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Executive Summary

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Executive Summary:

The whole period of my internship at Bank Islami and the preparation of this report have

been really helpful in making me understand Islamic and conventional banking in theory and in

practice and my experiences are so vast that I have no words to express them.

A bank is a financial institution that accepts deposits and channels those deposits into

lending activities. The Banks primarily provide financial services to customers while the main goal

is enriching investors.

Today banks work in a hybrid fashion providing a variety of services to their customers to

yield heavy profits. A valuable advice I learned on the way was;

“The days of conventional banking are long gone; it’s the era of customer oriented banking.”

Islamic banking refers to a system of banking or banking activity that is consistent with the

principles of the Shari'ah and its practical application through the development of Islamic

economics. The principles which emphasize moral and ethical values in all dealings have wide

universal appeal. Interest free banking is a narrow concept denoting a number of banking

instruments or operations, which avoid interest. Islamic banking, the more general term is expected

not only to avoid interest-based transactions, prohibited in the Islamic Shariah, but also to avoid

unethical practices and participate actively in achieving the goals and objectives of an Islamic

economy.

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Islamic banking system is based on risk-sharing, owning and handling of physical goods,

involvement in the process of trading, leasing and construction contracts using various Islamic

modes of finance. As such, Islamic banks deal with asset management for the purpose of income

generation. They will have to prudently handle the unique risks involved in management of assets

by adherence to best practices of corporate governance. In order to insure that these principles are

followed, each Islamic institution must establish and provide itself with an advisory council known

as a Sharia'a Board.

BankIslami Pakistan Limited (the Bank) was incorporated in Pakistan as a public limited

company on October 18, 2004 under the Companies Ordinance, 1984 to carry out business of an

Islamic Commercial Bank in accordance with the principles of Islamic Shariah.

BankIslami is the Joint venture project of 3 groups with 18.75% equity each, namely

Jahangir Siddiqui & Co. Pakistan, DCD Group UK, & Dubai Bank. Irrespective of stiff competition

in the market the Bank has successfully managed to grow over 400% during last one year.

BankIslami has become a hallmark of innovation and bringing new products and services in the

market and by introducing the Bio-Metric ATM facility it became the first bank of the region to

offer such services and till date no bank has been able to replicate this service. BankIslami has

been able to form a strong image of having authentic basis for its banking operations by using

smart marketing ideas that resonate well with the public mind. All branches of BankIslami have the

same look and feel irrespective of location.

The bank boasts an excellent technological ground for its operations and has a very robust

streamlined way of operating. Its staff being kept highly motivated by various strategies and its

human resource department, the bank always seems to leave almost all its customers with a smile

over their face. The experience whether for an internee or an employee or a customer is always

unique and stisfying in its own way. The banks employees play on the human way of thinking

naturally since they are a young energetic team collaborating with another instead of redundant

conflict siezed people in other organizations.

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My eperience with the bank was phenomenal and unforgettable at the same. I loved it and

enjoyed the best I could throughout the whole journey of learning and knowledge. It felt as I have

vividly expressed throughout my report as though I was always part of a bigger commitment to

serve and yet it boosted my individuality to work with its team as well. I felt as though for a brief

time period, this technical breathing corporate system accepted me as family, aloowed me on its

deepest systems and gave me the opportunity to walk on my own before I am ready to face the big

world myself. Thanking the bank simply just seems so less for all this.

Nothing short of incredible is the way in which Bank Islami Pakistan Limited functions. The

more I learned through my internship, the more I came to respect it. Just as a living creature, the

bank survives in the corporate world. I have grown a somewhat thorough understanding ofcourse

about the working of the bank and have presented my humble views, time and again where

required, to highlight further steps necessary in strengthening this magnificient organization.

Over to the end of my wonderful saga of learning and quest of knowledge I have

undoubtedly establighed evidently enough that Bank Islami is a force to reckon with in the indusrty

and has the best people working for it in the banking sector. Its philosophy of service is truly

evident in its sops and surely it compels out of every mind:

“Serving You; the Right Way!”

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Introduction of Organization

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History of Banking and Its Origin

History:

Banks date back to ancient times. The first banks

were most probably the religious temples of the ancient

world, and were most likely established sometime during the

third millennium B.C. Banks perhaps predated the

invention of money, initially deposits consisted of grain

and later other goods like metals(gold). Temples were

considered the safest places to store gold as they were

well built, constantly attended and protected from

thieves. There are extant records of loans from the 18th

century BC in Babylon that were made by temple priests/monks to merchants.

Banks in Persia and other territories in the Persian Sassanid Empire issued letters of credit

known as Sakks during the 3rd century AD. Muslim traders are known to have used the cheque or

Sakk system since the time of Harun al-Rashid (9th century) of the Abbasid Caliphate. In the 9th

century, a Muslim businessman could cash an early form of the cheque in China drawn on sources

in Baghdad, a tradition that was significantly strengthened in the 13th and 14th centuries, during

the Mongol Empire.

After the fall of Rome, banking was abandoned in western Europe and did not revive until

the time of the crusades. The earliest known state deposit bank, Banco di San Giorgio (Bank of St.

George), was founded in 1407 at Genoa, Italy. The oldest bank still in existence is Monte dei Paschi

di Siena, headquartered in Siena, Italy, which has been operating continuously since 1472.

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What is a Bank?

A bank is a financial institution that accepts deposits

and channels those deposits into lending activities. The Banks

primarily provide financial services to customers while the

main goal is enriching investors. Government restrictions on

financial activities by banks vary over time and location.

Banks are important players in financial markets and offer

services such as investment funds and loans.

In some countries such as Germany, banks have historically owned major stakes in

industrial corporations while in other countries such as the United States banks are prohibited from

owning non-financial companies. Today banks work in a hybrid fashion providing a variety of

services to their customers to yield heavy profits. The days of conventional banking are long gone;

it‘s the era of customer based banking.

Size of Global Banking Industry Today:

Assets of the largest 1,000 banks in the world

grew by 6.8% in the 2008/2009 financial year to a

record $96.4 trillion while profits declined by 85% to

$115bn in adverse market conditions. The United

States has the most banks in the world in terms of

institutions (7,085 at the end of 2008) and possibly

branches (82,000). As of Nov 2009, China's top 4 banks have in excess of 67,000 branches

(ICBC:18000+, BOC:12000+,CCB:13000+,ABC:24000+) with an additional 140 smaller banks

with an undetermined number of branches. Japan had 129 banks and 12,000 branches. In 2004,

Germany, France, and Italy each had more than 30,000 branches—more than double the 15,000

branches in the UK.

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Islamic Banking

What is Islamic Banking?

There is no standard way of defining what is an Islamic

bank is, but broadly speaking an "Islamic bank is an institution

that mobilize financial resources and invest that money in an

attempt to achieve pre-determined islamically - acceptable social

and financial objectives. Both mobilization and investment of

money should be conducted in accordance with the principles of

Islamic Shari'a".

It refers to a system of banking or banking activity that is consistent with the principles of

the Shari'ah and its practical application through the development of Islamic economics. The

principles which emphasize moral and ethical values in all dealings have wide universal appeal.

Shari'ah prohibits the payment or acceptance of interest charges (Riba) for the lending and

accepting of money, as well as carrying out trade and other activities that provide goods or services

considered contrary to its principles.

Interest free banking is a narrow concept denoting a number of banking instruments or

operations, which avoid interest. Islamic banking, the more general term is expected not only to

avoid interest-based transactions, prohibited in the Islamic Shariah, but also to avoid unethical

practices and participate actively in achieving the goals and objectives of an Islamic

economy.Islamic banking is not restricted to Muslims only. Islamic banking has the same purpose

as conventional banking except that it operates in accordance with the rules of Shari‘ah, known as

Fiqh al-Muamalat (Islamic rules on transactions).

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History of Islamic Banking:

During the Islamic Golden Age, early forms of proto-capitalism and free markets were

present in the Caliphate, where an early market economy and an early form of mercantilism were

developed between the 8th-12th centuries, which some refer to as "Islamic capitalism". A vigorous

monetary economy was created on the basis of the expanding levels of circulation of a stable high-

value currency (the dinar) and the integration of monetary areas. A number of innovative concepts

and techniques were introduced in early Islamic banking, including bills of exchange, the first

forms of partnership (mufawada) such as limited partnerships (mudaraba), and the earliest forms

of capital (al-mal), capital accumulation(namaal-mal), cheques, promissorynotes, trusts, loaning.

Organizational enterprises similar to corporation‘s independent from the state also existed in the

medieval Islamic world, while the agency institution was also introduced during that time. Many

of these early capitalist concepts were adopted and further advanced in medieval Europe.

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Banks in Persia and other territories in the Persian Sassanid Empire issued letters of credit

known as Ṣakks during the 3rd century AD. Muslim traders are known to have used the cheque or

ṣakk system since the time of Harun al-Rashid (9th century) of the Abbasid Caliphate. In the 9th

century, a Muslim businessman could cash an early form of the cheque in China drawn on sources

in Baghdad, a tradition that was significantly strengthened in the 13th and 14th centuries, during

the Mongol Empire.

The first modern experiment with Islamic banking was undertaken in Egypt under cover

without projecting an Islamic image—for fear of being seen as a manifestation of Islamic

fundamentalism that was anathema to the political regime. The pioneering effort, led by Ahmad

Elnaggar, took the form of a savings bank based on profit-sharing in the Egyptian town of Mit

Ghamr in 1963. This experiment lasted until 1967 (Ready 1981), by which time there were nine

such banks in the country.

In 1972, the Mit Ghamr Savings project became part of Nasr Social Bank which, till date, is

still in business in Egypt. In 1975, the Islamic Development Bank was set-up with the mission to

provide funding to projects in the member countries. The first modern commercial Islamic bank,

Dubai Islamic Bank, opened its doors in 1975.

The Philosophy of Islamic Banking and Finance:

Islamic Shariah prohibits ‗interest‘ (Riba) but it

does not prohibit all gains on capital. It is only the increase

stipulated or sought over the principal of a loan or debt

that is prohibited. Islamic principles requires consideration

of capital performance while rewarding the capital. The

prohibition of a risk free return and permission of trading,

as enshrined in the Verse 2:275 of the Holy Quran, makes

the financial activities in an Islamic set-up real asset-

backed with ability to cause ‗value addition‘.

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Islamic banking system is based on risk-sharing, owning and handling of physical goods,

involvement in the process of trading, leasing and construction contracts using various Islamic

modes of finance. As such, Islamic banks deal with asset management for the purpose of income

generation. They will have to prudently handle the unique risks involved in management of assets

by adherence to best practices of corporate governance. Once the banks have stable stream of

Halal income, depositors will also receive stable and Halal income.

The forms of businesses allowed by Islam at the time the Holy Quran was revealed included

joint ventures based on sharing of risks & profits and provision of services through trading, both

cash and credit, and leasing activities. In the Verse II:275, Allah the Almighty did not deny the

apparent similarity between trade profit in credit sale and Riba in loaning, but resolutely informed

that Allah has permitted trade and prohibited Riba.

Profit has been recognized as ‗reward‘ for the use of capital and Islam permits gainful

deployment of surplus resources for enhancement of their value. However, along with the

entitlement of profit, the liability of risk of loss on capital rests with the capital itself; no other

factor can be made to bear the burden of the risk of loss. Financial transactions, in order to be

permissible, should be associated with goods, services or benefits. At macro level, this feature of

Islamic finance can be helpful in creating better discipline in conduct of fiscal and monetary

policies.

Besides trading, Islam allows leasing of assets and getting rentals against the usufruct taken

by the lessee. All such things/assets corpus of which is not consumed with their use can be leased

out against fixed rentals. The ownership in leased assets remains with the lessor who assumes risks

and gets rewards of his ownership.

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Riba in Quran:

1. First Revelation (Surah al-Rum, verse 39)

"That which you give as interest to increase the

peoples' wealth increases not with God; but that which

you give in charity, seeking the goodwill of God,

multiplies manifold." (30: 39)

2. Second Revelation (Surah al-Nisa', verse 161)

"And for their taking interest even though it was forbidden for them, and their wrongful

appropriation of other peoples' property. We have prepared for those among them who reject faith

a grievous punishment (4: 161)"

3. Third Revelation (Surah Al 'Imran, verses 130-2)

"O believers, take not doubled and redoubled interest, and fear God so that you may

prosper. Fear the fire which has been prepared for those who reject faith, and obey God and the

Prophet so that you may receive mercy."

4. Fourth Revelation (Surah al-Baqarah, verses 275-81)

"Those who benefit from interest shall be raised like those who have been driven to madness

by the touch of the Devil; this is because they say: "Trade is like interest" while God has permitted

trade and forbidden interest. Hence those who have received the admonition from their Lord and

desist may keep their previous gains, their case being entrusted to God; but those who revert shall

be the inhabitants of the fire and abide therein for ever." (275)

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Riba in Hadith:

From Jabir: The Prophet may curse the receiver and

the payer of interest, the one who records it and the two

witnesses to the transaction and said: "They are all alike [in

guilt]." (Muslim, Kitab al-Musaqat, Bab la'ni akili al-riba

wa mu'kilihi; also in Tirmidhi and Musnad Ahmad).

From 'Abdullah ibn Hanzalah: The Prophet, said: "A dirham of riba which a man receives

knowingly is worse than committing adultery thirty-six times" (Mishkat al-Masabih, Kitab al-Buyu',

Bab al-riba, on the authority of Ahmad and Daraqutni). Bayhaqi has also reported the above

hadith in Shu'ab al-iman with the addition that "Hell befits him whose flesh has been nourished by

the unlawful."

From Abu Hurayrah: The Prophet, said: "Riba has seventy segments, the least serious

being equivalent to a man committing adultery with his own mother." (Ibn Majah)

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Modern Islamic Banking:

The first modern commercial Islamic

bank, Dubai Islamic Bank, opened its doors in

1975. In the early years, the products offered

were basic and strongly founded on

conventional banking products, but in the last

few years the industry is starting to see strong

development in new products and services.

Islamic Banking is growing at a rate of 10-15% per year and with signs of consistent future

growth. Islamic banks have more than 300 institutions spread over 51 countries, including the

United States through companies such as the Michigan-based University Bank, as well as an

additional 250 mutual funds that comply with Islamic principles. Conservative estimates suggest

that over US$500 billion of assets are managed according to Islamic investment principles. The

World Islamic Banking Conference, held annually in Bahrain since 1994, is internationally

recognized as the largest and most significant gathering of Islamic banking and finance leaders in

the world. The Vatican has put forward the idea that ―the principles of Islamic finance may

represent a possible cure for ailing markets.‖

The recent $2.35 billion bank financing for Ettihad Etisalat Company is a significant

milestone in the history of Islamic banking and sets a benchmark for Islamic financing deals into

the future. For the first time in the industry's history, several Islamic banks headquartered in the

Gulf have recently set up business operations in Malaysia, while making clear that on their radar

screens are Indonesia and China. Riyadh, Asharq Al-Awsat- In 1990, a new player emerged in the

Islamic banking market, signifying a huge leap in the Islamic banking industry. It was a landmark

year in the history of Islamic banking, indicating the beginning of an industry in terms of expansion

and growth.

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About Islamic Banking:

"Islamic banks operate in the Middle

East, Europe, Asia and Africa. At the

threshold of the 21st century, Islamic banks

had about US $700 billion in funds under their

management"

A few decades ago, modern banking

and financial institutions that encompass

Islamic values within their principles and practices seemed to be merely a remote dream. Today,

however, Islamic banking has become a viable financial approach that attracts an increasing

amount of capital investment. As a concept Islamic Banking was developed as a result of the

religious prohibition of the payment or receipt of interest. The fundamental principles of Islamic

Banking go back over one thousand four hundred years. They are set out in Shari'a law and are

enshrined in the Qur'an, the Hadith and the Sunna. Today, these principles form the basis of the

contemporary Islamic Banking range of Islamic financial products & services.

There is no standard way of grouping Islamic Financial Institutions, but in terms of services

rendered, today Islamic Financial Institutions can be divided into the following broad categories:

1- Islamic Banks. 2- Islamic Windows.

3- Islamic finance/Investment Banks. 4- Islamic Mortgage companies.

5- Takaful Companies. 6- Mudarabah Companies.

7- Islamic investment funds

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Principles of Islamic Banking:

The principles of Islamic finance are established in the Qur'an, which Muslims believe are

the exact Words of God as revealed to the Prophet Mohammed. These Islamic principles of finance

can be narrowed down to four individual concepts:

1. Prohibition of Interest or Usury

2. Ethical Standards

3. Moral and Social Values

4. Liability and Business Risk

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1- Prohibition of Interest or Usury:

The first and most important concept is that both the charging and the receiving of interest

is strictly forbidden. This is commonly known as Riba or Usury. Money, on its own, may not

generate profits. When Riba infects an entire economy, it jeopardises the well-being of everyone

living in that society. When investors are more concerned with rates of interest and guaranteed

returns than they are with the uses to which money is put, the results can only be negative. Usury is

forbidden in all the three religions, Judaism, Christianity and Islam, but it is the people who forget

the rules of Allah. All societies, nowadays - Muslims, Christians and Jews - deal with Usury.

2- Ethical Standards:

The second guiding principle concerns the ethical standards. When Muslims invest their

money in something, it is their religious duty to ensure that what they invest in is good and

wholesome. It is for this reason that Islamic investing includes serious consideration of the business

to be invested in, its policies, the products it produces, the services it provides, and the impact that

these have on society and the environment. In other words, Muslims must take a close look at the

business they are about to become involved in.

In all facets of the financial system, Islam has certain rules, certain regulations as to how

Muslims should go about participating in these activities. For example, in share trading or the

securities market, Islam looks at the activities of the companies, to establish whether or not the

companies are involved in activities which are in line with Sharia'a.

3- Moral and Social Values:

The third guiding principle concerns moral and social values. The Qur'an calls on all its

adherents to care for and support the poor and destitute. Islamic financial institutions are expected

to provide special services to those in need. This is not confined to mere charitable donations but

has also been institutionalised in the industry in the form of profit-free loans or Al Quard Al Hasan.

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An Islamic bank's business includes certain social projects, as well as charitable donations.

Islamic banks provide profit-free loans. For example, if an individual needs to go to hospital or

wants to go to university, we give what is called Quard Al Hasan. This Quard Hasan is normally

given for a short period of one year and the Islamic bank does not charge anything for that.

4- Liability and Business Risk:

The final principle concerns the overarching concept of fairness, the idea that all parties

concerned should both share in the risk and profit of any endeavor. To be entitled to a return, a

provider of finance must either accept business risk or provide some service such as supplying an

asset, otherwise the financier is, from a Sharia'a point of view, not only an economic parasite but

also a sinner. This principle is derived from a saying of the Prophet Mohammed (SAW) "Profit

comes with liability". What this means is that one becomes entitled to profit only when one bears

the liability, or risk of loss. By linking profit with the possibility of loss, Islamic law distinguishes

lawful profit from all other forms of gain.

