be to Allah,
Lord of all the worlds,
Most Beneficent, Ever-Merciful,
King of the Day of Judgment,
You alone we worship, and to you.
Alone we turn for help.
Guide us (O Allah) to the path that is
straight,
The path of those you have blessed,
Not of those who have earned your anger,
Nor those who gone astray

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

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 highest authorities without whose on time
support and guidance it would be difficult for me to
achieve this task successfully.

ABSTRACT:
This Report is specially meant for the student of B.COM (IT). It is concerned to a brief
study of the operation, Function, tasks and services of Quaid-e-Azam Industrial
Estate, Lahore branch of Meezan Bank of Pakistan.
The internship program of six weeks was taken only for the sake of learning as it was no
requirement from the academic university in order to complete the degree
requirements. The internship was performed only for the sake of learning.
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 over 300 branches in 89 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 concise and understanding 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. Then the main pillars of Islamic
banking are taken into consideration, I have also tried my best to use simple and easy
words. The report further elaborates the working of the different department in which I
got privilege to leverage my experience and the duties and functions I performed in
them.

ISLAMIC BANKING
Islamic banking refers to a system of banking or banking activity which is
consistent with Islamic law (Sharia) principles and guided by Islamic economics.
In particular, Islamic law prohibits usury, the collection and payment of interest,
also commonly called riba. Generally, Islamic law also prohibits trading in
financial risk (which is seen as a form of gambling). In addition, Islamic law
prohibits investing in businesses that are considered haram (such as businesses
that sell alcohol or pork, or businesses that produce un- Islamic media).
In the late 20th century a number of Islamic banks were created, to provide to this
particular banking market. Islamic banking has the same purpose as conventional
banking except that it claims to operate in accordance with the rules of Sharia,
known as Fiqh al-Muamalat (Islamic rules on transactions). The basic principle
of Islamic banking is the sharing of profit and loss and the prohibition of riba.
Amongst the common Islamic concepts used in Islamic banking are profit sharing
(Mudharabah), safekeeping (Wadiah), joint venture (Musharakah), cost plus
(Murabahah) and leasing (Ijarah).

Rules of Islamic Financing:

a) Any predetermined payment over and above the actual amount of principal is
prohibited.
Islam allows only one kind of loan and that is qard-el-hassan (literally good
loan) whereby the lender does not charge any interest or additional amount over
the money lent.
b) The lender must share in the profits or losses arising out of the enterprise for
which the money was lent. Islam encourages Muslims to invest their money and to

become partners in order to share profits and risks in the business instead of
becoming creditors. As defined in the Shariah, Islamic finance is based on the
belief that the provider of capital and the user of capital should equally share the
risk of business ventures, whether those are industries, farms, service companies or
simple trade deals.
c) Making money from money is not acceptable according to Islam. Money is only
a medium of exchange, a way of defining the value of a thing; it has no value in
itself, and therefore should not be allowed to give rise to more money, via fixed
interest payments, simply by being put in a bank or lent to someone else. The
human effort, initiative, and risk involved in a productive venture are more
important than the money used to finance it.
d) Gharar (Uncertainty, Risk or Speculation) is also prohibited. Under this
prohibition any transaction entered into should be free from uncertainty, risk and
speculation. Contracting parties should have perfect knowledge of the counter
values intended to be exchanged as a result of their transactions. Also, parties
cannot predetermine a guaranteed profit. This is based on the principle of
uncertain gains which, on a strict interpretation, does not even allow an
undertaking from the customer to repay the borrowed principal plus an amount to
take into account inflation. The rationale behind the prohibition is the wish to
protect the weak from exploitation. Therefore, options and futures are considered
as un-Islamic and so are forward foreign exchange transactions because rates are
determined by interest differentials.
e) Investments should only support practices or products that are not forbidden -or
even discouraged- by Islam. Trade in alcohol, for example would not be financed
by an Islamic bank; a real-estate loan could not be made for the construction of a
casino; and the bank could not lend money to other banks at interest. For example,
in an Islamic mortgage transaction, instead of loaning the buyer money to purchase
the item, a bank might buy the item itself from the seller, and re-sell it to the buyer