In order to insure that these principles are followed, each Islamic institution must establish

and provide itself with an advisory council known as a Sharia'a Board. The members of Sharia'a

Boards can include bankers, lawyers or religious scholars as long as they are trained in the Islamic

law, or Sharia'a.

In 2001, the Industry witnessed a remarkable development in this regard by the initiative of

the Accounting and Auditing Organization for the Islamic Financial Institutions or AAOIFI. At that

time, AAOIFI's standards were enhanced to include elements that aim at broadening the role of the

external auditor. Now according to these new developments the external auditor is also required to

look for compliance with Sharia'a rules as defined by the Sharia'a supervisory board of each bank

and in accordance with the Sharia'a standards AAOIFI has begun to issue.

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History of Islamic Banking in Pakistan:

Steps for Islamization of banking and financial system of Pakistan were started in 1977-78.

Pakistan was among the three countries in the world that had been trying to implement interest free

banking at national level. But as it was an epic task, the switchover plan was implemented in

phases. The legal framework of Pakistan's financial and corporate system was amended on June

26, 1980 to permit issuance of a new interest-free instrument of corporate financing named

Participation Term Certificate (PTC). An Ordinance was promulgated to allow the establishment of

Mudaraba companies and floatation of Mudaraba certificates for raising risk based capital.

Amendments were also made in the Banking Companies Ordinance, 1962 (The BCO, 1962) and

related laws to include provision of bank finance through PLS, mark-up in prices, leasing and hire

purchase.

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Pakistan adopted a policy of gradual transformation of its banking system from February

1979 after several years of study and preparation by the government-appointed Council of Islamic

Ideology (CII). The procedure adopted by banks in Pakistan since July 1 1985, based largely on

‗mark-up‘ technique with or without ‗buy-back arrangement‘, was, however, declared un-Islamic

by the Federal Shariat Court (FSC) in November 1991. However, appeals were made in the Shariat

Appellate Bench (SAB) of the Supreme Court of Pakistan. The SAB delivered its judgment on

December 23, 1999 rejecting the appeals and directing that laws involving interest would cease to

have effect finally by June 30, 2001. In the judgment, the Court concluded that the present financial

system had to be subjected to radical changes to bring it into conformity with the Shariah. It also

directed the Government to set up, within specified time frame, a Commission for Transformation of

the financial system and two Task Forces to plan and implement the process of the transformation.

The House Building Finance Corporation had shifted its rent sharing operations to interest

based system in 1989. The Task Force of the M/O Law proposed amendments in the HBFC Act to

make it Shariah Compliant. Having vetted by the CTFS, the amended law has been promulgated by

the Government. The State Bank issued detailed criteria in December 2001 for establishment of

full-fledged Islamic commercial banks in the private sector. Al Meezan Investment Bank received

the first Islamic commercial banking license from SBP in January 2002 and the Meezan Bank

Limited (MBL) commenced full-fledged commercial banking operation from March 20, 2002.

The Government as also the State Bank are mainly concerned with stability and efficiency of

the banking system and safeguarding the interests, particularly, of small depositors. With this

concern in mind it has been decided to operate Islamic banking side by side with traditional

banking. The approach is to institute best practice legal, regulatory and accounting frameworks to

support Islamic banks and investors alike. The year 2002-2003 witnessed strengthening measures

taken in the areas of banking, non-bank financial companies and the capital markets.

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Conventional Banking Vs Islamic Banking:

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Key Distinguishing Features:

The key distinguishing features that diffrentiate Islamic banking from

conventional banking are:

Transactions are asset-based

It is socially-responsible banking because it operates under Shariah

restrictions.

Does not permit financing of prohibited goods / Industries

Conventional Banking Islamic Banking

- Profit rates are fixed

- Interest based

-Doing financing in cash form

- Does not involve itself in trade and business

-Current account based on profit

- Depositors get a fixed rate regardless of the

bank’s profitability, thus insulating them

from the bank’s true performance.

- Profit rates are variable

-Interest free

-Doing financing in form of products

- Actively participates in trade and production.

-Current account based on no profit no loss

- Profit is shared with the depositor, higher the

bank’s profit, higher the depositors income.

The conventional banking, which is interest based, performs the following major activities:

Deposit creation

Financing

Agency services

Issuing LCs

Advisory-services

other related services

Now I would like to make a comparison of these activities with Islamic concept of banking:

Deposits (The liability side)

Deposit qard (loan) not amanah (Trust)

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The common misconception regarding "deposit" is that it is a form of amanah

(security/trust). However, according to Shariah definition, deposit has more resemblance to qard

(loan) than amanah. In Islam an item is termed as amanah, if it bears all the features of amanah.

Deposits cannot be termed amanah, as they do not have two of its special features:

1. Amanah cannot be used by the bank for its business or benefit.

2. The bank cannot be liable in case of any damage or loss to the amanah resulting from

circumstances beyond its control.

Whereas in banks, deposits are primarily placed to earn profit, which is only possible when

the bank uses these deposits to invest in other business. Hence deposits do not fulfill the first

condition of amanah, which says that it should not be used by the caretaker for his own business or

benefit. Secondly, the bank is held 100% responsible for these deposits in all circumstances even in

case of loss or damage to the bank. This feature releases deposits from the ruling of amanah where

the assets will not be returned in case of any damage to the asset resulting from circumstances

beyond caretaker's control. According to this justification, all three kinds of deposit namely current

accounts, fixed deposits and saving accounts are not amanah. They are all governed by qard.

One school of thought says that only fixed deposit and saving accounts fall under the laws of

qard but current account is governed by amanah. However, this is also not correct because the

bank is as much liable to current account holders as it‘s PLS account holders and is called the

"guarantor" in fiqh terminology. Due to this feature, current account is also governed by qard.

The depositors are not interested in terminology but the end-result of holding an account.

Therefore if a bank does not offer security to the assets, the depositors under normal circumstance

will never keep their assets at such a bank. Similarly if the depositors are told that the status of

their account will that be of amanah and in case of any loss to the assets, without any negligence of

the bank, will not be returned to them, not a single person would put his asset in the bank.

Therefore the bank provides the security to the assets, which the depositors themselves want.

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We thus conclude that the main intention of the depositors is not to put the assets in banks

as amanah; rather as qard by having collateral security by appointing the bank as guarantor.

Role of the Bank as Agent:

A bank under Islamic Shariah can act as an agent (on Al-Wakalah basis) of the customer and can

carry out the transaction on his behalf. Moreover it can charge agency fee for the services.

The agency fee can be charged in the following cases:

Payment / receiving of cash on behalf of the customer

Inward bill of collection

Outward bill of collection

LC opening and acceptance

Collection of export bills / bills of exchange. In this case the undertaking or guarantee

commission and take-up commission can be Islamized. Bank will charge an agency fee for

accepting the bills, which is bought at face value.

Underwriting & IPO services

Role of the Bank as Guarantor:

The bank or financial institute gives a guarantee on behalf of its customer but according to

Shariah, guarantee fee cannot be charged. Normally conventional banks charge fee for following

guarantees:

Letter of guarantee

Shipping guarantee

Advisory Services:

Most of the advisory services provided by the financial institutes can be carried out easily in

compliance with Shariah as long as the nature of business is Halal:

Privatization advisory services

Equity placement

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Merger & acquisition advise

Venture capital

Trading (Capital market operations)

Cash & portfolio management advice

Brokerage services (Purchase & buying of share of companies involved in halal business, a

fee could be charged for it).

Other Allowed Islamic Financial Services & Products:

Remittance

Zakat deduction.

Sale & purchase of foreign currency

Sale & purchase of travelers checks (local foreign currency)

ATM services

Electronic online transfer

Telegraphic transfer (of cash)

Demand draft

Pay order

Lockers & custodial services

Syndicate funds arrangements services (non-interest or markup based) for some fee.

Opening of bank account (current & non-interest or no-markup)

Clearing facility

Sales & purchase of shares/stock (of companies

involved in halal activities)

Collection of dividends

Electronic banking window

Telephone banking.

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Introduction of Bank Islami Pakistan Limited

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History

BankIslami- The Idea:

The epochal idea of BankIslami was conceptualized by

Jahangir Siddiqui & Company Limited and DCD Group in late

2003. Mr. Hasan A. Bilgrami was appointed as Adviser to the

sponsors on March 16, 2004 to formalize the idea. He presented

the concept paper of BankIslami to sponsors on March 24, 2004. A

detailed business plan was then prepared and a formal application

was submitted to the State Bank of Pakistan on May 26, 2004. On September 26, 2005, Dubai Bank

joined the Sponsors and became one of the founding shareholders of BankIslami by investing

18.75% in the total Capital.

Accredition by State Bank of Pakistan:

The State Bank of Pakistan issued a No

Objection Certificate in no time on August 19,

2004 and BankIslami Pakistan Limited, the

second full-fledge Islamic Commercial Bank

in Pakistan, was incorporated on October 18,

2004 in Pakistan.

BankIslami Pakistan Limited was the first Bank to receive the Islamic Banking license under

the Islamic Banking policy of 2003 on March 31, 2005. The Bank envisioned to focus primarily on

Wealth Management as the core area of business in addition to Shariah compliant Retail Banking

products, Proprietary and Third party products, and Integrated financial planning services.

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Initial Public Offering of BankIslami:

BankIslami Pakistan Limited made a

public offering of Rs. 400 Million, at par, from

6th to 8th March. This was the first primary

issue by a Bank in over a decade in Pakistan.

The Initial public offering (IPO) of BankIslami

received overwhelming response from the

general public as the applications received were

9 times higher than offered, fetching nearly Rs.

3.5 Billion, against the demand of Rs. 400 Million.

Inauguration & Network Expansion:

The State Bank of Pakistan declared

BankIslami Pakistan Limited as a Scheduled

Bank with effect from March 17, 2006.

BankIslami started its Banking operations on

7th April 2006 with its first branch in SITE,

Karachi. By the end of 2006, the Bank had

10 branches, nine in Karachi and one in

Quetta. The Bank further concentrated in

building a nationwide network and by the end of year 2007, its branch network grew to 36 branches

in 23 cities. In 2008, the Bank opened 66 new branches nationwide which expanded its network to

102 branches in 49 cites. This gives BankIslami the distinction of having the fastest expanding

network in Pakistan as well as offering the widest network by any Islamic Bank in Pakistan.

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Competition Situation:

BankIslami is the Joint

venture project of 3 groups with

18.75% equity each, namely

Jahangir Siddiqui & Co. Pakistan,

DCD Group UK, & Dubai Bank.

Irrespective of stiff competition in

the market the Bank has

successfully managed to grow over

400% during last one year and all

set to be a 100 Online Branch Network by the year end 2008.

The same was achieved by the existing largest player in the Islamic Banking Industry

Meezan Bank in 6 years time at December 2007. BankIslami has become a hallmark of innovation

and bringing new products and services in the market and by introducing the Bio-Metric ATM

facility it became the first bank of the region to offer such services and till date no bank has been

able to replicate this service. Bio-Metric identification (based on finger print) removes the need for

PIN based verification and it adds the security element in ATM transactions.

Image Marketing:

BankIslami has been able to form a strong

image of having authentic basis for its banking

operations by using smart marketing ideas that

resonate well with the public mind. For example,

the calligraphy of the bank's name in Urdu is

claimed to have been done by the same

calligraphers who have done similar work in the

Holy Mosque of Madina in Saudi Arabia. Marketing Department of the Bank was at the forefront of

re-branding exercise and achieving greater standardization across the network. All branches of

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BankIslami have the same look and feel irrespective of location. An agreement was also signed with

VISA for launch of the debit card. BankIslami has also entered into an agreement with Pak-Qatar

Family Takaful for distribution of BancaTakaful from selected branches of the Bank.

Key Achievements of Bank Islami:

The foremost achievement of the Bank during the year 2010 has been its emergence as a

serious Islamic Bank which is increasingly being seen as the most authentic provider of Islamic

Financial Solutions. Bank Islami is thankful to Almighty Allah and his customers‘ base who are

now willing to pay a premium to bank for the authenticity of products, commitment to adhere to

Shariah principles without any compromise and delivery which is better than most of our counter

parts, including conventional banks. In less than three years BankIslami is an established franchise.

Another key achievement of bank Islami was the completion of branch expansion target of

100 branches and sub-branches. Bank Islami actually opened 102 branches and sub-branches

covering 49 cities in all four provinces, Azad Kashmir and Northern Areas. Not only does

BankIslami offer the best coverage compared with any Islamic Bank, but also this is the fastest

expansion achieved by any Bank in Pakistan's Banking industry. Almost all branches are online,

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serviced with 24×7 Phone banking and offer the same standard facilities across the network. For

year 2010, BankIslami intends consolidating its network and operations.

Bank Islami core Banking system, iMal, was successfully deployed in the first branch in

November 2008. The core banking module is completed deployment in nine largest branches

towards end of the year2008. Deployment of iMal has made BankIslami the only bank in Pakistan

to use Banking software that has been designed for Islamic Banking as well as the bank was the

fifth largest net acquirer on the 1 Link ATM network.

Human Resources Department responded well to the challenge of recruitment for 66

branches. Staff strength rose from 563 as on December 31, 2007 to 1,188 on December 31, 2008. In

all, 2,500 interviews were conducted and 785 training sessions were held. Online recruitment was

launched with success. Staff turnover remained one of the lowest in the industry at 1.9%.

BankIslami was the first Bank that has a full time Shariah Adviser the scope of the Shariah

Department was further strengthened with more pro-active involvement in Product Development,

Training and Audit. The first Shariah Audit of the Bank was conducted in year 2008 and it reported

that not even a single deviation was found. BankIslami is actively involved in different forums at the

State Bank‘s level for development of Islamic Standards in the country as well.

BankIslami's performance for the year 2009:

Due to a heavy expansion last year, the full cost

impact of which came this year, BIPL is reporting a

loss of Rs. 563M before tax and Earning Per Share

stood (0.91). This is approximately Rs. 250M more

than what we had budgeted. Due to economic in-

stability, we preferred to conserve the liquidity. At the

same time, private corporate credit off take was slow

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there by drying up appetite for quality credit. While our closing ADR is still less than 50%, going

forward the signs are very positive. Almost 30% growth came in the last quarter only.

Growth in consumer financing was contained, though the Bank continued to finance good

credit. BIPL has also successfully negotiated with CITI Bank acquisition of its mortgage portfolio

of Rs. 1.5b. This transaction is expected to close in the second quarter. The Book quality remains

good and improving. Most of the nonperforming financing consists of quality collateral with a

market. We expect a strong recovery this year. We are aiming to close the year at around 60% ADR

with NPL's contained at less than 5% of the portfolio.

The success story of the year was the growth in deposits, which came almost entirely from

retail segment. BIPL is one of the few banks in Pakistan which has a genuine deposit franchise.

Instead of targeting large, rate sensitive accounts, BIPL as strategy focused on retail customer

which are stable, less rate sensitive and loyal. Current and Saving Accounts recorded impressive

growth. Even growth in Fixed Deposits was propelled by our five and ten depository products

which now accounts for 21% of the deposit base. Despite of 124% increase in deposits, cost of

funds actually declined. BIPL will continue to follow the same strategy – strong focus on retail

deposits, a further 5% to 10% reduction in cost of fund coupled with at least 50% increase in the

deposit base.

Our technology infra-structure was further strengthened during the year with full

deployment of state of art sharia compliant core banking system, iMal. We remain the largest user

of Linux in Pakistan which has helped us to have a stable, cost effective platform compared to our

peers. Our market share in ATM transactions has improved to 11th position amongst 1-LINK

members. We are aiming to complete deployment of the next phases of iMal during 2010.

Head count in 2009 increased by almost 24%. Most of the hiring took place in the branches.

Head count/branch of BIPL remained impressive at around 14, which is one of the best in the

industry. The highlight of this year was our focus on Training. BIPL is strictly following mandatory

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training hours for all employees which in some cases is as high as 80 hours. The first batch of

trainee officers has graduated and assumed responsibility in the branches. We plan to induct a few

more batches this year in Karachi, Lahore, Islamabad, and Balochistan where we have a strong

presence. BIPL also continued with focus marketing initiatives. Our greatest asset today is

probably our brand name 'BankIslami'. Going forward, we plan to maintain presence in selected

media segments.

This was a year of consolidation for the Bank. To ensure and maintain Shari'ah compliance

of highest possible standards in all transactions (particularly Murabahah transactions) in the

increased branch network remained the matter of focus. Following were the major development of

the period under review:

Product Development:

BankIslami Pakistan Limited had voluntarily stopped

Commodity Murabahah transaction after some scholarly

reservations raised on the transaction structure. However, huge

liquidity arising from tremendous deposits growth necessitated an

efficient but Shari'ah compliant Treasury Product for management

of liquidity. For this reason, Product Development and Shari'ah

team of BankIslami in coordination with prominent market players

brought certain improvements in the existing structure of

Commodity Murabahah transactions. After considerable efforts

BankIslami undertook a few transactions, under the revised

structure, during last quarter of the year 2009. Efforts are still in

progress to further improve the process which are expected to bring fruits shortly and BankIslami

plans to present the revised structure and processes to prominent Shari'ah scholars InshaAllah

after post-launching study of the product.

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The Bank also carried out major revision of Policy and Procedure Manuals for Deposit,

Murabahah, Ijarah, Diminishing Musharakah and Istisnaa' products to make them more user

friendly. Finished goods purchase product with the name ―Karobar Financing‖ has been

developed for working capital financing during the year.

Islamic Banking Training:

Besides Systems and SOPs employees are the major contributor to

success or failure of any organization. BankIslami has greatly emphasized

on Islamic banking products to ensure Shari'ah compliance from their

end. With a handsome budget allocated for training program and state of

the art Training Centers have been established in Karachi, Lahore and

Islamabad, a detailed Training Calender was prepared to organize the

sessions properly and to ensure that every employee gets proper training. Following Training

Methodology was adopted during the training sessions:

Case study based Method of training was introduced which was found very useful by the

participants. Training manuals for Murabahah, Ijarah and Diminishing Musharakah products were

also developed.

Following are the details of the training sessions held in 2009:

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Future Outlook:

Despite of testing times, bank Islami is

optimistic about the coming years. BIPL

management team target for the coming years is to

consolidate the operations and bring greater

efficiencies in operations. Specifically, they would

like to grow the balance sheet and wipe off the

accumulated losses of Rs. 577,246,000 which are

expected to decrese this year.

Growing network, a viable and working depository franchise, growth in the Islamic Banking

industry and technological advantage places them in an ideal position to take advantage of the opportunities

that lie ahead due to State Bank‘s increased capital requirements. The bank is also unin IT effectively and

efficiently to reduce cost ofcommunication and its taking the maximum posible banefitout of it. The bank is

alsoexpectedto takeover another chainofbanks as soon as the bank recovers from the accumilated loss.

As discussed earlier, the reason for our losses this year is non-absorption of operating costs due to

lower asset volumes. Besides that, BIPL has all the right straits which a successful bank may wish to have.

Our net-work is large and well spread out, deposit base is stable and cost effective, intermediation cost is

within the top quartile in the industry, NPLs are low and that too contained and technology base is one of

the best. With improving asset deployment, BankIslami achieved operating break from December. On full

year basis, we will inshallah report a profit starting from first quarter. No large expansion in net-work is

envisaged this year.

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Our Logo Story

Our name & logo set the benchmark:

When it is a question of faith,

Authenticity

Is the key word.

A simple, local and Authentic name that leaves

no confusion about what we do

Only Islamic Banking!

The same thought process went into designing the

logo- simple local and Authentic to the core.

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Motif:

The blue and green motif sets the background

of the logo. Like all ‗Authentic‘ Islamic

motifs, it has eight corners filled with flowing

lines without any source point. These two

features are an important part of Islamic art.

Next time you see an Islamic motif, check its

authenticity by these banchmarks.

Script and Calligrapher:

We opted for the Arabic script for its

versatility, beauty and Authenticity ‗Khat-

e-Sulus‘, a script which has graced the

Islamic monuments from the subcontinent

to Turkey to Arabia including the two most

sacred mosques, was opted for. It stands

for timeless traditions and values that

Muslims in these regions have shared for

centuries-trade and commerce included.

When it came to the Calligrapher, we went to one of the best sources in the world-

Ustad Shafiq-uz-Zaman, the only person chosen to do calligraphy in the Masjid-e-

Nabwi after 500 years.

Can you think of any better and more authentic standard?

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The Crescent:

A rising crescent in the traditional green

encircles the motif and calligraphy. The

Crescent has deep association with

contemporary and modern Islam. In our

logo, it stands for Shariah encompassing

everything that we do at Bankislami.

Motif Bands:

Two motif bands run parallel to each other and frame the symbol. Again, stars in the

bands have eight corners. This band is found on many Islamic Monuments all around

the world including the Holy Ka‘ba.

Do you think Authenticity will ever escape

our attention in whatever we do?

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Board of Directors

The Board of Directors of

BankIslami comprises of eminent

representatives from the Bank and its

Sponsors. These include Chief Justice

(R) Mahboob Ahmed (Chairman), Mr.

Ahmed EIshall, Mr. Ahmed Randeree,

Mr. Ali Raza Siddiqui, Mr. Hasan A.

Bilgrami, Mr. Shabir Ahmed Randeree

and Mr. Mohamed Al Amiri.

Chief Justice (R) Mahboob Ahmed

Chief Justice (R) Mahboob Ahmed is

the Chairman of the Board of Directors of

the Bank. Mr. Mahboob Ahmed graduated

from University of Punjab and completed

his LLB in 1957. He practiced at the Bar of

Lahore High Court and Supreme Court of

Pakistan for 19 years particularly on the

constitution and commercial sides. Mr.

Mahboob Ahmed was appointed Judge of Lahore High Court in 1978 and became Chief Justice

in 1990-91. He also has been the Chief Justice of Federal Shariat Court of Pakistan in 1997. He

has also served as the acting Governor of Punjab. During his tenure as judge of Lahore High

Court he was the first original side judge on the Banking Jurisdiction and also the Company

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Judge and Chairman-Election Authority. He also represented Pakistan in a number of

conferences in the Middle East, Far East and Europe.

Mr. Mahboob Ahmed has been on the Board of Directors of Jahangir Siddiqui & Co.

Ltd. since October 31, 2002. He is also the Director of Azgard Nine Limited.

Mr. Ahmed Elshall

Mr. Ahmed Elshall is the Chief Financial Officer of Dubai Bank. Mr. Elshall is an MBA,

CPA and a Certified Financial Planner (CFP) and has more than 20 years of experience in

Investment, Commercial and Islamic Banking.

He served as Senior Vice President and Group Head incharge of strategic projects at

Union National Bank following a stint with the Abu Dhabi Islamic Bank where he held the

position of SVP, Strategic Planning and Financial Control. Mr. Elshall also served as the

Financial Controller, International Division and Senior Manager for Strategic Planning at

Riyad Bank and as the Manger, Investors Tax Reporting Group at the Federal Home Loan

Mortgage Corporation in Washington, D.C.

Mr. Ahmed Goolam Mahomed Randeree

Mr. Ahmed Goolam Mahomed Randeree is the Chairman of the DCD Group and its

associated holdings in International Trade Finance and Property & Investment businesses.

Having moved from South Africa to the UK in the mid 1970's, Mr. Randeree was instrumental

in growing the groups Textile and Trade Finance business, Revelate Limited. The business

operated throughout the UK, South Africa and the Far East. Mr. Randeree presided over the

Group when its turnover and operations grew from US$ 2.5 million in 1977 to over US$ 150

million by 1998.

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Over the past 6 years, Mr. Randeree moved to the Middle East and concentrated on

various new businesses on the Indian subcontinent, Hong Kong and the UAE. Dominion Asset

Management, Hong Kong and Al Ajwad International, Dubai, U.A.E represent the on-going

diversification of Mr. Randeree's holdings worldwide.

Mr. Ali Raza Siddiqui

Mr. Ali Raza Siddiqui joined JS-Investments as an Executive Director in 2005.

Previously, he was Assistant Vice President at AIM Investments, a wholly-owned subsidiary of

AMVESCAP Plc in Houston, U.S.A. At AIM, Mr. Siddiqui was part of a Five-person team

responsible for the management of US$ 60 billion in mutual fund assets.

Mr. Siddiqui holds a Bachelors Degree from Cornell University, USA, with double

majors in Economics and Government.

Mr. Hasan A. Bilgrami

Mr. Hasan A. Bilgrami is the Founding Chief Executive Officer and Director of

BankIslami. His association with BankIslami started as a consultant to the sponsoring

shareholders right at the inception of the project where he was responsible for developing the

business plan, arranging permissions, staffing and capital raising. Previously he worked as the

Head of Asset Management with the National Investment Trust (NIT), as Country Manager

Consumer Banking & Corporate Business with Gulf Commercial Bank (now PICIC

Commercial Bank Limited) as General Manager Corporate Finance with ORIX Investment

Bank and as Director and Head of Corporate Finance with Khalid Majid Husain Rahman, then

a member firm of Deloitte & Touche. Mr. Bilgrami has overall 19 years of professional

experience.

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Mr. Bilgrami has hands on experience in structuring Islamic modes of financing while

he worked as a Secretary of the Financial Instruments Committee of the Islamic Finance

Commission. His specific task was development of model financial instruments that could be

used by the financial services industry in Pakistan. The scope of work not only included both

asset and liability side products, but also included areas such as risk management and capital

adequacy. Model agreements were also part of the mandate. His work of model agreements has

been approved by the Shariah Board of the State Bank of Pakistan and has become the industry

standard.

He is a Director on the Board of BankIslami's subsidiary, BankIslami Modaraba

Investment Limited, Director of KSB Pumps Limited as well as a Chairman of its Audit

Committee, Nominee Director of Haleeb Foods Limited. He is also the President of the National

Council of the Institute of Cost and Management Accountants, Director of Pakistan Institute of

Corporate Governance and a member of the Institute of Capital Markets, Pakistan.

He has also been a Director on boards of PICIC, Soneri Bank Limited, Crescent

Commercial Bank Limited, Fauji Fertilizer Company Limited and National Refinery Limited.

Mr. Bilgrami graduated in Commerce from Karachi University and is a Fellow member of the

Institute of Cost & Management Accountants of Pakistan and a Fellow of the Canadian

Securities Institute.

Mr. Shabir Ahmed Randeree

Mr. Shabir Ahmed Randeree is a principal and CEO of DCD Group Ltd (Global), a

worldwide group with core business interests in Finance and Property & Investments. He has

over 25 years of experience of a broad array of real estate investments, including the

development, acquisition and management of offices, hotels, retail space and residential

developments.

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He has been the Group's Managing Director for the since 1992 and previous to this he

was a founder member and Managing Director of Warrenby Limited, a business involved in

International Trade Finance and Real Estate Commercial Investments in the UK, and which

was later acquired by the DCD Group. He also has worked in the clothing import and export

business with Dominion Clothing Distributors Limited where he was the Sales and Finance

Director in the mid 1980's.

Mr Randeree holds a number of Directorships, including being a Director of the Al

Baraka Bank Limited of South Africa and European Islamic Investment Bank Plc in UK. Mr.

Randeree is also on the Executive committee of BMRC (a Charity related to the Ethnic

Minorities Foundation UK) and Trustee for the British Edutrust Foundation, chaired by Lord

Bhatia

Mr. Randeree has done his BA Honors in Accounting and a post graduate MBA.

Mohamed Amiri

Mohamed Amiri has over 18 years of banking experience in both Islamic &

International Banking and is presently working for Dubai Bank, U.A.E as Head of Retail &

Business Banking

Prior to joining Dubai Bank, Mr. Amiri was working for Dubai Islamic Bank as

Executive Vice President – Retail & Business Banking and was successful in opening many

branches in a short span of three years.

Mr. Amiri also carries a 9 years of valuable experience with HSBC Dubai, where he

held the position of a Branch Manager at Deira Branch, the 2nd largest branch of HSBC in the

Middle East.

Mr. Amiri has a Bachelor‘s degree in Management Information System and is also a

Graduate from the first batch of Mohammed Bin Rashid Program for Leadership Development

(MBRPLD).

Page 44 of 300

Sponsors

BankIslami is a joint venture among

three financially sound and progressive

shareholders, namely, DCD Group, Dubai Bank

and Jahangir Siddiqui & Co. Ltd. Please click

on the following for details of our Sponsors:

DCD Group

The history of the modern DCD Group can be traced back to

Jersey ( The Channel Islands ) in 1975 with the formation of DCD

Holdings Limited. After three decades of trading, today the Group

has its Family Investment office based out of the DIFC (Dubai

International Finance Centre) with its operations extending to

London, New York and Dubai.

The DCD Group's core business activities are concentrated in the Real Estate and Banking

sectors. The Real Estate division of the DCD Group concentrates on enhancing and delivering

long-term gains for the Group and its Partners internationally. The Group has built its track-record

primarily in the UK and USA, then spread to the Middle East and a select number of Far East and

Page 45 of 300

African destinations. Over the past three decades, the Group's real estate investments have

produced a consistent, attractive IRR.

The Group takes a proactive hands-on Asset Management role and is responsible as a

managing partner for all or a portion of the equity required in any given transaction. As of June

2007, the total value of properties owned and/or managed by the DCD Group, was in excess of US

$3.0 Billion.

The DCD Group's interests in the Banking sector comprise of various niche holdings

internationally, including a stake in Dallah Albaraka Bank Limited in South Africa which was

formed in 1989 .

More recently, the Group played a pioneering role with QIIB (Qatar International Islamic

Bank) in the formation of the Islamic Bank of Britain PLC (IBB) and retains its shareholding in the

Bank. DCD also remains a founding shareholder in the European Islamic Investment Bank PLC

(EIIB), which raised approximately 200 million pound, pre and post listing on the LSE. In 2007, the

Group were founding investors in The Islamic Bank of Asia in Singapore, with DBS Development

Bank of Singapore as the principle promoter.

Dubai Bank PJSC

Dubai Bank PJSC which commenced operations in

September 2002, is one of the UAE‘s most dynamic financial

institutions and closely associated with Dubai's plans of

establishing itself as the region‘s financial and trading centre.

The Bank‘s focus is to be a leading financial institution that is a

flagship for Dubai, the UAE, the GCC and beyond. Dubai Bank

is 70% owned by Dubai Banking Group, with the remaining 30% being held by Emaar Properties.

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Dubai Banking Group was launched in May 2008 under the directive of HH General Sheikh

Mohammed bin Rashid Al Maktoum to consolidate the existing Shariah-compliant investments of

Dubai Holdings and form a global Islamic investment company.

Dubai Banking Group is managed by Dubai Group, the leading diversified financial

services company of Dubai Holding. Emaar Properties is the largest real estate developer in the

GCC region and have managed large-scale projects in Dubai such as: Dubai Marina, Burj Dubai,

Dubai Mall. The Company has a collective presence in over 36 markets spanning the Middle East,

North Africa, Pan-Asia, Europe and North America.

Dubai Bank offers a full range of products and services through its Corporate & Consumer

Banking divisions. These include transaction and deposit accounts,financing, trade finance, and

wealth management services as well as a host of other unique Banking services. In the near future,

Dubai Bank plans to increase its current Banking network by opening additional branches, and

developing new alliances with key financial institutions in the GCC and beyond.

Dubai Bank has identified Islamic Banking as a promising area. On January 1,2007, the

Bank became a Shariah compliant financial institution. The members of Shariah Supervisory Board

of Dubai Bank consists of Justice (R) Muhammad Taqi Usmani, Sheikh Nizam Yaquby, Dr

Mohamed Elgari and Dr Mohamed Daud Bakar.

Jahangir Siddiqui & Co. Ltd.

Jahangir Siddiqui & Co. Ltd. ("JSCL") is the holding

company for one of the largest and most diversified financial

services groups in Pakistan, involved in investment Banking,

broker-dealer operations, proprietary trading, insurance, Banking and asset management.

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The Company was established in 1991 and was the first Pakistani financial services

company to boast a Wall Street pedigree due to its previous joint venture with Bear Stearns and Co.

It is also the only securities company to be a primary dealer for Government securities in Pakistan

and is one of the largest bond trading firms in Pakistan. JSCL is a listed company on the Karachi

Stock Exchange.

JSCL subsidiaries include JS Global Capital Ltd, JS Bank., and JS-Investment Ltd. JSCL

also has holdings in the sugar, sugar derivatives, specialty textile, specialty steels and insurance

sectors through significant minority holding in leading companies in these sectors. These strategic

investments and associated companies include, EFU General Insurance, EFU Life Assurance,

Allianz EFU Heath Insurance, Azgard Nine and Al Abbas Sugar Mills amongst others.

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Shareholding Pattern:

* The initial public offering of BankIslami took place in March 2006. BankIslami shares were

formally listed on the Karachi Stock Exchange on April 17, 2006.

On October 31, 2006, the Board of Directors of BankIslami decided to further issue capital of

Rs. 1.2 Billion through a right share issue of 60% at par i.e. Rs.10 each to existing

shareholders.

On August 23, 2007, the Board of Directors of the Bank decided to raise the paid up capital of

the Bank to Rs. 4.2 billion through a right issue of 31.25% at par i.e Rs.10 each to existing

shareholders.

On March 31, 2008, BankIslami issued an additional Rs. 80 Million shares to general public.

On August 27, 2008, the Board of Directors of the Bank decided to raise the paid up capital of

the Bank to Rs. 5.2 billion through a right issue of 23.366% at par i.e Rs.10 each to existing

shareholders.

Shareholding Rs. (Million) %

Founding Sponsors

Dubai Bank PJSC 1,310.53 24.82

Jahangir Siddiqui & Co. Ltd 1,112.56 21.07

DCD Group 1,028.48 19.47

Mr. Hasan A Bilgrami 5.81 0.11

Chief Justice(R) Mahboob Ahmed 1.31 0.02

Total 3,459 65.50

General Public* 1,821 34.49

Grand Total 5,280 100

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Shariah Supervisory Board

The Shariah Board of BankIslami

consists of three renowned and distinguished

Shariah scholars namely Justice (R) Mufti

Muhammad Taqi Usmani, Prof. Dr. Fazlur

Rahman and Mufti Irshad Ahmad Aijaz.

Mufti Irshad Ahmad is also the Shariah

Adviser of the Bank who works full-time with

the management and guides them in issues

pertaining to the Shariah. Please click on

the following names to view the details of our Shariah Board members:

Justice (R) Muhammad Taqi Usmani

Justice (R) Muhammad Taqi Usmani is the Chairman of Shariah Supervisory Board of the

Bank. He is a renowned Islamic Scholar of Pakistan and has held a number of positions in board of

prestigious Islamic institutions.

Presently, he is the Permanent member of International Islamic Fiqh Academy, Jeddah,

Vice President of Darul Ulloom Karachi, Chairman International Shariah Standard Council of

Accounting and Auditing Organization of Islamic Financial Institutions (AAOFI), Bahrain;

Chairman of Shariah Board Bahrain Monetary Agency (BMA), Bahrain; Chairman of Shariah

Board, Abu Dhabi Islamic Bank, UAE; Chairman of Shariah Board, Meezan Bank, Pakistan;

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Chairman of Shariah Board, Islamic House of Britain plc, UK; Chairman of Shariah Board, HSBC

Amanah Finance, Dubai.

Muhammad Taqi Usmani obtained his 'Takhassus' (Specialization in Islamic Fiqh and

Fatwa) degree, equivalent to PhD, from Darul Ulloom Karachi in 1961. He also holds a Master's

degree from Punjab University in Arabic Literature and LLB degree from Karachi University.

Muhammad Taqi Usmani has served as a Judge of Shariat Appellate Bench, Supreme Court

of Pakistan from 1982 to 2002 and Judge of Federal Shariat Court of Pakistan from 1980 to 1982.

He has written a number of books and articles on Islamic Banking and Finance in Arabic, Urdu

and English.

Professor Dr. Fazlur Rahman

Professor Dr. Fazlur Rahman is the member of Shariah Supervisory Board of the Bank. He

is a renowned scholar and has over 30 years of teaching experience in various countries of the

world including Malaysia and Saudi Arabia.

Presently, he is the Director of Islamic Guidance Trust and Shariah Adviser of Atlas Asset

Management's Atlas Islamic Fund. He is also a faculty member of Sir Syed University in Karachi.

He has contributed several articles on interest, Muslim personal laws, and human rights etc.

Moreover, one of his writings, "a study of commercial interest from the point of view of Fiqh and

History", is of great repute in literary circles and has been extensively quoted by Federal Shariah

Court in its Judgment in 1991 and again in 1999.

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Mufti Irshad Ahmad Aijaz

Mufti Irshad Ahmad Aijaz is appointed as the full time Shariah Adviser to the Bank. He

comes from a leading family of scholars. His father, Maulana Muhammad Ashfaque Ahmad, is

better known for translating in English the famous ‗Tafseer e Usmani‘. He graduated from Jamia

Uloom Islamiyyah, Binnori Town, Karachi and he has done his Shadat-ul-Aalamia (Masters in

Arabic and Islamic Studies) from there as well. Afterwards, he completed his Takhassus fi al-Iftaa

(Specialization in Islamic Jurisprudence and Fatwa) from Jamia Darul Uloom, Karachi.