at a profit, while allowing the buyer to pay the bank in installments. However, the
fact that it is profit cannot be made explicit and therefore there are no additional
penalties for late payment. In order to protect itself against default, the bank asks
for strict collateral. The goods or land is registered to the name of the buyer from
the start of the transaction. This arrangement is called Murabaha. Another
approach is IjarawaIqtina, which is similar to real estate lending. Islamic banks
handle loans for vehicles in a similar way (selling the vehicle at a higher-thanmarket price to the debtor and then retaining ownership of the vehicle until the
loan is paid).
There are several other approaches used in business deals. Islamic banks lend their
money to companies by issuing floating rate interest loans. The floating rate of
interest is pegged to the companys individual rate of return. Thus the banks profit
on the loan is equal to a certain percentage of the companys profits. Once the
principal amount of the loan is repaid, the profit-sharing arrangement is concluded.
This practice is called Musharaka. Further, Mudaraba is venture capital funding of
an entrepreneur who provides labor while financing is provided by the bank, so
that both profit and risk are shared. Such participatory arrangements between
capital and labor reflect the Islamic view that the borrower must not bear all the
risk/cost of a failure, as it is Allah who determines that failure, and intends that it
fall on all those involved.
Last, Islamic banking is restricted to Islam accordance acceptable deals, which
exclude those involving alcohol, pork, gambling, etc. Thus ethical investing is the
only acceptable form of investment, and moral purchasing is encouraged. Islamic
banks and banking institutions that offer Islamic banking products and services are
required to establish Shariah advisory committees / consultants to advise them and
to ensure that the operations and activities of the bank comply with Shariah
principles.

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 ofbusiness 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 managementteam comprised of experienced
professionals, that have achieved a strong balance sheet with excellent operating
profitability and strong ratios, which places theBank at the top of the Islamic Banking
industry. The Bank has been assigned along-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 TaqiUsmani, an internationally renowned figure in
the field of Shariah, particularly Islamic Finance. He holds the position of Deputy
Chairman at the Islamic FiqhAcademy, Jeddah and in his long and illustrious career has
also served as a Judge in the Shariat Appellate Bench, Supreme Court of Pakistan. The

10

Board also includes Sheikh Essam M. Ishaq(Bahrain), Dr. Abdul Sattar Abu Ghuddah
(Saudi Arabia) and Dr. Imran Usmaniwho is also the resident Shariah Advisor of the
Bank. Dr. Imran is assisted by a 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 andbusinesses

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.

Vision Statement:
Establish Islamic banking as banking of first choice to facilitate the implementation of
an equitable economic system, providing a strong foundation for establishing a fair and
just society for mankind
Mission Statement:
To be a premier Islamic bank, offering a one-stop shop for innovative value added
products and services to our customers within the bounds of Shariah, while optimizing
the stakeholders value through an organizational culture based on learning, fairness,
respect for individual enterprise and performance

11

MEEZANS BRANCH
NETWORK:
Meezan Bank has established over 300 branches
in 89 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" for their
customers. One of the key objectives of the Bank
is to have its footprint strategically placed
throughoutthe country enabling the public to
avail the benefits of Shariah Compliant Banking
in their neighborhood.

12

Application Procedure:
Application Form & Initial Payment
Submit a filled & signed application form to Meezan Bank.
Submit the required cheque for Processing Fee & External
Agency costs.

Required Documents
Kindly attach all the required documents, as mentioned below,
along with your Application Form
Personal Information
Income Information
Address Verification
Meezan Bank will verify your residential & office addresses and
the addresses of references submitted.

Income Estimation
For Businessman / Self Employed professionals
For Salaried Individuals

Legal Opinion
Meezan Bank will obtain a legal opinion on the property
documents provided by you.

Property Valuation
Meezan Banks appointed Valuation Agency will evaluate the
property to determine its market value.