Mufti Irshad Ahmad is well versed in Islamic economics. Mufti Irshad has passed an Islamic

economics course ―Contemporary Business and Banking and its critical evaluation in the light of

Shariah‖ from the Centre for Islamic Economics, Jamia Darul Uloom, Karachi. Mufti Irshad has

also recently completed his MBA program from (AMI) Iqra University, Karachi. He is also

presently associated with Iqra University as Lecturer in Islamic Studies and is enrolled in the

MPhil program with specialization in Islamic Finance at (AMI) Iqra University, Karachi.

Page 52 of 300

Bank Islami Areas of Working

Retail Banking

We offer you a range of saving and investment

alternatives to help you grow your money in safe

and secure manner.

Consumer Banking

We offer you superior financing products and

quality service to help you own your home or car

for a better quality life.

Corporate Banking

We are your financial partners to help you meet

your business needs with timely and cost effective

financial solutions.

Value Added Services

We provide state of the art banking services and

channels to help you access your funds with utmost

ease and convenience.

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Financial Highlights

Amounts in Rs. Million Mar07 Jun 07 Sept07 Dec 07 Mar08 jun 08 Sept08 Dec 08 Mar09

Total Deposits 2,717 4,196 6,246 9,934 9,806 11,353 11,242 12,478 16,514

Total Assets 6,268 7,824 9,985 14,447 14,827 16,581 17,231 19,089 22.935

Total Financing 1,470 2,188 3,486 3,963 4,592 5,387 6,827 6,528 6,704

Total Investments 399 645 1,920 3,864 4,155 3,841 5,018 5,020 7,089

Asset to Deposit Ratio 54% 52% 56% 40% 47% 47.45 60.73 52 29

Return on Assets -0.30% -0.48% -0.36% -0.26% -0.50% -0.06 0.04 -0.28 -0.37

Return on Equity -0.59% -1.17% -1.14% -0.96% -1.81% -0.23 0.15 -1.02 -1.65

Earnings Per share (Rs.) -0.09 -0.13 -0.14 -0.13 -0.08 -0.02 0.02 -0.12 -0.16

No. of Employees 300 413 471 563 708 723 825 1,188 1,430

No. of Branches 10 14 16 36 36 36 40 102 102

Total Deposits Total Investment Total Financing

Total Assets Branch Network Employee Per Branch

Page 54 of 300

Credit Rating

Credit Rating:

The Bank has been assigned a long term entity

rating of 'A' and short term rating of 'A 1' by Pakistan

Credit Rating Agency Limited (PACRA), reflecting

BankIslami well conceived business strategy and

establishment of an effective operating platform to execute

the business strategy. (Rating as of June 2008 review)

Assessment of PACRA:

BankIslami, capitalizing on its expanded outreach, experienced substantial growth in

finances in 2008. This enabled BankIslami to register a significant increase in its net interest

revenue. Other operating income witnessed an upsurge on account of higher fee and commission.

Meanwhile, there was a sizeable increase in personnel and other expenses, owing to the ongoing

network expansion. Moreover, BankIslami made a net provision of PKR 130mln, due to sizeable

increase in the classified portfolio. This resulted in doubling the pre-tax loss of the bank. The

performance trend remained the same in 1Q09 with a slight addition in NPLs.

Going forward, BankIslami intends to leverage its expanded outreach to enhance both its

deposit base and finances portfolio. Although the bank has plans to penetrate the retail segment, no

significant lending is expected over the near-term, owing to currently weak credit environment.

BankIslami would continue with its recent strategy of focusing the corporate segment, though

cautiously here as well. The bank, with a view to reduce its cost of funds, plans to focus more on

Long Term A

Short Term A1

Page 55 of 300

demand deposits. BankIslami, to augment further its retail franchise, has entered into agreements

with different organizations to launch new products and services. Meanwhile, BankIslami, with

surplus liquidity and support of strong sponsors, eyes acquisition of banks as a strategy to achieve

sizeable growth. These initiatives exhibit clarity of direction but the extent to which they materialize

remains to be seen.

BankIslami's core banking software is iMal, developed by Path Solutions, a software house

in the Middle East. Based on Shariah stipulations and compliant with Basel II, iMal provides an

integrated solution for all operational requirements. The implementation of the software is to be

completed by end-09.

The target is to take consumer financing, over the medium term, upto 10%-15% of the total

advances. With expansion in outreach, the bank intends to rationalize its deposit mix by substituting

a portion of term deposits with current deposits. Nevertheless, deployment of excess liquidity would

remain a challenge in the absence of an active Shariah compliant money market. Earnings from

investment banking business are expected to grow significantly.

The deal pipeline is currently healthy. Meanwhile, BIPL plans to lay down requisite

infrastructure for offering wealth management services, going forward. BankIslami, due to initial

stage of operations, maintains ample liquidity and has a very low deposit concentration, which

clearly stands out among close peers. The bank‘s investment portfolio is modest in size (end-08:

PKR 207mln) – mainly dominated by strategic investment (PKR 191mln). The bank recently

expanded its exposure to the sukuk market. There is a revaluation surplus, though slight, available

on this investment (PKR 16 mln).

BankIslami, mainly due to un-utilized resources, has a relatively high level of capitalization

(CAR), which offers significant room for credit expansion. However, with restricted internal

generation, the bank would remain dependent on its sponsors meeting

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Risk Management:

Risk Management is the process of managing uncertainties that arises in the normal course

of business activities. It also encapsules risk/reward trade-off. The function of risk management is

one of the most important areas of the banking business, and covers a wide spectrum of financial

business risk categories; including Credit, Market, Liquidity, Operational etc. The Group follows

an effective risk governance which commensurate's well with our current size and structure.

During the last couple of years risk management has weathered a lot of criticism with

relations to its effectiveness in the global financial markets. While financial managers at the time

were clearly divided from the center on the role of risk management in the global crisis of the

recent past, the division now is at the furthest from the equator. More and more significance is

being attached to an effective and integrated risk management.

The Group is also committed to the full and a timely implementation of Basel II (B2) which

would effectively provide for a risk-based capital approach. Currently, the Bank adheres to the

regulatory requirement in this respect, and conducts its business accordingly. Risk-exposure limits

in compliance with regulatory and banks own internal policies have also been defined for each

asset class.

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Risk Management Framework:

The Risk management function

has now taken its root within the

financial institutions on a world-wide

basis, and is as critical in fulfilling

the institutes‘ financial objectives as

the objectives themselves. Its not just

a function to foretell and manage an

adverse future event, but it brings about the basic function of being informed; being informed of

what can or may happen, being informed of what steps/controls need to be taken to reduce/mitigate

the level of risk and to be informed and to be reasonably prepared to deal with any undesired event/

circumstances. Decisions emanating from this basic understanding form the cornerstone of our

Risk Management Framework.

A strong organizational set-up, with clearly defined roles and responsibilities permits a

higher level of articulation of the banks' risk mandate, establishment of a structure that provides for

authority, delegation, accountability, and the development of a control framework. Risk

management cannot live in a vacuum; in order to be effective, it has to be run on an enterprise

level. Our framework comprises of a separate department, with a dedicated and growing team,

which share our core strategic values including an effective Sharia‘h compliance. Committees

related to the management of risks at BIPL form the main layer of the framework, the

inflow/outflow of information is through the dedicated function of risk management. The Head of

Credit / Risk, Operations, Finance, Treasury and other related functions review the critical risk

areas of operational, credit and market risk as well as other risks being faced by the organization,

along with the magnitude of their impact and likelihood of occurrence.

BIPL perceives the management of risk not to be limited to a department or a function, but

rather should readinto our daily business routine. Ideas and decisions are heavily based on the

Page 58 of 300

risk/ reward trade-off some of the ideas which never see the light of the day are usually the ones

which have been shelved due to an unacceptable risk level. The risks when identified and analyzed

are further weighed against the applicable risk weights and its impact reviewed on a periodic basis.

This pro-active approach helps in outlining the organization‘s risk tolerance level vis-a-vis BIPL's

risk appetite in relation to its size, current position and market standing, with a view to refine

processes, controls and guidelines to not only mitigate, but also to effectively manage risk.

A well formulated policy and procedure is critical for an effective risk management

framework; it than needs to be reinforced through a strong control culture that promotes sound risk

governance. Our Risk Management Framework has been developed keeping in mind, that:

- To be effective, strong monitoring and control activities should be integral to the Bank.

- Critical Decision Making should be based on relevant research, proper analysis and effective

communication within the Bank.

- Every loss or near miss event should provide some KLO (Key Learning Outcome), developing a

better risk analysis ability.

Strategic Level:

At strategic level, the risk related functions are approved by the senior management and the

Board. These include; defining risks, setting parameters, ascertaining institutions risk appetite,

formulating strategy and policies for managing risks and establishing adequate systems and

controls to ensure that overall risk remains within acceptable level and the reward compensates'

for the risk taken.

Macro Level:

It encompasses risk management within a business area or across business lines. Generally

the risk management activities performed by middle management or units devoted to risk reviews

fall into this category. Periodical sensitivity / scenario analysis, stress testing is performed, to

review sensitivity and resilience of the portfolio.

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Micro Level:

Risk management at micro level, is of critical importance. This function if performed with diligence

and understanding, can be of maximum benefit to the organization. Micro level risk management

includes the business line acquisition, strong adherence to the credit and other related criteria.

Capital Management:

Our objectives for a sound capital management are: 1)

to ensure that the Group complies with the regulatory

Minimum Capital Requirement (MCR) 2) maintain a strong

credit rating 3) maintain healthy capital ratios to support

business and to maximize shareholder value and 4) to operate

with a Revolving Planning Horizon and be able to take

advantage of new investment opportunities when they appear.

The State Bank of Pakistan through its BSD Circular No.07 dated April 15, 2009 requires

the minimum paid up capital (free of losses) for Banks / Development Finance Institutions to be

raised to Rs.10 billion by the year ending December 31, 2013. The raise is to be achieved in a

phased manner requiring Rs.6 billion paid up capital (free of losses) by the end of the financial

year 2009.

The paid up capital of the Bank (free of losses) as of December 31, 2009 amounts to Rs

4.706 billion. However, the Bank has been granted an exemption till March 31, 2010 to meet the

Minimum Capital Requirement by the SBP, vide its letter BSD/BAI-3/608/191/2010 dated March 3,

2010. The Board of Directors, in order to comply with the enhanced capital requirement, is

considering various options including but not limited to issue of right shares and acquisition

options. In this connection, the Bank has already made an announcement to Karachi Stock

Exchange about its decision to enter into a Memorandum of Understanding (MoU) with another

Islamic Commercial Bank in relation to its merger/acquisition into/by the Bank. The Board is

confident that it will meet the Minimum Capital Requirement within the stipulated time.

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In addition, the Group was also required to maintain a minimum Capital Adequacy Ratio

(CAR) of 10% of the risk weighted exposure of the Group. The Group CAR as at December 31,

2009 was 20.87% of its risk weighted exposures.

Compliance with Code of Corporate Governance:

The requirements of the Code of Corporate Governance

set out by the Karachi Stock Exchange in its listing regulation

relevant for the year ended 31st December 2009 have been

adopted by the Bank and have been duly complied with. A

statement to this effect is annexed with the report.

Bank Islami is in complete complience with the Code of Corporate Governance contained in

the regulations G-1 of the Prudential Regulations for Corporate/Commercial Banking issued by the

State Bank of Pakistan for the purpose of establishing a framework of good governance, whereby a

listed banking company is managed in compliance with the best practices of corporate governance.

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Milestones

24 March 2004 Concept paper of Islamic Bank presented to Sponsors; JS Group and DCD Group

26 May 2004 Application for the license of an Islamic Bank was submitted to SBP

19 August 2004 BankIslami received the No Objection Certificate from SBP

18 October 2004 BankIslami became a legal entity after SECP granted it an incorporation certificate

31 March 2005 SBP Governor, Dr. Ishrat Hussain issued Islamic Banking license to BankIslami

26 September 2005 Dubai Bank became founding shareholder of BankIslami by investing 18.75% in the

total Capital

26 February 2006 BankIslami share debuted on the Karachi Stock Exchange

6 March 2006 BankIslami's three day Initial Public Offering (IPO) was initiated and got

oversubscribed by 9 times

17 March 2006 State Bank of Pakistan declared BankIslami Pakistan Limited as a Scheduled Bank

7 April 2006 BankIslami started commercial operations from its 1st branch at SITE, Karachi

7 April 2006 BankIslami became the First bank in Pakistan & Asia and the Second Bank in the

World to install BIOMETRIC ATM

7 April 2006 BankIslami became the First bank in Pakistan to launch Internet banking from start

of operations

28 April 2006 BankIslami's second and third branch opened simultaneously in Clifton and Korangi

Industrial Area in Karachi

9 June 2006 The Fourth branch of BankIslami located on 26th Street of Phase V, D.H.A opened

Page 62 of 300

its doors for customers

7 July 2006 The official inauguration of BankIslami was conducted at the Governor House,

Sindh

14 July 2006 BankIslami's Shaheed -e- Millat branch located at Adam Arcade, BMCHS, Shaheed-

e-Millat Road, Karachi starts operations

31 August 2006 State Bank's Director of Islamic Banking, Mr. Pervez Said inaugurated the induction

ceremony of the first Trainee Officers batch of BankIslami

4 September 2006 Phone Banking services were launched by BankIslami

8 September 2006 Sixth branch of BankIslami opened on Rashid Minhas Road, Karachi

8 December 2006 BankIslami's North Nazimabad branch started operations. It was the 7th branch

opened by the Bank

15 December 2006 BankIslami formally inaugurated its eighth branch located in Gulshan-e-Maymar

22 December 2006 BankIslami went nationwide with the opening of its 9th branch on Jinnah Road,

Quetta. This was BankIslami's first branch outside Karachi

29 December 2006 BankIslami opened its 10th Branch in Baqai Medical University, Karachi

3 March 2007 BankIslami signed ORIX network for its '1 Card'

30 April 2007 BankIslami became the first Bank in Pakistan to sign contract with Haydrian for

'XM3", a state of the art Anti Money Laundering (AML) software

3 May 2007 BankIslami launched home financing product "MUSKUN"

11 May 2007 BankIslami's Islamabad branch opened in Blue Area, Islamabad

25 May 2007 Wah Cantt Branch of BankIslami was opened

15 June 2007 Karachi Stock Exchange Branch of BankIslami was opened

21 June 2007 BankIslami signed agreement for a state of art Shariah compliant Banking system

software "iMAL" with Path solutions

29 June 2007 Mirpur (Azad Kashmir) Branch of BankIslami was opened

6 July 2007 BankIslami deployed its Deposit ATM machine. Based on GBNA technology, the

ATM is capable of accepting 100 notes at a time

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18 August 2007 BankIslami bought JS Finance Limited, a Modaraba management company and

renamed it as BankIslami Modaraba Investments Limited

31 August 2007 BankIslami opened its branch in Lahore. This was the 15th Branch of BankIslami

and its first in Lahore

7 September 2007 16th branch of BankIslami opened in Jodia Bazar, Karachi

25 September 2007 BankIslami completed its First Investment Banking transaction by issuing privately

placed SUKUK of Rs. 1.2 Billion for PEL

16 November 2007 17th branch of BankIslami opened in Pishin

26 November 2007 18th branch of BankIslami opened in Sukkur

28 November 2007 19th branch of BankIslami opened in DHA, Lahore

2 December 2007 21st branch of BankIslami opened in Hyderabad

3 December 2007 20th branch of BankIslami opened in Chaman

10 December 2007 BankIslami led managed a Consortium to successfully achieved the financial close

of a landmark Investment Banking deal of SSGC Sukuk of Rs. 5 Billion

18 December 2007 22nd branch of BankIslami opened in Muslim Bagh

18 December 2007 23rd branch of BankIslami opened in Qila Saifullah

19 December 2007 24th branch of BankIslami opened at Cloth Market, Karachi

24 December 2007 25th branch of BankIslami opened in Multan

26 December 2007 26th branch of BankIslami opened at Bank Square Road, Larkana

27 December 2007 27th branch of BankIslami opened in Faisalabad

31 December 2007 Nine branches of BankIslami opened in different cities of Pakistan. The branch

network grew to 36 branches in 23 Cities of Pakistan

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13 February 2008 BankIslami's branch network expansion plan of opening 30 branches and 32 sub

branches in 2008 approved by State Bank of Pakistan

14 February 2008 BankIslami installed the first ever ATM in an Islamic School at Darul Uloom,

Karachi

22 August 2008 37th branch of BankIslami opened at DHA, Phase IV, Karachi

29 August 2008 BankIslami's Response to Fatwa against Islamic Banking. (Download)

27 August 2008 BankIslami posted an operating profit of Rs. 19.210mn in 2nd quarter of 2008

27 August 2008 BankIslami announces right issue of 23.36% subject to SECP approval.

12 September 2008 38th branch of BankIslami opens on UP More Road, Karachi

26 September 2008 BankIslami opens branches at Kotli, Islamgarh and Sharea-e-Faisal Road,

Karachi.

17 October 2008 BankIslami opens its sub branch in Shadman Town No.1, North Nazimabad

Karachi.

18 October 2008 Sub Branch of BankIslami opens in Khyber Bazar, Peshawar

31 October 2008 BankIslami opened its 50th Branch today. It has been the fastest growth by any

Bank in Pakistan.

31 October 2008 BankIslami opens seven new branches nationwide.

November 1 2008 Bankislami crosses 50 branches mark by opening its branch at Nazimabad Block A

Karachi.

November 30 2008 BankIslami opens ten Online branches this month.

December 5 2008 BankIslami signs strategic cooperation with Pak Qatar Takaful Company for

Takaful cover to BankIslami Auto Ijarah customers.

December 31 2008

BankIslami ceates history by becoming the first bank to open 100 plus branches in

less than three years and with this complete its yearly expansion plan of reaching to

102 Online branches in 49 cities nationwide.

March 31 2009 BankIslami witnesses phenomenal increase of 32% in Deposits and 39% increase in

Customer base over the same period last year.

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Branch Network

Our Network:

BankIslami offers its products and services through a wide network of branches and ATMs

in different cities of Pakistan. Currently it has the following branches and ATMs:

Corporate Headquarters

BankIslami Pakistan Limited

11th Floor, Executive Tower One

Dolmen City, Marine Drive

Block 4, Clifton, Karachi, Pakistan

UAN: (021)- 111-BIP-111 (111-247-111)

Fax: (021)-5378373

E-mail: info@bankIslami.com.pk

SWIFT Code: BKIPPKKA

Our Branches:

Punjab

Blue Area Branch, Islamabad Blue Area Branch, 5-6, Chenab Center, Block-104-E

F-7/G-7, Jinnah Avenue

Tel.: 051-2804271-74

Fax.: 051-2804275

I-9 Branch, Islamabad Plot No-2 E, I-9 Markaz

Islamabad.