13

Credit Approval & Sanction Letter

After you have fulfilled all Meezan Banks credit requirements, we
will give you a conditional sanction letter.

Account Opening
After approval of the case, you are required to open an account at
Meezan Bank.

Signing of House Finance Agreement

After completion of the above steps and approval of your case,
you are required to come to Meezan Bank for signing of the
Islamic House Finance Agreement and other legal documents.

Transfer of Property and Disbursement

Original Property Documents will be handed over to the lawyer
who, after verification of the documents, will hand over the payorder to the banker or seller.

Applying for Islamic Housing Finance is Easy! Simply download the application form and follow the 10
easy steps given below to fulfillyour dream of owning a Home in a truly Halal way; come true.
Step 1: Application Form & Initial Payment

Submit a filled & signed application form to Meezan Bank.

Submit the required cheque for Processing Fee & External Agency costs.

Step 2: Required Documents

Kindly attach all the required documents, as mentioned below, along with your Application Form:

Personal Information

Copy of Applicant's CNIC

Copy of Co-Applicants CNIC (if applicable)

2 latest passport-sized colored Photographs of Applicant / Co-Applicant

Copy of last paid Utility Bills (Electricity/Gas/Telephone)

Borrowers Basic Fact Sheet

Copy of CNICs of legal heirs

14

Copy of recent Credit Card Bills and any other credit facilities (if applicable)

Copy of professional Degree / Certificate (if applicable)

Copy of Rent Agreement (if applicable)

Life Takaful documents (Declaration of Good Health / Health Questionnaire)

Income Information

For Salaried Individuals

Employment Certificate including salary, date of joining & present designation

Original or Certified salary slip of last three months

Previous employment proof (if applicable)

Salary A/c Bank statement - last 6 months

For Businessman / Self Employed / Professional

3 years proof of business (e.g. Tax Return / Bank Certificate)

Copy of NTN Certificate & last three years tax returns

Bank Statement of Business Account - Last 12 Months

Copy of Partnership deed (In-case of Partnership)

Professional Association Membership Certificate / Practice License (if

applicable)

If you have selected the property to buy or want financing for construction/ replacement/renovation
Complete chain of property documents (copies at initial stage & original before disbursement)
In the case of a Co-Applicant, all income related documents will also be required.
Step 3: Address Verification
Meezan Bank will verify residential& office addresses and the addresses of you and your references
submitted.
Step 4: Income Estimation
For Businessman / Self Employed professionals

15
Meezan Banks External Consultant will contact you to determine your monthly income to help you in
obtaining the maximum possible financing from the Bank.
For Salaried Individuals
Meezan Bank will verify the income with your employer.
Step 5: Legal opinion
Meezan Bank will obtain a legal opinion on the property documents provided by you.
Step 6: Property Valuation
Meezan Banks appointed Valuation Agency will evaluate the property to determine its market value
Step 7: Credit Approval & Sanction Letter
After you have fulfilled all Meezan Banks credit requirements, we will give you a conditional sanction
letter.
Step 8: Account Opening
After approval of the case, you are required to open an account at Meezan Bank
Step 9: Signing of House Finance Agreement
After completion of the above steps and approval of your case, you are required to come to Meezan Bank
for signing of the Islamic House Finance Agreement and other legal documents
*In Home Construction / Renovation Cases Original Documents will be handed over to the bank at this
stage
Step 10: Transfer of Property and Disbursement
In Home Buying / Replacement Cases

16

Account Opening
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.
TYPE OF ACCOUNTS OPENED
CURRENT
SAVING
TERM DEPOSIT
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)
JOINT ACCOUNTS
As evident from the name these accounts can be jointly opened by any number ofpersons. The
minimum number of persons required to open a joint account is two butthere is no maximum
limit.
Requirements:
National Identity card of all Applicants

17

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)
Copy of NIC/Passport of the proprietor
Declaration Letter
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)

18

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 the account opening form
Certificate of Commencement of Business
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:
Photocopy of NIC of Account Holder
Two-three passport size photographs
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:

19

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.
Overall functions performed by Customer Services Department:
ACCOUNT OPENING
ACCOUNT CLOSING
GENERAL CLIENT DEALING
My Experience:
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.