Tel.: 051-4858403-08,4445851

Fax.: 051-4445852

F-10 Islamabad plot- No 06-C Markaz F-10 Islamabad.

Tel.: 051- 2222961-66

Fax.: 051- 2222965

I-8 Branch, Islamabad Plot No 24 Executive Centre I-8 Markaz Islamabad.

Tel.: 051-4861017,4861029,4861117-18,4861038

Fax.: 051-4861060

Turnol Sub Branch, Islamabad Satellite Town Branch, Rawalpindi

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Muhammad Ayub Plaza

Main G.T Road Turnol, Islamabad

Tel.: 051-2217022

Fax.: 051-2217021

69/B, 4th Road, Satellite Town,

Rawalpindi, Pakistan.

Tel.: 051-4572001-4

Fax.: 051-4572005

Chaklala Scheme III, Rawalpindi

Plot# 11, Commercial Bazar,

Chaklala Scheme III Rawalpindi.

Tel.: 051-5766140-43

Fax.: 051-5766144

Saddar Branch, Rawalpindi Survey No-367/25 Compound bungalow, No-60

Bank Road Cantt Rawalpindi.

Tel.: 051-5120381-4

Fax.: 051-5120385

Jail Road Branch, Lahore

Plot No. 5-A, House No.5, Main Gulberg Road, near

EFU Building, Jail Road, Lahore, Pakistan.

Tel.: 042-5790571-88

Fax.: 042-5790573

DHA Branch, Lahore 153 Block "Y"

DHA, Lahore

Tel.: 042-5692598-9, 5692637

Fax.: 042-5692499

Badami Bagh Branch, Lahore 23-peco Road Badami Bagh Lahore.

Tel.: 042-7723865-68,7723881

Fax.: 042-7723882

Ferozepur Road, Lahore 174- Ferozepur Road Lahore.

Tel.: 042-7524321,7524324,25,7524327

Fax.: 042-7524331

DHA G Block Sub Branch, Lahore 47-G,Commercial Area, Phase I

Block - G, Stadium Road, D.H.A, Lahore

Tel.: 042-5691066-72

Fax.: 042-56910673

Akber Chowk, Lahore 883-D, Peco Road, Faisal Town

Akber Chowk, Lahore.

Tel.: 042-5221731-37

Fax.: 042-5221738

Azam Cloth Market, Lahore F-1207 Azam Cloth Market Lahore.

Tel.: 042-7670188,7658602,7670256

Fax.: 042-7658232

Darogha wala gate Branch, Lahore

326 G.T.Road(Link Shalimar Road)

Tel.: 042-6530512-16

Fax.: 042-6530517

Thokar Niaz Baig Branch, Lahore 3/D- Nawab Town, Rawind Road,Thokar Niaz Baig,Lahore

Johar Town Branch, Lahore M-Block, Johar Town, Lahore

Airport Road Branch, Lahore Plot no 595/8, Airport Road,Main Defence Road,

Lahore Cantt ( Adjacent to Phase VIII ), Lahore

Tel.: 042-5701160-65

Circular Road Branch, Lahore Circular Road , Near Mochi Gate, Lahore

Tel.: 042-7374009-15

Fax.: 042-7374016

Walton Road Branch, Lahore Plot 48-E Super Town, Walton

Road Lahore, Cantt.

Susan Road Branch, Faisalabad Plot No S-8 Madina Town Main

Susan Road Faisalabad.

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Tel.: 042-6603701-2 Tel.: 041-8728626-8, 8728631-08-31

Fax.: 041-8728671

Kotwali Road Branch, Faisalabad P-16, Kotwali Road, Faisalabad

Tel.: 041-2412123-29

Fax.: 041-2412130

Gujranwala Branch Gujranwala BX-11-75-7S-10+12, GT Road,

Gujranwala, Pakistan.

Tel.: 055-3820511-16

Fax.: 055-3820517

Abdali Road Branch, Multan Abdali Road, Chowk Nawan Sher, Multan

Tel.: 061-4500356-59

Fax.: 061-4500360

Vehari Road Branch, Multan Vehari Road, Multan.

Tel.: 061-6761900-6

Fax.: 061-6761907

Gulgusht Branch, Multan Jalal Masjid Chowk,

Multan

Sargodha Branch 65/2 Railway Road, Sargodha.

Te.: 048-3768264-68

Fax.: 048-3768269

D.G. Khan Branch Jampur Road Dera Ghazi Khan

Tel.: 064-2473201-07

Fax.: 064-2473208

Mian Channu Branch Ghazi Mor G.T Road Mian Chunnu

Tel.: 065-2664001-7

Fax.: 065-2664008

Rahimyar khan Branch Model Town Branch 21-A, Model Town,

Rahim Yar Khan, Pakistan.

Tel.: 068-588691-77

Fax.: 068-5886978

Sadiqabad Branch Allama Iqbal Road,

Opp. Ghalla Mandi, Sadiqabad

Te.l: 068-5700594-7, 068-5800591-3-5

Fax.: 068-5800598

SIE 1 Branch (Gujrat) Danish Metal Work, SIE-1, Gujrat

Te.: (053)3538010 -15

Fax.: (055) 3538016

Bhawalpur Branch Block No. 915, Circular Road, Bahawalpur.

Tel.: 062-2732235-38

Fax.: 062-2732239

Okara Branch 69/1 M.A.Jinnah Road, Okara.

Tel.: 044-2522901-6

Fax.: 044-2552907

Kashmir Road Branch, Sialkot B-III-116/99/2 Kashmir Road, Sialkot.

Tel.: 052-4270419-20, 4270429-30,4270439-40

Fax.: 052-4270426

Mainwali Branch Mouza urra khel Pacca,Main Sargodha Road,Mianwali

Tel.: 0459-237531

Fax.: 0459-237532

Jhang Branch 95-A College Chowk , Jhang.

Tel.: 047-7651401-05

Fax.: 047-7651406

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Sahiwal Branch 418 High Street, Sahiwal.

Tel.: 040-4228284-88, 4467688,4461688

Fax.: 040-4462688

Chakwal Branch Khasra # 4516 Jhelum, Road Chakwal.

Tel.: 0543-552739,42,44,45,56

Fax.: 0543-552760

Jehlum Branch Tehsil Road, Near Shandar Chowk, Jehlum

Tel.: 0544-620503-4 & 8, 620584 & 88

Fax.: 0544-620498

Wah Cantt. Branch A-12, Shahwali Colony, Mall Road, Wah Cantt,

Tel.: 051-4539046-7

Fax.: 051-4539044

Taxila Branch

Fasial Shaheed Road, Taxila

Ph: 051-4535055 - 58

Fax.: 051- 4534985

Hazro Branch Circular Road, Hazro

Tel.: 057-2310048-51

Fax.: 057-2310019

Sindh

Main Branch Clifton, Karachi 11th Floor, Executive Tower, Dolmen City,

Marine Drive, Block-4, Clifton, Karachi.

Tel.: 021- 5839906

Fax.: 5378373

26th Street D.H.A. Branch, Karachi 26th Street Branch, 31-C, Badar Commercial

Street No.1 Phase V, D.H.A. Karachi.

Tel.: 021 5349244-5

Fax.: 5349243

Al Hilal Society Branch, Karachi Shop No,1 Ground floor, Jawwad Court Plot No,

SC-11, KDA Scheme No#7 Main

University Road, Chandni Chowk,Karachi.

Tel.:021-4860713-16,4860728

Fax.: 021-4860704

Baloch Colony Branch, Karachi Plot No, SA-2/1 Block-3 Administrative

Society, Karachi.

Tel.: 021-4300036-42

Fax.: 021-430004

Baqai Medical University Branch, Karachi 51-DHTOR, Baqai Medical Centre,

Super Highway,North Bond).Karachi.

Tel.: 021- 4410220-4410201

Fax.: 4410294.

Burns Road Sub Branch, Karachi Land Survey, Sheet No. AM 51

Burns Road, Karachi

Ph: 021-2215505, 2215527, 2215689

Fax.: 021-2215480

Cloth Market Branch, Karachi Cloth Market Branch Shop-05

Cochinwala Market Laxmidas Street Karachi.

Tel.: 021-2469031-35

Fax.: 021-2469030

DHA Phase IV Branch, Karachi Plot # 36-C Sunset Commercial

Street # 2 D.H.A Phase 4 Karachi.

Tel.: 021-5313191-7

Fax.: 5313190

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Dhoraji Sub Branch, Karachi Al Madina Heights, Plot Survey No. 35 C/449

C. P Berar Cooperative Housing Society

Tel.: 021-4860407-10,4860566-68

Fax.: 021-4860569

F.B Area Sub Branch, Karachi Plot No.C-6, Block 4, KDA Scheme #16

F.B. Area, Karachi

Tel.: 021-6827783-87

Fax.: 021-6364659

Gulshan-e-Maymar Branch, Karachi Gulshan-e-Maymar Branch,

Areeba Heaven, SB-3, Sector X-II Karachi.

Tel.: 021-6833354-5

Fax.: 6833445

Jodia Bazar Branch, Karachi Jodia Bazar Branch Ibrahim Manzil,

Jodia Bazar Darya Lal Street Karachi.

Tel.: 021-2462488-9, 2462831-4

Fax.: 2416368

Karachi Stock Exchange Branch, Karachi Room No. 520, 5th Floor,

KSE Building Karachi

Tel.: 021-2462861-67

Fax.: 021-2462490

Korangi Branch, Karachi Korangi Branch, Plot No. 51/9-B

Sector 15 Korangi Industrial Area, Karachi.

Tel.: 021-5114488-91

Fax.: 5114494

Malir Cantt Branch, Karachi Plot No. 35, Block-5 Cantt Bazar,

Malir Cantt Karachi.

Tel.: 021-4491481-82

Nazimabad #7 Sub Branch Plot No-4 Row No-1 sub block,iii

Situated at Nazimabad, Karachi.

Tel.: 021-6707492-96 Fax.: 6707497

North Nazimabad Block A, Branch, Karachi Shop No. 3A, 3B, 3C, 2B Unique Centre,

Blcok A, North Nazimabad, Karachi

Tel.: 021-6722504-6

Fax.: 6722507

North Nazimabad Branch, Karachi North Nazimabad Branch, D-5,

Block-L, North Nazimabad Karachi.

Tel.: 021-6676474-75

Fax.: 6676488

Orangi Town Branch, Karachi Plot No. LS 55 & 56, ST 11-A Sector 1,

Block D, Orangi Town,Karachi.

Tel.: 021-6664031-34,6692257-59

Fax.: 021-6662257

Power House Branch, Karachi

St-3 As-28 Comm. Area Sector 5-H

Power House, New Karachi.

Tel.: 021-6901356 - 9, 6901362

Fax.: 021-6901364

Rashid Minhas Road Branch, Karachi Rashid Minhas Road Branch, Plot No. FL-3/13 & 14,

Block-5, Gulshan-e-Iqbal Karachi.

Tel.: 021-4818227-9

Fax.: 4818135

S.I.T.E. Branch, Karachi Shop Nos. 8 & 9, Anum Trade Center, E-31-B,

Ghani Chowrangi, S.I.T.E., Karachi.

Tel.: 021-2587661-2

Fax.: 2587510

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Shadman Town Branch, Karachi Shadman Town Sub Branch, Shop No. 1-5 KDA

Flats Phase # 3, Sector 14/B Shadman Town No. 1,

North Nazimabad Karachi.

Tel.: 021-6950027-33

Fax.: 021-6950034

Shah Faisal Colony Branch, Karachi Shah Faisal Colony Branch Shop No 1 & 2

Plot No A/6, Shop No 1 & 2 Plot No A/7 Surrey No,

135, Deh Drigh Colony Shah Faisal Colony Karachi.

Tel.: 021-4686121-25

Fax.: 021-4686126

Shaheed-e-Millat Branch, Karachi Shop No. 15 & 16, Adam Arcade, B.M.C.H.S.

Shaheed-e-Millat Road, Karachi.

Tel.: 021-4145305-9

Fax.: 4145310

Shahra-e-Faisal Branch, Karachi

Shahra-e-Faisal Branch, Shop No. 1,

Faisal Tower. Plot No. 25/3 Survey Sheet No. 35/1

Block 7 & 8 Maqbool CHS Ltd.

Tel.: 021-4555985-87 Fax.: 021-4555991

Saddar Branch, karachi Plot no 7/17 saddar bazar quarter Bohri bazar

raja ghanzaefar ali khan road saddar karachi

Tel.: 021-5219891-94 Fax.: 021-5219895

University Road Branch, Karachi Shop No. 1, Ground Floor, Jawwad Court, Plot No.

SC-11, KDA Scheme No.7, Main University Road

UP More Branch, Karachi UP More Branch, LS-7, Street No. 8 Sub Sector 11-I,

North Karachi Town Ship Karachi.

Tel.: 021-6950158-59-61-64-66 Fax.: 6950167

Gulistan-e-Jauhar Branch, Karachi

Shop No. W-9, 10 8 11 Eastern Print Appt.

Sub Plot No: Fl-23/4 On Plot No. Fl-23/4 Block 15,

KDA Scheme 36 Gulistan-e-Johar Karachi.

Auto Bahan Branch, Hyderabad Hyderabad Branch Plot # C-10-8, C-10- 3

Block C Auto Bhan Road. Hyderabad, Pakistan.

Tel.: 022-3820301-2-3-4-5-6-7

Fax.: 022-3820308

Heerabad Branch, Hyderabad A/113-261, Jail Road,

Heerabad, Hyderabad.

Tel.: 022-2636768-70, 2636862 -3

Fax.: 022-2636864

Tando Allahyar Branch Tando Allahyar Branch Mir Pur Khas Road,

Tando Allahyar

Tel.: 022-3891114, 3892424, 3891442, 3892443

Fax.: 022-3891699

Mirpurkhas Branch

Station Road Mirpur Khas Branch New Town Station

Road, Mirpur Khas, Pakistan.

Tel.: 0233-874287

Fax.: 0233-875802

Sukkur Branch Sukkur Branch, Umar Welding Store City

Survey No. 3/21 Station Road Sukkur.

Tel.: 071-5617322-8 Fax.: 071-5617329

Larkana Branch Larkana Branch City Survey # 1806

Word-A Bank Square Road Larkana.

Tel.: 074-4059833-6 Fax.: 074-4059887

Nawabshah Branch Nawab Shah Branch City Survey No. 225

Ward A Masjid Road Nawab Shah.

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Tel.: 0244-330920-4, Fax.: 0244-330928

Balochistan

Jinnah Road Branch, Quetta Jinnah Road Quetta, Pakistan.

Tel.: 081-2821743-28-46

Fax.: 081-2821650

Iqbal Road Branch, Quetta Shop No 605 Khewat No. 200 Khatooni No 234

Ward No 18 Urban No 1 Sharah-e-iqbal Quetta

Tel.: 081-2866510-13-36 Fax.: 081-2829739

Airport Road Branch, Quetta Alam Khan Chowk Airport Road Quetta.

Tel.: 081-2864627-29, 081-2840114, 081-2840121

Fax.: 081-2840135

Kucklak Branch, Quetta Chaman Raod Quetta, Quetta

Tel.: 081-2891591-2

Fax.: 081-2891580

Muslimbagh Branch Muslimbagh , Baluchistan

Tel.: (0823) 669823-29

Fax.: (0823) 669830

Pishin Branch Pashin Branch Bund Road,

Opp Madina Hardware, Pasheen

Tel.: 0826-421384 Fax.: 0826-42187

Chaman Branch Trench Road,Chaman.

Tel.: 0826-618032-37 Fax.: 0826-618039

Zhob Branch Market Road

BranchZhob.

Loralai Branch Bhagi Bazar Branch, Loralai.

Dukki Branch Masjid Road, Dukki Baluchistan

Qila Saifullah Branch Main Junction Road, Qila Saifullah. Tel.: 0823-610895,610804-05 Fax.: 0823-610806

NWFP

Jamrud Road Branch, Peshawar Near Hotel Grand, Jamrud Road,Peshawar

Tel.: 091-5711482-4 Fax.: 091-5711489

Khyber Bazaar Branch, Peshawar Shop No. 6 & 7 Haji Khan Building

Tel.: 091 2590341-7 Fax.: 091 2590348

Chitral Branch Attalique Bazar,Chitral

Tel.: 0943-414501,414530,414550

Fax.: 0943-414591

Mansehra Branch Swati Arcade, Abbottabad Road, Tehsil & District

Mansehra

Tel.: 0997 – 307761 – 4 Fax.: 0997 – 303479

Dera Ismail Khan Branch West Circular Road, Near Taank Adda, Dera Ismail

Khan. Tel.: 0966 – 715018-9 Fax.: 0966-715021

Gilgit Branch Askari Bakers, Gilgit Cantt

Tel.: 05811 – 57832 – 6 Fax.: 05811 – 57837

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Abottabad Branch Business Complex Khasra No. 2302 To 2305

Aamir Shaheed Road Abbottabad.

Tel.: 0992-343959 - 64 Fax.: 0992-343957

Haripur Branch Circular Road, Haripur.

Tel.: 0995-613570-73

Fax.: 0995-613574

Azad Kashmir

Islamgarh Branch, Azad Kashmir Ground Floor Main Kotli Road,

Islam Garh Tehsil Distric Mirpur(AJK)

Tel.: 058612 - 43971-7 Fax.: 058612 - 43970

Mirpur Branch, Azad Kashmir Plot No # 2- B/3 Sub Sector A/2 Mian Muhammad

Road Mirpur Azad Kashmir.

Tel.: 058610-39701-4 Fax.: 058610-39705

Our ATM Network:

BankIslami branches are installed with BIOMETRIC ATMs. All BankIslami Customers can use their 1 Card

(ATM/Debit Card) on 1Link & MNET Networks and Orix Network.

Punjab

Blue Area Branch Islamabad.