20

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
The requirement for opening these types of a/c are
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/cof the
firm
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
For Agents A/C:
Certificate of power of Attorney
Attested photocopy of CNIC of the agent

21

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.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.

I learnt about the role of STATE BANK OF PAKISTAN in Pakistans economy and
knew 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

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.

Then I was showed us module in computer that how he enters the data of customer
known as swift report of the 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.

22

Credits Financing
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 thecustomer. 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)

Car Ijara (auto finance)

Corporate Banking

Working Capital Finance

Project Financing for existing Corporate having expansion or BMRrequirements

Islamic Export Refinance Facility (Part I and Part II)

Trade Related Services

Commercial Banking

Working Capital Finance

Project Financing, Expansion or BMR Requirements

Islamic Export Refinance Facility

Trade Related Services

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

23

Foreign Trade
FOREIGN TRADE DEPARTMENT :
The account dealing with the foreign currency is called foreign currency account. Meezanhome
Remittance provides Quick Remittance in major currencies i.e.
USD
GBP
Euro
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 undera Mudarabah
arrangement that is strictly in conformity with the principles of IslamicShariah. The return earned on the
Mudarabah pool is calculated every month and theprofit ratio for all investors is declared at the beginning
of the month. If you maintain aminimum average monthly balance of $ 500, you shall be eligible to
receive profits thatshall be credited to your account every month.If any person wants to import goods
fromforeign, an account is required and for international trading the FC is needed. MBLprovide foreign
currency on Pak rupee at booking rate and the central office sent RatesIn foreign currency department the
remittance is sent through Foreign TelegraphicTransfer. The account holder can sent the amount in
foreign bank account. If anytransaction 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 letteris sent for
opening the foreign currency account to account holder and introducer. Whenany transaction is made the
bank inform stock exchange daily. The foreign currency noteis counted and recorded in the cash memo
book. The people in the foreign country sentthe amount through S.W.I.F.T. Weekly and monthly report of
all the transaction is givento the stock exchange. Cheque book is also issued to the account holder & the
foreigncurrency Account number is given to him. In this FBC & FBR is done. Debit CreditVoucher 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
foreignexchange they sent to this branch.

24
Two Major Parts:

Imports

Exports

This department also deals in

Guarantees
Export Refinance
Imports:
Letter of credit
Registered contract
Advance Payments
An LC is opened against a security which may be in the form of land & building by equitable or
registered mortgage or by the Hypothecation of the current assets.
The imports are reported on I form which has 4 copies its original copy goes to SBP after a month in
SBP reporting. In case the bank could not get original copy of I Form then its quadruplicate copy sent
to the SBP.

Letter of Credit:
A letter of credit is a written instrument issued by a bank at the request of its customer, the Importer
(Applicant), whereby the bank promises to pay the Exporter (Beneficiary) for goods or services, provided
that the Exporter presents all documents called for, exactly as stipulated in the Letter of Credit, and meets
all other terms n condition set out in the Letter of Credit. A Letter of credit is also commonly referred to
as Documentary Credit.

Other Parties of a Letter of Credit:

Issuing Bank: The bank issuing the letter of at the request of its customer the importer.
Drawee Bank:The bank named in the Letter of Credit on which the drafts are to be drawn.

25
Confirming Bank:The bank which at the request of the issuing bank adds its confirmation to the Letter
of Credit. In doing so the confirming bank undertakes to make payment to the Exporter under the Letter
of Credit assuming all terms and conditions of the letter of credit have been met.
Advising Bank:The bank to which the Issuing Bank sends the Letter of Credit, which instructions to
notify the exporter Available with Bank: - The Bank authorized in the letter of credit to effect payment
under, accept or negotiate the letter of Credit.
Reimbursing Bank:The bank designated in the Letter of Credit to reimburse the available with bank
which submits payment claims under the Letter of Credit
Modes of Shipment:

Part Shipment

Tran-Shipment

Part Shipment:It means that the shipment will be partial, that is the goods will come in more than one
shipment.
Tran-Shipment:It means that during the course of voyage merchandise is unloaded and reloaded from
one vessel to another vessel or from one mode of transportation to another mode of transportation. TranShipment must be allowed for multimodal and air transport documents.
Mode of Payment of LC:
At Sight LC
Usance LC
At Sight LC:Payment is made upon presentation of stipulated documents.
Usance LC:In this time period is mentioned e.g. 30/60/90/120/180/270 days.
Registered Contracts:
If the importer wants to make the import on the basis of registration of contracts without opening Letter of
Credit, the importer will submit a copy of the contract to the bank for registration. The bank will issue a
registration certificate. On the basis of this the importer will import the goods. The difference between
contracts and Letter of Credit is that in LC the exporter will get the payment even if the importer does not
pay where in contract the bank is not liable for payment to the exporter.
Advance Payment:

26
Buyer Trusts Seller
Seller in advantage
Where it is sellers market
Remittances mostly through Banking Channels
State Bank may consider applications for advance payment against imports where the goods are of
specialized nature. Applications for such advance payment should be made to the State Bank on Form I
and should be accompanied by the original contract (with a spare copy) entered into between the importer
and foreign manufacture .The application should also be supported by an undertaking in the prescribed
form duly countersigned by the officer of MBL. In special case the advance payment may be allowed
upto 33 1/3%of the estimated C & F value of the total quantity of the goods to be imported.
In Imports:
Process opening & amendment to letter of credit then relevant vouchers prepared posting and LC
text for the transmission.
After receiving documents against LC checking, of documents according to the LC requirements
Forward booking, PAD lodgment & retirement
Head office reporting & SBP returns
Although the LC Murabaha is booked by the corporate department but for understanding we will explain
Sight LC Murabaha and Usance LC Murabaha here to understand how trade department is working under
Islamic rules and Shariah.

Import Financing:
LC
Payment against Documents (PAD)
Trust Receipts
Finance against imported Merchandise (FIM)
Sight LC Murabaha:
Meezan Bank use Islamic mode of Murabaha in order to open sight LCs. Therefore while opening sight
LC Trade Finance should take in to account general rules of Murabaha.

27
Process Flow:
Step

Process

No.
1.

Client Contact:

CBD meets the customer and explains the Murabaha product.

The client and MBL agree on the terms and conditions of the Murabaha facility such as
amount, tenor, rate, security etc.

2.

Execution of MMFA and Agency:

The client and MBL execute the MMFA and agency agreement.

Under the agency agreement the customer is appointed as an agent (wakeel) of MBL to
purchase various kinds of raw materials on MBLs behalf.

The agency agreement may contain an exhaustive list of assets that may potentially be
purchased by the client.

3.

LC Opening and Payment:

Client will send LC documents to the Trade Finance Dept. (TF).

TF will check the available limits and will obtain necessary approvals from CBD.

TF will open LC on behalf of the client At the time of presentation of documents at

MeezanBank.s counter, TF would contact CBD for necessary approvals.

CBD will contact the client for confirming the tenure of Murabaha. If the client wishes to
pay after some time then profit for the specified period will be added otherwise no profit
will be added to the cost price.

Cost Price should include Insurance, LC opening and miscellaneous charges. If the client
has already paid above charges from his own sources then profit will be calculated
keeping in view the financing amount. An illustration of the above process is as follows:

LC Amount= Rs. 1 m
LC Opening Charges= Rs. 2,500
Insurance= Rs. 2,000
Miscellaneous charges= Rs. 1,000
Total Cost= Rs. 1,005,500
Assuming that the client has paid all charges upfront, and needs financing for a period of 30 days
against the LC at 10% p.a. The profit for the period will be Rs. 8,220. The total Murabaha
contract price would be Rs. 1,013,720. If the client wishes to pay on spot then the goods will be
sold to him at Rs. 1,005,500.
4.