I-9 Branch (Islamabad)

I-8 Branch (Islamabad)

F-10 Markaz Branch (Islamabad)

Turnol Branch

Satellite Town Branch (Rawalpindi)

Saddar Branch (Rawalpindi)

Chaklala Scheme No. 3 (Rawalpindi)

Jail Road Branch (Lahore)

Akbar Chowk Branch (Lahore)

Azam Cloth Market Branch (Lahore)

Badami Bagh Branch (Lahore)

Darogha wala gate Branch (Lahore)

D.H.A.Y Block Branch (Lahore)

Ferozepur Road Branch (Lahore)

G-Block, D.H.A. Branch (Lahore)

Thokar Niaz Baig Branch (Lahore)

Johar Town Branch (Lahore)

Airport Road Branch (Lahore)

Walton Road Branch (Lahore)

Circular Road Branch (Lahore)

Gujranwala Branch

Abdali Road Branch (Multan)

Vehari Road Branch (Multan)

Gulgusht Branch (Multan)

SIE 1 Branch (Gujrat)

Jhang Branch

Mian Channu Branch

Susan Road Branch (Faisalabad)

Kotwali Road Branch (Faisalabad)

Kashmir Road Branch (Sialkot)

Sahiwal Branch

Sargodha Branch

Mainwali Branch

Okara Branch

Bhawalpur Branch

Sadiqabad Branch

Rahimyar khan Branch

Jehlum Branch

Hazro Branch

Wah Cantt. Branch

Taxila Branch

Chakwal Branch

D.G. Khan Branch

Sindh

Main Branch Clifton (Karachi)

26th Street D.H.A. Branch (Karachi)

Al Hilal Society Branch (Karachi)

Baloch Colony Branch (Karachi)

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Baqai Medical University Branch (Karachi)

Burns Road Branch (Karachi)

Cloth Market Branch (Karachi)

Cloth Market Branch (Karachi)

Dhoraji Branch (Karachi)

F.B.Area Branch (Karachi)

Gulshan-e-Maymar Branch (Karachi)

Jodia Bazar Branch (Karachi)

Karachi Stock Exchange Branch (Karachi)

Korangi Branch (Karachi)

Malir Cantt Branch (Karachi)

Nazimabad No. 7 branch (Karachi)

North Nazimabad Block A, Branch (Karachi)

North Nazimabad Branch (Karachi)

Orangi Town Branch (Karachi)

Power House Branch (Karachi)

Rashid Minhas Road Branch (Karachi)

S.I.T.E. Branch (Karachi)

Shadman Town Branch (Karachi)

Shah Faisal Colony Branch (Karachi)

Shaheed-e-Millat Branch (Karachi)

Shahra-e-Faisal Branch (Karachi)

Saddar Branch karachi

University Road Branch (Karachi)

UP More Branch (Karachi)

Gulistan-e-Jauhar Branch (Karachi)

Darululoom (Karachi)

Heerabad Branch (Hyderabad)

Auto Bahan Branch (Hyderabad)

Mirpurkhas Branch

Sukkur Branch

Nawabshah Branch

Larkana Branch

Tando Allahyar Branch

Balochistan

Kucklak Branch (Quetta)

Jinnah Road Branch (Quetta)

Airport Road Branch (Quetta)

Iqbal Road Branch (Quetta)

Muslimbagh Branch

Qila Saifullah Branch

Chaman Branch

Zhob Branch

Loralai Branch

Dukki Branch

Pishin Branch

NWFP

Chitral Branch

Khyber Bazar Branch (Peshawar)

Jamrud Road Branch (Peshawar)

Mansehra Branch

Abottabad Branch

Gilgit Branch

Dera Ismail Khan Branch

Haripur Branch

Azad Kashmir

Islamgarh Branch (Azad Kashmir)

Mirpur Branch (Azad Kashmir)

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Mission, Vision and Objectives of Organization

Page 78 of 300

Our Vision

The Vision of BankIslami is to be recognized as the leading Authentic Islamic Bank.

Page 79 of 300

Our Mission: The Mission of BankIslami is to create value for our

stakeholders by offering Authentic, Shariah Compliant and technologically advanced product and services.

We differentiate ourselves through:

Authenticity Innovation Understanding our client's needs Commitment to excellence, and Fast, efficient and seamless delivery

of solution. As a growing institution, the foundation for our performance lies on our human capital and BankIslami remains committed to becoming an employer of choice, attracting, nurturing and developing talent in a transparent and performance driven culture.

Page 80 of 300

Our Core Values

BankIslami is strongly committed towards its core values of:

Product authenticity

Customer focus

Meritocracy

Integrity

Team work

Humility

Innovation

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Objectives of Bank Islami:

The main objective of bank Islami is ―Serving

in the Right way‖

To create value for stakeholders by offering

Authentic, Shariah

To provide compliant and technologically

advanced product and services.

To continue developing and delivering

innovative products and services.

To achieve sustainable growth, maximum market share, and high profitability in all areas of

banking.

To maintain absolute world class service excellence, with a dedicated focus on value and

recognition for our customers.

To build and sustain a high performance culture in accordance with Islamic values and

Shariah principles.

To promote ―Riba free‖ Banking in Pakistan as well as in foreign countries.

To become an employer of choice, attracting, nurturing and developing talent in a

transparent and performance driven culture.

Page 82 of 300

Corporate, Business and Departmental Level Strategies

Page 83 of 300

Corporate, Business and Departmental Level Strategies:

Despite of testing times, bank Islami is

optimistic about the coming years. BIPL management

team target for the coming years is to consolidate the

operations and bring greater efficiencies in

operations. Specifically, they would like to grow the

balance sheet and wipe off the accumulated losses of

Rs. 577,246,000 which are expected to decrese this

year.

Growing network, a viable and working

depository franchise, growth in the Islamic Banking

industry and technological advantage places them in an ideal position to take advantage of the

opportunities that lie ahead due to State Bank‘s increased capital requirements. The bank is also

unin IT effectively and efficiently to reduce cost ofcommunication and its taking the maximum

posible banefitout of it. The bank is alsoexpectedto takeover another chainofbanks as soon as the

bank recovers from the accumilated loss.

As discussed earlier, the reason for our losses this year is non-absorption of operating costs

due to lower asset volumes. Besides that, BIPL has all the right straits which a successful bank may

wish to have. Our net-work is large and well spread out, deposit base is stable and cost effective,

intermediation cost is within the top quartile in the industry, NPLs are low and that too contained

Page 84 of 300

and technology base is one of the best. With improving asset deployment, BankIslami achieved

operating break from December. On full year basis, we will inshallah report a profit starting from

first quarter. No large expansion in net-work is envisaged this year.

Due to a heavy expansion in year 2008, the full cost impact of which came in the year 2009,

BIPL is reporting a loss of Rs. 563M before tax and Earning Per Share stood (0.91). This is

approximately Rs. 250M more than what we had budgeted. Due to economic in-stability, we

preferred to conserve the liquidity. At the same time, private corporate credit off take was slow

there by drying up appetite for quality credit. While our closing ADR is still less than 50%, going

forward the signs are very positive. Almost 30% growth came in the last quarter only.

Growth in consumer financing was contained, though the Bank continued to finance good

credit. BIPL has also successfully negotiated with CITI Bank acquisition of its mortgage portfolio

of Rs. 1.5b. This transaction is expected to close in the second quarter. The Book quality remains

good and improving. Most of the non-performing financing consists of quality collateral with a

market. We expect a strong recovery this year. We are aiming to close the year at around 60% ADR

with NPL's contained at less than 5% of the portfolio.

The success story of the year was the growth in deposits, which came almost entirely from

retail segment. BIPL is one of the few banks in Pakistan which has a genuine deposit franchise.

Instead of targeting large, rate sensitive accounts, BIPL as strategy focused on retail customer

which are stable, less rate sensitive and loyal.

Current and Saving Accounts recorded impressive growth. Even growth in Fixed Deposits

was propelled by our five and ten depository products which now accounts for 21% of the deposit

base. Despite of 124% increase in deposits, cost of funds actually declined. BIPL will continue to

follow the same strategy – strong focus on retail deposits, a further 5% to 10% reduction in cost of

fund coupled with at least 50% increase in the deposit base.

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Our technology infra-structure was further strengthened during the year with full

deployment of state of art sharia compliant core banking system, iMal. We remain the largest user

of Linux in Pakistan which has helped us to have a stable, cost effective platform compared to our

peers. Our market share in ATM transactions has improved to 11th position amongst 1-LINK

members. We are aiming to complete deployment of the next phases of iMal during 2010.

Head count in 2009 increased by almost 24%. Most of the hiring took place in the branches.

Head count/branch of BIPL remained impressive at around 14, which is one of the best in the

industry. The highlight of this year was our focus on Training. BIPL is strictly following mandatory

training hours for all employees which in some cases is as high as 80 hours. The first batch of

trainee officers has graduated and assumed responsibility in the branches. We plan to induct a few

more batches this year in Karachi, Lahore, Islamabad, and Balochistan where we have a strong

presence.

BIPL also continued with focus marketing initiatives. Our greatest asset today is probably

our brand name 'BankIslami'. Going forward, we plan to maintain presence in selected media

segments.

BankIslami, capitalizing on its expanded outreach, experienced substantial growth in

finances in 2008. This enabled BankIslami to register a significant increase in its net interest

revenue. Other operating income witnessed an upsurge on account of higher fee and commission.

Meanwhile, there was a sizeable increase in personnel and other expenses, owing to the ongoing

network expansion. Moreover, BankIslami made a net provision of PKR 130mln, due to sizeable

increase in the classified portfolio. This resulted in doubling the pre-tax loss of the bank. The

performance trend remained the same in 1Q09 with a slight addition in NPLs.

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Going forward, BankIslami intends to leverage its expanded outreach to enhance both its

deposit base and finances portfolio. Although the bank has plans to penetrate the retail segment, no

significant lending is expected over the near-term, owing to currently weak credit environment.

BankIslami would continue with its recent strategy of focusing the corporate segment, though

cautiously here as well. The bank, with a view to reduce its cost of funds, plans to focus more on

demand deposits. BankIslami, to augment further its retail franchise, has entered into agreements

with different organizations to launch new products and services. Meanwhile, BankIslami, with

surplus liquidity and support of strong sponsors, eyes acquisition of banks as a strategy to achieve

sizeable growth. These initiatives exhibit clarity of direction but the extent to which they materialize

remains to be seen.

The target is to take consumer financing, over the medium term, upto 10%-15% of the total

advances. With expansion in outreach, the bank intends to rationalize its deposit mix by substituting

a portion of term deposits with current deposits. Nevertheless, deployment of excess liquidity would

remain a challenge in the absence of an active Shariah compliant money market. Earnings from

investment banking business are expected to grow significantly. The deal pipeline is currently

healthy. Meanwhile, BIPL plans to lay down requisite infrastructure for offering wealth

management services, going forward. BankIslami, due to initial stage of operations, maintains

ample liquidity and has a very low deposit concentration, which clearly stands out among close

peers. The bank‘s investment portfolio is modest in size (end-08: PKR 207mln) – mainly dominated

by strategic investment (PKR 191mln). The bank recently expanded its exposure to the sukuk

market. There is a revaluation surplus, though slight, available on this investment (PKR 16 mln).

BankIslami, mainly due to un-utilized resources, has a relatively high level of capitalization

(CAR), which offers significant room for credit expansion. However, with restricted internal

generation, the bank would remain dependent on its sponsors meeting

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Organizational Structure

Page 88 of 300

Organizational Structure of BankIslami Pakistan Limited:

Central Hub

Southerenren Hub

Northeren Hub

Blochistan Hub

Interior Sindh Hub

Lower Central Hub

Page 89 of 300

Organogram of a BIPL Branch:

Chief Executive

Officer

Section Head

Regional Genral

Manager

Hub Manager

Branch Manager

Customer Service

Manager

Customer Service

Executive

Customer Service Officer

5 Sub Members

Wealth Manager

Business Executive

5 Sub Members

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Organogram of Bank Islami Bahawalpur Branch:

Mr. Hafiz Aqeel (BM)

Mr. Khurram Rasheed (CSM)

Khalil Ahmed

(Cashier)

Mina Faisal (Cashier)

Mr. Burhan Ahmed (CSE)

Mr. Asad Mehmood Khan Ali Zai (CSO)

5 Sub Members (vacent)

Wealth Manager (vacent)

Mr. Qaiser Nawaz (BE)

5 Sub Members (vacent)

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Corporate Information:

Board of Directors

Chief Justice (Retd.) Mahboob Ahmed Chairman

Mr. Ahmed Goolam Mahomed Randeree

Mr. Ali Raza Siddiqui

Mr. Hasan A. Bilgrami Chief Executive Officer

Mr. Hisham Hammoud

Mr. Mohamed Amiri

Mr. Shabir Ahmed Randeree

Sharia'h Supervisory Board

Justice (Retd.) Muhammad Taqi Usmani Chairman

Professor Dr. Fazlur Rahman Member

Mufti Irshad Ahmad Aijaz Member & Sharia'h Adviser

Audit Committee

Mr. Hisham Hammoud Chairman

Mr. Ali Raza Siddiqui Member

Mr. Shabir Ahmed Randeree Member

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Executive Committee

Chief Justice (Retd.) Mahboob Ahmed Chairman

Mr. Ahmed Goolam Mahomed Randeree Member

Mr. Hasan A. Bilgrami Member

Mr. Hisham Hammoud Member

Risk Managemnt

Mr. Ahmed Goolam Mahomed Randeree Chairman

Mr. Hasan A. Bilgrami Member

Mr. Mohamed Amiri Member

Human Resource & Compensation Committee

Mr. Ali Raza Siddiqui Chairman

Mr. Ahmed Goolam Mahomed Randeree Member

Mr. Hisham Hammoud Member

Mr. Hasan A. Bilgrami Member

Company Secretary

Syed Shah Sajid Hussain

Auditors

Ernst & Young Ford Rhodes Sidat Hyder

Chartered Accountants

Page 93 of 300

Legal Adviser

Haidermota & Co.

Barrister at Law

Management (in alphabetical order)

Mr. Adnan Hamid Ali Head, Administration & General Services

Mr. Ahmed Mustafa Head, Branch Operations

Mr. Arsalan Vohra Head, Risk Policy & Analytics

Mr. Asad Alim Head, Information Systems

Mr. Farooq Anwar Head, Operations

Mr. Hasan A. Bilgrami Chief Executive Officer

Mr. Khawaja Ehrar ul Hassan Head, Compliance

Mr. Muhammad Faisal Shaikh Head, Product Development

Mr. Muhammad Furqan Head, Credit Administration

Mr. Muhammad Imran Head, Consumer & Retail Banking

Mr. Muhammad Shoaib Khan Head, Treasury & Financial Institutions

Mr. Rehan Shuja Zaidi Head, Internal Audit

Mr. Shamshad Ahmed Head, Trade Finance

Ms. Sheba Matin Khan Head, Human Resources

Mr. Syed Akhtar Ausaf Head, Risk Management

Mr. Syed Mujtaba H. Kazmi Head, Corporate Finance

Mr. Syed Shah Sajid Hussain Head, Finance

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Working of Various Divisions/Departments

Page 95 of 300

Working of Various Departments of A Branch:

The purpose of banks is to provide some services to the

general public. And for this purpose different banks provide

different services to the people in diverse forms.

For proper functioning and the overall bank has been

divided in different departments. These departments handle

different jobs so that division of work is there for improvement

of functions and it also makes it easy to control the situation.

The general divisions in the branch are as follows:

Operations Department

Libality Department

Trade Department

Sales Department.

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Products & Servicves

Before discussing the working of various devesions and department lets have a look at the

products and services that Bank Islami offers to its customers.

Consumer Banking Investment Banking

MUSKUN Home Financing

Advisory

Islami Auto Ijarah-New Vehicle

Private Placement

Islami Auto Ijarah-Used/Imported Vehicle

Sukuk Arrangment

Syndication

Retail Banking

Underwriting

Islami Current Account

Trusteeship

Islami Foreign Currency Account

Structured Finance

Islami Bachat Account

Listing on Capital Markets

Islami Dollar Bachat Account

Project Financing

Islami Mahana Munafa Account

Mergers & Acquisitions

Islami Amadni Certificate

Rates & Weightages Value Added Services

Online Banking

Corporate Banking

Inter Bank Fund Transfer

Account Services

Internet Banking

Trade Services

ATM/Debit Card

Working Capital Finance

Biometric ATM

Project Finance

24/7 Phone Banking

Musharakah Financing

eStatement

Mudarabah Financing

Self Service Phone Banking

Lockers

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Operations Department

Page 98 of 300

Operations Department consists of:

Account Opening Department

Remetance

Collection

Cash

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Account Opening Department

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Account Opening Department:

Borrowing funds from different

sources has become an essential feature of

today‘s business enterprises. But in the

case of bank borrowing funds from

outside parties is more vital because the

borrowed capital of a bank is much

greater their own capital. Bank deals in

money and they are merely mobilizing funds within the economy. They borrow from one person and

lend to another, the difference between the rate of borrowing and lending forms their spread or

gross profit. Islamic banks do the same but in compliance with sharia principles.Banks borrowing

is mostly in the form of deposits. These deposits are invested into different investment pools. Such

deposit creation is done through opening an account in the bank.

As these deposits are the basis on which the bank lendds out funds therefore we can rightly

state that deposits are the life blood of the bank which causes the body of an institution to work.

Like without blood the body can not work the same way without deposit bank can not work

irrespective of a conventional comercial bank or an islamic bank or any other form of bank.

Without sufficient deposits no bank can survive. These deposits are the liability of the bank so from

point of view of bank we refer to them as liabilities.

All types of accounts of customers are managed and maintained in this section. All the

money deposited and withdrawn is properly recorded in a specific account number which is

allotted to every account holder. Banks has different kinds of deposit schemes in order to induce

deposits. Account opening is an agreement in which customer gives his funds and bank accepts

these funds, therefore the nature of relation between a banker and customer is of contractual one

and all the conditions applicable to this are applicable in the same way as the contract act.

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The department that is responsible for opening and closing an account assumes immense

significance and holds a central place in the basic banking operations. The Account opening

department was the very first experience of my practical life being working with a bank, during my

internship with Bank Islami Pakistan Limited.

This department is the best way to start with the banking career or training. This is because

the ways you deal with the customers give a lot exposure to you for the coming days in banking

because the bankers are always in contact with customers as customers are the biggest source of

assets for the bank. I really enjoyed my stay at this department as I got to interact with the

customers directly for the first time. I was given under the supervision of Mr. Asad Mehmood Khan

Ali Zai (Customer Services Officer), who is the Incharge of Accounts Opening.

The banking history is full of various examples of fraud largely due to incorrect opening of

accounts. These frauds could have been avoided if the branch mangers and other designated

officers had taken due care and exercised precautions at the time of opening of accounts.one of the

most important thing that I learned during my internship was that account opening is the base of all

frauds. As our branch manger said ―fraud starts when an account is opened‖. This is the reason

that 3 out of 6 weeks of my internship were focussed on account opening department. I was

introduced to each and every aspect of account opening and was thoroughly trained and tested. I

focussed a lot on know your customer (KYC) form.

I also learned that at the time of opening of an account, officers should tactfully obtain as

much information as possible about the integrity and character of the person, his correct name and

address and occupation. This infect will be the only opportunity they will be able to talk to the

prospective customers in a friendly and frank environment. This is the time when we have a slight

edge over the customer. He/she at this point in time is willing to divulge as much information about

his or her personal status and business etc. to the bank officer. It is therefore necessary that due

care and proper procedure be followed for opening of any account for any customer.