Disbursement:

28

In case the client does not need any financing, TF will debit the account of the client to
settle the LC.

If the client wishes to Finance the LC the following process may be followed:

RM will coordinate with CAD and the client for the preparation and execution of subMurabaha documents
After execution of sub-Murabaha documents, CAD will credit the required amount in the
clients account
TF will debit clients account to settle the LC
TF will forward copy of LC and other details to CAD as purchase evidence

In both cases TF should prepare Declaration and send for execution.

TF should coordinate with the client to obtain executed declaration from the client.

In case the client unnecessarily delays in sending back the declaration, the concerned TF
officer should coordinate with the RM.

Usance LC Murabaha:Meezan Bank generally establishes Usance LCs against service charges only. However, on case to case
basis, upon information by the client Meezan Bank opens Usance LCs under Murabaha. In this way the
client enjoys two credit periods, one from supplier and another from Meezan Bank. However, for this
purpose we need to follow certain steps, which are discussed below.
Process Flow:
Step

Process

No.
1.

Client Contact:

CBD meets the customer and explains the Murabaha product.

The client and MBL agree on the terms and conditions of the Murabaha facility such as
amount, tenor, rate, security etc.

2.

Execution of MMFA and Agency:

The client and MBL execute the MMFA and agency agreement.

Under the agency agreement the customer is appointed as an agent (wakeel) of MBL to
purchase various kinds of raw materials on MBLs behalf.

The agency agreement may contain an exhaustive list of assets that may potentially be
purchased by the client.

3.

LC Opening and Payment

29

Client will send documents to the Trade Finance Dept. (TF) to open a 120 days Usance
LC.

RM will coordinate with the client to confirm that the client would like to book
Murabaha against the LC.

TF will obtain necessary approvals from CBD.

TF will open LC on behalf of the client

At the time of presentation of documents at MeezanBanks counter, TF would contact

CBD for necessary approvals.

CBD will contact the client for confirming the tenure of Murabaha.

Cost Price should include Insurance, LC opening and miscellaneous charges. If the client has
already paid above charges then profit will be calculated keeping in view the financing amount.
An illustration of the above process is as follows:
LC Amount= Rs. 1 m
LC Opening Charges= Rs. 2,500
Insurance= Rs. 2,000
Miscellaneous charges= Rs. 1,000
Total Cost= Rs. 1,005,500
Assuming that the client has paid all charges upfront, and needs financing for a period of 30 days
against the LC at 10% p.a. The profit for the period will be Rs. 8,220. The total Murabaha
contract price would be Rs. 1,013,720.
4.

Disbursement:
RM will coordinate with CAD and the client for the preparation and execution of subMurabaha documents.

In case the Usance LC is of foreign currency, RM needs to help the client for booking
forward cover to confirm the amount to be financed by the bank.

Payment date from Murabaha Contract Price would be Disbursement Date plus 150 days,
with profit added for 30 days.

TF should prepare Declaration and send for execution.

TF should coordinate with the client to obtain executed declaration from the client.

In case the client unnecessarily delays in sending back the declaration, the concerned TF
officer should coordinate with the RM.

On 120th day CAD will credit the required amount in the clients account.

TF will debit clients account to settle the LC.

Client pays the price on 150th day.

30

Exports:
Process of Exports:
The process of exports in short is described below The person who wants to export commodities come to
the bank along with his I.D Card copy, Certificate of Chamber of Commerce for export registration No
and copy of NTN No for the E-Form.It has 4 copies. The E-Form is then issued after checking these
documents. He then takes the form and fills the form in all respects. The bank then certified the form
within the 14 days of issuance of E-Form .After the E-Form is certified by the bank, it is submitted by
the exporter to the customs at the time of shipment. The custom authorities will detach the original copy
and after filling in the portion relating to them and affixing their seal and signature thereon forwarded it to
SBP. The custom authorities will return the duplicate, triplicate and quadruplicate copies to the exporter
who will retain the quadruplicate for his own record and submit the duplicate and triplicate copies to the
bank along with the shipping documents, invoices etc within14 days of the shipment and 21 days of
certification of E-Form and 21 days of bill of Lading.. The bank will forward triplicate copy to SBP in
his monthly reporting. The E-Forms are reported in A-1/A-2 schedule.
On receipt of the documents the bank should compare the documents with the relative export form and
satisfy themselves that they conform in all respects to the declaration made on the relative export form
and the amount of the bills and invoices is not less then the value declared on them.
Short Shipment:
Where a portion of consignment is short shipped and the exporter consequently draws a bill or prepares
an invoice for a quantity less than that declared on the relative export form, he should produce a notice of
short shipment on the prescribed form duly certified by the customs along with the shipping documents.
The bank will forward the short shipment notice along with the triplicate copy of E-Form while reporting
the realisation of full value of goods shipped to SBP.
Advance Payment against Exports:
In case of payment received in advance for goods to be exported from Pakistan, Bank should obtain a
certificate in duplicate from the beneficiary on the Advance payment voucher declaring the particulars of
the intended export, before disbursing the amount to him. Both the copies of the Advance payment
voucher shall be signed by the authorized officers of MBL. The original shall be surrendered to the SBP
on A-2 schedule, while duplicate shall be returned to exporter for production at the time of certification of
form E.
Exports on D.A Basis:
In case of exports on firm contracts on Documents against acceptance (D.A) the bank should ensure that
the foreign is of sound financial standing before certifying E. Form. Despite aforesaid precaution, if a

31
foreign buyer refuses to accept the goods, the exporter should make immediate arrangement for shipping
the goods back to Pakistan or alternate buyer found with the approval of SBP.
Export Financing:
Financing against Foreign Bills (FAFB)

Foreign Bills Discounted (FBD)

Foreign Bills Purchased (FBP)

Packing Credits

Conclusion:
Islamic banking is a very young concept. Yet it has already implemented as the only system in
two Muslim countries; there are Islamic banks in many Muslim countries and the few nonMuslims countries as well. Despite the successful acceptance there are problems. These
problems are in the area of financing.
With only minor changes in their practices, Islamic banks can get rid of all their cumbersome,
burdensome and sometimes doubtful forms of financing and offer a clean and efficient interestfree banking. The entire necessary ingredients are already there. The modified system will make
use of only two forms of financing loans with a service charge and Mudaraba participatory
financing both of which are fully accepted by all Muslim writers on the subject.
Such a system will offer an effective banking system where Islamic banking is obligatory and a
powerful alternative to conventional banking where both co-exist. Additionally, such a system
will have no problem in obtaining authorization to operate in non-Muslim countries.
Participatory financing is a unique feature of Islamic banking and can offer responsible financing
to socially and economically relevant development projects. This is an additional service Islamic
banks offer over and above the traditional service provided by conventional commercial banks.
In short Meezan Bank is stands today at a noteworthy and critical juncture as The Premier
IslamicBank in Pakistan and is truly leading the way forward in establishing a real, stable, and
dynamic Islamic Banking system in Pakistan. The foundation of this being the guidance of our
highly qualified and globally renowned Shariah Supervisory Board headed by Justice (Retd)
Muhammad TaqiUsmani and including renowned scholars from the Middle East, who as a whole
bring together a rich knowledge base of Islamic Fiqh accumulated over the past 1400 years.
Furthermore, with the able support of the SBP's Islamic Banking Department, all the products
offered by the bank are very thoroughly scrutinized by these Shariah specialists in Islamic

32

finance; hence approval of these products is not based on unqualified individual opinion or
views, but on very sound assessment and jurisprudence.
Meezan Bank continues to educate the market in a transparent and open manner, as to what
Islamic Banking all about, how does it differs from the conventional system and what are its
main benefits and advantages. They welcome and in fact urge all members of society to come
and see for themselves as well. Visit any Meezan Bank branch across Pakistan and allow the
clarity and functionality of the Islamic Banking Model to speak for itself.