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During my stay at this department I got to fill the forms of individuals who wanted to get

their accounts opened at Bank Islami, fill the cheque and deposit slips of customers who were not

literate enough or needed instructions, and I also got the opportunity to give advice to the

customers regarding the type of account they should open requirements of account opening and the

benefits of opening an account with Bank Islami Pakistan Limited.

I myself filled the Account Opening Forms of almost all the customers I encountered

because many customers get confused when they see the huge form and many don‘t understand

sevral things in the form. Another reason for me or the bank staff to fill the form was that no cutting

or over writing is allowed in the AOF and incase of cutting or any over writing either the customer

must sign at the place of the cutting or over writing with the stamp of cutting cunfurm or a new

form has to be filled. Another reason for us filling the AOF is that customers are more relaxed and

avoid the trouble of filling the form and expect a smooth service that is effortless.

This is important to avod any suspecian or ambiguity and to eliminate even the minutest

chances for anyone to edit the customer‘s AOF. We also stamp the empty parts of AOF with the

stamp void to make sure that this part of the AOF should not be used to do any fraudelent

transection. Although these things seem minute but as Mr. Hafiz Aqeel said ―small things, mistakes

or neglegencies can become really big problums in the future‖. Thus we try to avoid even the

minutest chance of fradulent alteration or transection. That is the reason that auditers pin pointed

everything even the smallest mistake of an incorrect date.

Before filling an AOF and while filling an AOF we must somehow get all the required

information from the customer in a detailed interview and it should be sufficient to fill his KYC

Form accorately and realistically. This is the place where fraud starts. If you do not guess the right

monthly and yearly ternover of the customer‘s account then this may lead to a fraud or money

londering. Banks today are more careful about money londering then anything ever before.

Money londering is the same like normal londering in which dirty clotes go into a londery

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and are cleaned the same way illigal or black money goes into the bank as a big laundry machine

and then comes out clean. If someone is depositing more then the expected monthly deposit then we

have to cunfurm to the head office about where the money came from.

Working with the Accounts Opening Department gave me a lot of courage and confidance

as it taught me the way that you should deal with the customers of the bank.

Fatwa:

BankIslami's commitment to Shariah is strict and absolute. We have the distinction of being

the only Bank to have a full time Shariah adviser as well as having a prestigious local Shariah

board of global repute. All types of accounts and TDR Certificates are approved and verified by our

Shariah Board. Please see Anaxture 2 to view our Shariah Board's approval.

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Types Of Accounts:

Bank Islami provides its customers mith four

types of accounts and two types of Term Deposit

Recipt (TDR) Certificates with a bonus of a lot of

our Value Added Services.

Three Types of Accounts:

1. Islami Current Account

2. Islami Foreign Currency Account

3. Islami Bachat Account

4. Islami Dollar Bachat Account

Two Types of Term Deposit Recipt (TDR) Certificates:

1. Islami Mahana Munafa Account

2. Islami Amadni Certificate

Rates & Weightages

Value Added Services

Page 105 of 300

Islami Current Account

Features:

With our Islami Current Account, you can

have complete peace of mind that your funds are

safe and utilized in Halal avenues only. Islami

Current Account is ideal for customers who have

frequent transaction needs and require unlimited

access to their account to meet their personal or

business expenses. Also, you have access to our entire online network of 102 Branches in 49 Cities

for convenience of instant and secure intercity transactions. So enjoy full control over your funds in

a Shariah compliant manner.

The Islami Current Account offers you the following Key Salient Features:

A minimum balance of Rs. 1,000/- only to open the account

Joint Account facility up to four joint account holders

Access to the entire online branch network 102 Branches in 49 Cities

Free unlimited online intercity transactions

Free 1 Card, BankIslami's ATM & Debit card

Access to all ATMs linked to MNET and 1 Link throughout Pakistan

InterBank Funds transfer facility through ATM

Facility of making instant payments at Orix terminals for grocery, fuel ,dining, etc.

Free Internet Banking service

Round the clock phone Banking through 111-ISLAMI (475-264) or 111-BIP (247)-111

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Personalized service from Customer Relationship Officers

Free Account statement facility

Hold mail and Stop payment facility

Safe deposit lockers (subject to availability)

How It Works:

BankIslami's Islami current account is based on the Islamic principle of Qarz (loan)

whereby you are the lender and the Bank is the borrower. These funds are invested in halal

business ventures only so that you are 100% sure that your funds are managed in a Shariah

compliant manner. The funds are payable to you on demand as and when required with neither any

addition nor penalty.

Brochure

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Islami Foreign Currency Account

Features:

BankIslami Islami Foreign

Currency account is ideal for

businesses and individuals who

would like to diversify their

investment in different currencies

to ensure security against

currency fluctuations or want to keep foreign currency account to meet their business needs. Also,

you can have easy access to foreign currency with no hassles of foreign exchange conversion when

you have to travel abroad or remit funds abroad to meet education, leisure or business needs.

Key Features:

Safe Deposit Lockers

Hold Mail & Stop payment facility

Available in USD, GBP & EURO

A minimum balance of USD 100/-or equivalent in GBP or EURO to open the account

Joint Account facility up to four joint account holders

Free Account statement facility

Free Internet Banking service

Round the clock phone Banking through 111-ISLAMI (475-264) or 111-BIP (247)-111

Personalized service from Customer Relationship Officers

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How It Works:

BankIslami's Islami foreign currency account is based on the Islamic principle of Qarz

(loan) whereby you are the lender and the Bank is the borrower. These funds are invested in halal

business ventures only so that you are 100% sure that your funds are managed in a Shariah

compliant manner. The funds are payable to you on demand as and when required with neither any

addition nor penalty.

Islami Bachat Account

Features:

Our Islami Bachat account is a

bundle of benefits. It helps you keep up

with your tradition of savings with the

convenience and safety of a professional

and understanding bank. Also, you earn

highly attractive profits on your savings

with the flexibility of making as many

transactions on your account as you

want. Islami Bachat Account is ideal for customers who need to draw money for monthly expenses

but would also like to earn on your hard earned savings. Corporate Employers can also avail this

account to provide convenience, flexibility and halal profits to their employees by opening their

salary accounts with us.

The Islamic Bachat Account offers you the following Key Salient Features:

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Monthly profit/loss payment on daily product basis

Differential and specific pool allocation possible for large deposit holders

Profit announcement at the end of every month

A minimum balance of Rs. 5,000/- only to open the account

Joint Account facility up to four joint account holders

Access to the entire on line network of 102 Branches in 49 Cities

Unlimited over the counter deposits and withdrawals, free of charge

No restrictions on intercity transactions

Free 1 Card, BankIslami's ATM & Debit card

Access to all ATMS linked to MNET and 1 Link throughout Pakistan

Facility of making instant payments at Orix terminals for grocery, fuel, dining, etc.

Free Internet Banking service

Round the clock phone Banking through 111-ISLAMI (475-264) or 111-BIP(247)-111

Personalized service from Customer Relationship Officers

Free Account Statement facility

Hold mail and Stop payment facility

Safe deposit lockers (subject to availability)

How It Works:

BankIslami's Islami Bachat account is a profit bearing account developed on the basis of

the modes of Mudarabah. This is how it works. You provide funds to the Bank on Mudaraba basis

for investment in the Bank‘s Shariah Compliant Assets. In this arrangement, you will function as a

Rabbul Maal (investor in Mudaraba) and the Bank will act as the Mudarib (Manager of the

Mudaraba). The Bank will form a pool of customers‘ funds. The pool provides financings to various

individuals, corporate, government and other entities based on various Islamic modes of finance

such as Murabaha, Ijarah, Musharakah, Mudaraba and other modes and would generate income.

This income will be calculated on monthly basis and shared between the Bank and the

Depositors as per a pre agreed profit sharing ratio. The profit share of the Bank is called the

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Mudarib's share. This profit sharing ratio between the Bank and the Depositors is determined at the

beginning of each month.

The profit share of the depositors is based on the predetermined weightages assigned at the

beginning of the month. A weightage based profit distribution mechanism ensures that the return

paid to any Customer in a Profit & Loss sharing contract is proportionate to the risk taken. In the

case of a loss, as per the rules of Mudaraba, the loss will be borne solely by the Rabbul Maal. The

loss will be distributed between various categories of customers on a pro rata basis. Bank also

suffers loss as no income is generated against its efforts.

Brochure

Islami Dollar Bachat Account

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Features:

The Islami Dollar Bachat account is ideal for

individuals and businesses who are eager to save in

US Dollar. This saving scheme is both for Residents

and Non residents who need to either save in US

Dollars or remit money from or abroad for personal

or business transactions. The Islami Dollar Bachat

account is a profit/loss bearing account in USD

based on the principle of Mudaraba where the Bank invests your funds in a Shariah compliant

manner. The profit and loss from the investment is then shared between you and the Bank.

The Islami Dollar Bachat Account offers you the following Key Salient Features:

Free Internet Banking service

Safe Deposit Lockers facility available

100% interest free

Monthly profit/loss payment on daily product basis

A minimum balance of USD 100/- in cash or through USD clearing cheque or valid

instructions of remittances from abroad

No Zakat or Withholding tax applicable

Joint Account facility up to four joint account holders

Access to the entire online branch network 102 Branches in 49 Cities

No restrictions on intercity transactions

Round the clock phone Banking through 111-ISLAMI (475-264) or 111-BIP (247)-111

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Personalized service from Customer Relationship Officers

Free Account statement facility

Hold mail and stop payment facility

How It Works:

BankIslami's Islami Dollar Bachat account is a profit bearing account developed on the

basis of the modes of Mudarabah. This is how it works. You provide funds to the Bank on

Mudaraba basis for investment in the Bank‘s Shariah Compliant Assets. In this arrangement, you

will function as a Rabbul Maal (investor in Mudaraba) and the Bank will act as the Mudarib

(Manager of the Mudaraba). The Bank will form a pool of customers‘ funds. The pool provides

financings to various individuals, corporate, government and other entities based on various

Islamic modes of finance such as Murabaha, Ijarah, Musharakah, Mudaraba and other modes and

would generate income.

This income will be calculated on monthly basis and shared between the Bank and the

Depositors as per a pre agreed profit sharing ratio. The profit share of the Bank is called the

Mudarib's share. This profit sharing ratio between the Bank and the Depositors is determined at the

beginning of the month.

The profit share of the depositors is based on the predetermined weightages assigned at the

beginning of the month. A weightage based profit distribution mechanism ensures that the return

paid to any Customer in a Profit & Loss sharing contract is proportionate to the risk taken. In the

case of a loss, as per the rules of Mudaraba, the loss will be borne solely by the Rabbul Maal. The

loss will be distributed between various categories of customers on a pro rata basis. Bank also

suffers loss as no income is generated against its efforts.

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Islami Mahana Munafa Account

Features:

Long term investments yield high returns

but delayed profit payment. With our Islami

Mahana Munafa Account you don't compromise

on any. Now you can enjoy the freedom of halal

monthly gains for a prosperous present while

building your wealth for a secure future. Also,

Islami Mahana Munafa Account will provide you with security, convenience and flexibility of

investment tenure to suit your needs.

The Islami Mahana Munafa Account offers you the following Key Salient Features:

Free Internet Banking Service

Hold Mail & Stop payment facility

Safe Deposit Lockers

100% interest free

Available in Pak Rupees

Tenure of investment are 1, 2, 3, 5 & 10 years

Minimum amount of investment is Rs. 10,000/- only

Profit/loss payment on monthly basis until the maturity date

Payment of amount of investment on the maturity date

Differential and specific pool allocation possible for large deposit holders

Profit announcement at the begining of every month

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Facility of premature encashment available. In such a case, the corresponding period rate

would apply, unless stated otherwise

Free facility of transfer of profit and invested funds in nominated Islami Current or Islami

Bachat Account

Monthly profit/loss payment on daily product basis

Round the clock phone Banking through 111-ISLAMI (475-264) or 111-BIP (247)-111

Personalized service from Customer Relationship Officers

Free Six monthly Account Statement facility

How It Works:

BankIslami's Islami Mahana Munafa Account is a profit bearing account developed on the

basis of the modes of Mudarabah. This is how it works. You provide funds to the Bank on

Mudaraba basis for investment in the Bank‘s Shariah Compliant Assets. In this arrangement, you

will function as a Rabbul Maal (investor in Mudaraba) and the Bank will act as the Mudarib

(Manager of the Mudaraba). The Bank will form a pool of customers‘ funds. The pool provides

financings to various individuals, corporate, government and other entities based on various

Islamic modes of finance such as Murabaha, Ijarah, Musharakah, Mudaraba and other modes and

would generate income.

This income will be calculated on monthly basis and shared between the Bank and the

Depositors as per a pre agreed profit sharing ratio. The profit share of the Bank is called the

Mudarib's share. This profit sharing ratio between the Bank and the Depositors is determined at the

beginning of each month.

The profit share of the depositors is based on the predetermined weightages assigned at the

beginning of the month. A weightage based profit distribution mechanism ensures that the return

paid to any Customer in a Profit & Loss sharing contract is proportionate to the risk taken. In the

case of a loss, as per the rules of Mudaraba, the loss will be borne solely by the Rabbul Maal. The

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loss will be distributed between various categories of customers on a pro rata basis. Bank also

suffers loss as no income is generated against its efforts.

Brochure

Page 116 of 300

Islami Amadni Certificate

Features:

Why take interest when you

can earn Halal profit on your

investment. With Islami Amadni

Certificate your hard earned

investment works harder to yield high

expected profits so you can build your

wealth for a prosperous future. You

get the best of both worlds in a safe, secure and flexible package to perfectly meet your needs.

If you are a salaried individual, a businessperson or a corporate entity with some long term

investment funds to spare, our Islami Amadni certificate is an ideal solution for you. With our

Islami Amadni Certificate, the higher your investment the higher will be your return and that too in

a Shariah compliant manner. Also, you have the flexibility to choose amongst various investment

tenures to suit your personal or business needs.

Islami Amadni Certificate offers you the following Key Salient Features:

Available in Pak Rupees

Investment can be done for 1, 3, 6, 12, 24, 36 or 60 months

Minimum amount of investment is Rs. 10,000/- only

Payment of profit/loss and amount of investment on the maturity date

Quarterly profit payment for investment of 12 months and above

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Differential and specific pool allocation possible for large deposit holders

Profit announcement at the end of every month

Facility of premature encashment available. In such a case, the corresponding period

weightage would apply, unless stated otherwise

Free facility of transfer of profit and invested funds in nominated Islami Current or Islami

Bachat Account

Free Internet Banking service having free Term deposit enquiry facility

Round the clock phone Banking through 111-ISLAMI (475-264) or 111-BIP (247)-111

Personalized service from Customer Relationship Officers

Free Account statement facility

How It Works:

BankIslami's Islami Amadni Certificate is a profit bearing account developed on the basis of

the modes of Mudarabah. This is how it works. You provide funds to the Bank on Mudaraba basis

for investment in the Bank‘s Shariah Compliant Assets. In this arrangement, you will function as a

Rabbul Maal (investor in Mudaraba) and the Bank will act as the Mudarib (Manager of the

Mudaraba). The Bank will form a pool of customers‘ funds. The pool provides financings to various

individuals, corporate, government and other entities based on various Islamic modes of finance

such as Murabaha, Ijarah, Musharakah, Mudaraba and other modes and would generate income.

This income will be calculated on monthly basis and shared between the Bank and the

Depositors as per a pre agreed profit sharing ratio. The profit share of the Bank is called the

Mudarib's share. This profit sharing ratio between the Bank and the Depositors is determined at the

beginning of each month.

The profit share of the depositors is based on the predetermined weightages assigned at the

beginning of the month. A weightage based profit distribution mechanism ensures that the return

paid to any Customer in a Profit & Loss sharing contract is proportionate to the risk taken. In the

case of a loss, as per the rules of Mudaraba, the loss will be borne solely by the Rabbul Maal. The

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loss will be distributed between various categories of customers on a pro rata basis. Bank also

suffers loss as no income is generated against its efforts.

Brochure

Historical Deposit Rates & Weightages

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Rates:

Islami Bachat Account

Tiers Feb' 10 Jan' 10 Dec' 09 Nov' 09 Oct' 09 Sep' 09

0 - 999,999 5.01% 5.00% 5.01% 5.00% 5.00% 5.00%

1,000,000 - 9,999,999 5.01% 5.00% 5.01% 5.00% 5.00% 5.00%

10,000,000 - 49,999,999 5.01% 5.00% 5.01% 5.00% 5.00% 5.00%

50,000,000 - and above 6.48% 6.47% 6.48% 6.47% 6.47% 6.48%

The above rates are applicable only from the month of August 2009 to January 2010. The

above rates should not be taken as a prediction, projection or forecast as to the future or likely

performance of the accounts.

Islami Dollar Bachat Account

Feb' 10 Jan' 10 Dec' 09 Nov' 09 Oct' 09 Sep' 09

USD 0.01% 0.00% 0.00% 0.00% 0.00% 0.01%

The above rates are applicable only from the month of August 2009 to January 2010. The

above rates should not be taken as a prediction, projection or forecast as to the future or likely

performance of the accounts.

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Islami Amadani Certificate

Term Deposits with Quarterly profit payments

Tiers Feb' 10 Jan' 10 Dec' 09 Nov' 09 Oct' 09 Sep' 09

One Year Rs. 1-9,999,999 9.62% 9.61% 9.62% 9.61% 9.61% 9.62%

Two Years Rs. 1-9,999,999 9.71% 9.70% 9.71% 9.70% 9.70% 9.71%

Three Years Rs. 1-9,999,999 10.15% 10.14% 10.15% 10.14% 10.14% 10.15%

Five Years Rs. 1-9,999,999 11.06% 11.05% 11.06% 11.05% 11.05% 11.07%

Term Deposits with profit payments at Maturity

One Month Rs. 1-9,999,999 6.48% 6.47% 6.48% 6.47% 6.47% 6.48%

Three Months Rs. 1-9,999,999 7.43% 7.42% 7.43% 7.42% 7.42% 7.43%

Six Months Rs. 1-9,999,999 7.97% 7.96% 7.97% 7.96% 7.96% 7.97%

One Year Rs. 1-9,999,999 9.98% 9.97% 9.98% 9.97% 9.97% 9.98%

Two Years Rs. 1-9,999,999 10.07% 10.06% 10.07% 10.06% 10.06% 10.06%

Three Years Rs. 1-9,999,999 10.555% 10.54% 10.55% 10.54% 10.54% 10.55%

Five Years Rs. 1-9,999,999 11.53 % 11.52 % 11.53 % 11.52 % 11.52 % 11.52 %

The above rates are applicable only from the month of August 2009 to January 2010. The

above rates should not be taken as a prediction, projection or forecast as to the future or likely

performance of the accounts.

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Islami Mahana Munafa Account

Feb '10 Jan '10 Dec' 09 Nov' 09 Oct' 09 Sep' 09

1 Year 9.54% 9.53% 9.54% 9.53% 9.53% 9.58%

2 Year 9.63% 9.62% 9.63% 9.62% 9.62% 9.69%

3 Year 10.07% 10.06% 10.07% 10.06% 10.06% 10.21%

5 Year 10.96% 10.95% 10.96% 10.95% 10.95% 12.01%

10 Year 12.48% 12.47% 12.48% 12.47% 12.47% 12.49%

The above rates are applicable only from the month of August 2009 to January 2010. The

above rates should not be taken as a prediction, projection or forecast as to the future or likely

performance of the accounts.

Weights:

Weightages of March 2010

Customer's Share

Islami Bachat Account

0 49,999,999 0.388

50,000,000 - & above 0.502

Islami Amadni Certificate

Profit Payment At Maturity

One Month 0.502

Three Months 0.576

Six Months 0.618

One Year 0.774

Two Years 0.781

Three Years 0.818

Five Years 0.894

Profit Payment Quarterly

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One Year 0.746

Two Years 0.753

Three Years 0.787

Five Years 0.858

Equity 0.968

Islami Mahana Munafa Account

One Year 0.740

Two Years 0.747

Three Years 0.781

Five Years 0.850

Ten Years 0.968

Islami Dollar Bachat Account

Customer's Share 0.282

Bank's Share 1.000

The Bank and the Depositors will have equal share in income of the Mudaraba pool. The

share of the Depositors will be distributed based on the above weightages. Profit will only be paid

on deposits which remain with the Bank for a period of at least one month.

Attention: Special Deposit Holders,

We are pleased to inform all special deposit holder that the profit calculation mechanism

has been changed from Musharakah based system to Mudarabah based system with effect from

September 01, 2009. The process will simplify profit calculation mechanism with no major impact

at customers' end.

Weighatges of the corresponding deposit tenure will applied to the special deposit from

September 2009 onwards.

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Requirements For Account Opening:

The general procedure for account opening is same

but the document required to open the account is different

according to the types of accounts. The bank officer must

assure that the customer has the following characteristics:

The customer must have the the age of maturity

The customer must be of sound mind

The customer must not be insolvent and bankrupt

The customer must not be in the prohibited list of

SBP/NAB etc.

Account Opening Form (AOF):

A person who wants to open an account has to fill an account opening form which is

provided by the bank, free of cost. It is a form that contains the account number, date, title of the

account, applicant name and address, special instructions (if any) information about zakat

deduction, and any other information about whether the person wants to get online facility or ATM

Card etc.Then this filled form is submitted to bank, the bank officer verifies the signatures of the

applicant and while another bank officer admits the signature of the applicant.

Then these forms are fead into the system and then scaned and photocopied and then they

are sent to the headoffice which after doing the world check, issues the account number to the

applicant. In case of any discripency or some documents missing or any ambiguity the head office

sends the form back with the objections sheet (sheet is enclosed in anaxture 2). Then that

discripency has to be removed or the required documents are to be added and then sent again to the

head office. Till the time the head office is satisfied and letter of thanks has been delivered to the

customer the account remain debit blocked.

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The signatures of the applicent are admited by an officer of the bank with the stamp of

Signature Admited. Two signatures of the CSM (Customer Services Manager) are done on the AOF

with his stamp one signature of CRO (Customer Relationship Officer) and Branch Manager is also

done with their stamps. The empty spaces of the AOF are marked void with the stamp of VOID.

Specimen Signature Card:

This card contains the account number, title of the account, and the specimen signature of

the account holder. It is card on which specimen of applicant‘s signature are taken for future

reference. Every time a cheque is presented for payment, the signature on the cheque is verified by

comparing it with S.S Card. In case of joint account two applicants can sign on one SS card. In

case of more than two joint account holders more than one SS card are required.

Two copies of this card are required one is kept with the branch inside the branch in a fire

proof cabinet and the other sent to the head office for record and signature scanning purpose. It is

a centralized activity. The scanned signatures are recorded in the database of the system and are

promptly considered for future transactions of the customer. When this form is submitted in bank,

the bank officer admits the signatures of the applicant with the stamp Signature Admitted and signs

and CSM signes the SS Card with his stamp.

Terms And Conditions:

Applicant signs are taken on each and every page of Terms and Condition Form before

opening an account. A total of 7 signatures are taken 6 signatures on the 6 pages of the Terms and

Condition Form and one on the Authorised Signatories Section which is part of the Terms and

Condition Form. (Form is enclosed in appendix 1)

The signature on the Authorised Signatories Section is/are admitted by the officer of the

branch and are stamped with Signature Admitted while the 6 signatures on each page of the Terms

and Condition are varified by the bank officer with the stamp Signature Varified.

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Attested Copy of Computarized National Identity Card (CNIC) of the Customer:

While opening an account the first thing we ask the customer to provide us in the Attested

copy of Computarized National Identity Card (CNIC). The first thing we check on the CNIC is the

expiry date. For expired CNIC‘s, customer has to submit copy of expired CNIC and a NADRA

receipt in evidence of having applied for renewal of CNIC. The bank officer checks the number of

CNIC is correctly recorded in the AOF and a Attested copy of Computarized National Identity Card

(CNIC) of the Customer is kept in record by the bank.

Third Party Mandate:

This form is used when a applicant wants to authorize any third party to sign and deal

transactions with the bank. The customer signes it and authorises the bank to allow the therd party

to operate the account deal transactions with the bank while indemnifying the bank from any loses

the customer bears due to the third party.

Confidential Customer Profile Form (KYC Form):

At the time of opening of an account, officers should tactfully obtain as much information as

possible about the integrity and character of the person, his correct name and address and

occupation. This infect will be the only opportunity they will be able to talk to the prospective

customers in a friendly and frank environment. This is the time when we have a slight edge over the

customer. He/she at this point in time is willing to divulge as much information about his or her

personal status and business etc. to the bank officer.

Before filling an AOF and while filling an AOF we must somehow get all the required

information from the customer in a detailed interview and it should be sufficient to fill his KYC

Form accorately and realistically. This is the place where fraud starts. If you do not guess the right

monthly and yearly ternover of the customer‘s account then this may lead to a fraud or money

londering. This form is filled for checking the credibility of the applicant by the bank officer. The

CRO and CSM have to sign this form with their stamps.

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Undertaking For Difference In Signature On CNIC And AOF:

In case of difference in signature on NIC and AOF an undertaking is taken from the

applicant so that the customer has changed his signature and bank is not and will not be liable for

anything or any loss incured to customer due to his change in signature.

Biometric Thumb Impression:

In all types of accounts thumb impression is taken from the applicant. Thumb Impression is

used for ATM.

Verisys NADRA:

The CNIC‘s of the customers are verified through the NADRA‘S specialized software which

is called as ―VERISYS‖. This software is being used in BIPL, for all type of account, for the

purpose of verification of NIC number, place of birth, mother name, and for checking validity of

NIC. In case of any variation we have to ask the customer to provide us with a correct CNIC. If the

date of expiry or issuance does not match on the CNIC and the NADRA Varisis then the customer is

asked to provide the CNIC in which the date matches perfectly.

Zakat Declaration Form

If the customers do not want the deduction of the zakat charges from his account then he

will provide the bank officer zakat declaration form stamped with Registrar Notary Public.

Cheque Book Requisition Slip:

This is the request made by the client to the bank to issue him a cheque book containing

number of leaves mentioned (25, 50, 100). It enables a customer to make a withdrawal from their

account or make payments of various parties by issue of cheque. Customer‘s signature on the face

of the Cheque Book Requisition Slip are varified by the bank officer with his signatures and the

stamp of Signature Varified and signatures at the back of the Cheque Book Requisition Slip are

admitteded by another bank officer with his signatures and the stamp of Signature Admitted.

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Source Of Income

The following Source of income is taken from applicant:

In case of agriculturist

Visit report

Fard-e-malkiat

In case of shop

Source of income

Visiting card

Letter Head

In case of salaried person (Pvt or govt)

Salary slip

Appointment card

Service card

In case of housewife/student/retired officer without pension

On whom they will be dependent, that person‘s source of income is required.

In case of retired officer with pension

Retirement letter

Pension book

In case of petroleum station/CNG/Industry

On letter Head their proof of source of income is taken

Letter Of Thanks:

Letter of thanks is the letter issued by the head office of the bank to the customer for two purposes:

First purpose is to say thanks to the customer for opening the account in their bank.

Second purpose is to confirm the address provided by the customer while opening the

account.

Photo Account:

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Photo account is opened for the following reasons:

Urdu Signatures

Shaky Signatures

Illiterate Person (Thumb Impression)

Extra Documents Required Incase Of Photo Account Are:

Vernacular Form:

In case of shaky sign this form is filled and signed by the applicant. This way customer

indemnifies the bank from any loses the customer bears due to shaky signature.

Photographes:

3 photographes of the customer are to be obtained with the account opening form for a

photo account.

Application for Urdu Signatures:

An application for opening an photo account due to urdu signature must be signed by the

customer.

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Type of Relationship Account:

Individual account

Joint account

Sole proprietorship account

Partnership

/Club/Society/Association/NGO/Trust account

Limited company accounts

Minor account

Opening of Individual Account/Joint Account:

―When a single man or woman opens an account in his or her own name and has the right

to operate, it is called individual A/C.‖

―When two or more persons neither partners nor, trustees, open an account in their name is

joint account."

When different people want to or need to share a single account it is called joint account.

The names of persons are written on the title of A/C and on S.S. card. Joint A/C cannot be opened

by single person. Both persons have to sign on cheque.

Documentation:

Filled Account Opening Form

Computerized National Identity Card (CNIC)

Passport (for Non-residents only)

Employment proof (Pay slip, Employment letter etc)

Letter Head (if doing business of any type.)

Operation:

The person place in the type of account and type of operation required in the account

opening form.

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He/she fills in part 1 of the form, a fix his/her either two of four similar signature (or thumb

expression in the signature space)

The person fills his or her father, mother, husband/wife or any other relative‘s name, his/her

address, phone number, his or her sign to certify this requirement. This requirement is

needed because in his/her absence bank can have correspondence with a specific person.

The person deposits the initial amount for opening account onto the cash counter. The

person put his signature on form on two places in ―authorized Signature‖ and fills in the

―Title of Account‖ space by writing his name.

The person fills the Part-1 and Part-II (In case of joint account)

In the title of account space names of all persons maintained (In case of joint account)

Account holders specified in the form that they will operate the form singly or jointly (In

case of joint account)

The next day is opening of account

Opening of Sole Proprietorship Account:

When the owner of the firm operating singly, open an account in his firm name.

Documentation:

Filled Account Opening Form

Computerized National Identity Card (CNIC)

Passport (for Non-residents only)

NTN Certificate

Letter Head

Operation:

All operation remains the same, except that the firm name is written in ―title of account‖

area and Signature of the proprietor in the specified area.

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Opening of Partnership/Club/Society/Association/NGO/Trust:

The account is opened in the firm name and all partners designate one or two persons to act

behalf of the partnership firm all acts of the firm jointly and severely.

Documentation:

Certified Copy of Partnership/ Trust Deed

Certificate of Registration

Signatures of all Partners on letter of Partnership

Certified copy of rules

Certified copy of resolution

Minuts of Meeting

Letter Head

Copy of by-laws

Copy of NTN Certificate

CNICs of all Partners

Passports (for Non-residents only)

Operation:

All other requirements are same except that all partners dully sign the form, cards are

signed by all of those partners who will act on behalf of the firm.

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Opening of Limited Company Account:

Limited company account includes the private limited and public limited companies

Documentation:

Certificate of Incorporation

Certificate for Commencement of Business (PLC only)

Memorandum of Association

Articles of Association

Current list of Directors

Copy of Board Resolution

Minuts of Meeting

Letter Head

CNICs of all Directors

Copy of NTN Certificate and Form 29

Operation:

The person authorized in the resolution of the board of directors put their signature on the S.S

Card.

Next of Kin requirement is not need in a case of Private Limited Company. Other procedure is

same.

After completing each and every formalities are signed by all partners who will act on behalf

of the firm.

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Minor’s Account

In respect of an account opened in the name of a minor, the bank shall be entitled to act on

the instructions received from the guardian name on the account opening form, irrespective of

whether the minor account holder continues to be a minor or not unless the bank receives written

instructions from the guardian or a notice to the contrary from an appropriate authority. The title

of the account will be Miners‘s Name (M) Gardian‘s Name (G). source of fund of the gardian are

required with the attested copy of his CNIC and incase of blood relative a court certificate. B form

of the miner is also required.

Dorment Account:

If there is no debit transection in an account for 12 montes then that account is

autimatically marked dorment by the centralized operating system. We will keep the SS Cards of the

dorment accounts seprate from other cards with the words ―Dorment A/c Last transection dated ‖.

a letter is sent to the customer informing him that his account has become dorment.

Deceised Account:

When bank receives intemation from an authentic and reliable source of the death of an account

holder then bank imediately deceases the account.

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Account Number:

Bank Islami has acquired a new centralized banking system named ―iMal‖ where all the

branches are directly connected to Head office. When customers give all the information about him,

this information is entered into centralized data base. When this procedure is completed, the system

automatically generated the account number of that customer. Due to this system the process of

account opening becomes fast and also there is no chance of any mistake.

The account no of any bank islami branch starts with its 4 digit numarical branch code like

the branch code for bahawlapur branch is 2019. Then comes the 7 digit numarical account no that

can be for example 0000001 and then the last part is the Sufex Code that tells about the type of the

account like for current account it is 0001 and savings account it is 0201. So if I use the example I

geve an complete account no can be 2019-0000001-0001. This is a pakistani rupees current

account.

The Sufix Code of various types of accounts of BIPL are as follows:

Account title Sufix Code

Current account 0001

Saving account 0201

Account title Sufix Code

Current Account Savings Account

Dollar (US$) 0031 0231

Pound (GBP£) 0252

Euro (EU€) 0065 0999

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Issuance of Cheque Book:

Cheque book is issued to the customer after sending the letter of thanks when the customer

comes with the letter of thanks the requests for the issuance of the cheque book which he had signed

earlier is separated from the rest of the requests. A cheque book (usually having 25 leaves) is issued

to the customer. The customer can also ask for a 50 leaves or 100 leaves cheque book. The cheque

book is charged @ Rs. 2/for every leaf. Every cheque book also contains one leaf that is used for

another issue of a Cheque book

The procedure in this manner is to complete the cheque book requisition containing title of

account, account number, type of currency and signature of the customer. Signature of the customer

on the cheque book requisition is verified through the system. Particulars are entered in the cheque

book issuance register. After verifying signatures from the system, the account opening person signs

and stamps the cheque book requisition and hands over the cheque book after taking signatures of

the account holder on the cheque book acknowledgement as a proof that he/she has taken the

cheque book.

Entry Of cheque book:

Before issuance of a chequebook, the employee performs certain functions. They include:

Stamping every leaf with specific A/C number.

Stamping every leaf with stamp ―Payable at any BIPL Branch‖.

Enters it in the chequebook issue register.

Check whether or not a senior officer has verified the signatures, if no then first he gets

them verified.

If the check book is of photo account then be sure that each and every leaf of cheque

book should carry photo account stamp

After entry in the manual register, the employee issues the chequebook to the A/C holder

after taking his/her signature on the acknowledgement leaf.

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Stop Payment Of Cheques:

Here the bank stops the cheque of their own branch because of following reasons:

The customer does not want to make the payment due to any reason.

If the cheque book is lost or stolen.

If the customer has lost a few or one cheqe.

So the bank stops the payment of the cheque on the request of customer. In this turn around

time is 5 minutes and it is not done in the given time, then there will be the problem in the audit

committee and its charges are Rs. 200. After the payment is stopped, the concerned client is

informed about that through a letter of stoppage of payment.

Closing of Account:

Here the customer gives the application of closing the account. Its charges are Rs. 200. The

bank takes back the cheque book. If there is some money in the account, the bank makes pay order

and then courier to that person‘s address. If the person has left her house and bank is unable to

approach that person then the amount is transferred to the unclaimed deposit accounts. Usually

those accounts are closed that have a cash balance of Rs. 0. In prectice bank askes the customer to

draw a cheque of the total amount except the account closing charges and then closes the account.

Procedure Followed In Order To Close An Account:

Now, coming towards the procedure for the closing of an account at Bank Islami, the following

steps will be followed.

The client who wishes to close an account first has to give an application, duly signed on the

pre-printed application of the bank. The client can also give an application on a plain

paper, but correct signatures are very necessary.

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If a client wishes to close a account then the bank charges Rs.200, so at the time of closing

the balance should be Rs.200.

Along with the application to close the account client‘s Chequebook and ATM Card are also

received from him and then they are destroyed in order to prevent any misuse in the future.

All the cheques are first stamped ‗Account Closed‘ then torn from the center. The ATM

Card is also broken from the middle.

the account opening department then enters in the system and markes it as ‗account closed‘.

One thing has to be taken into immediate consideration that the account number allotted to

the client (who has closed his account), after closure of the account becomes useless and is

not allotted to any one in the future.

the specimen signature card are brought to the account-opening department and are

stamped ‗Account Closed‘ and the AOF and related documents are also stamped ‗Account

Closed‘.

Then all these documents along with the cheque book and the ATM Card are sent to the

head office.

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My Experiences During Internship In Accounts Opening Department:

During my internship at Bank Islami Pakistan Ltd, Bahawalpur Branch, my experience was

outstanding while working in the Accounts Opening Department. This was the first ever experience

of my life regarding working in any professional environment with practical people working around

me. I was young and new so I also did make mistakes an my seniors corrected me and helped me a

lot.

Mr. Asad Mehmood Khan Ali Zai (Cusmomer Service Officer and Incharge of Account

Opening) was very much fanatical in giving me indepth insight of all the workings of that Accounts

Opening Department. I was being supervised by Mr. Asad Mehmood at all times. He was a very

ebullient person and made me feel easy and relaxed to a greater extant. He was a very hardworking

and supportive type of a colleague, menter, trainer and teacher to me. He taught me each and every

situation that one can face while being in the accounts opening department. He also directed me

about the procedures of other banks dealings. Whenever he was busy in doing a work regarding the

accounts opening things he never forgot to tell me what he is doing and what is the purpose of

doing that thing.

During my stay at the accounts opening department, I got a chance to open some accounts

after the approval and due verification from my supervisor Mr. Asad Mehmood Khan Ali Zai. He

showed and explained the purpose of each of the stamps which have to be incorporated in the

Account Opening Form. I did mistakes as well while opening of accounts regarding writing account

titles but my stamping was perfect always. But he never ever said a word to me regarding that. I

observed that employees at Bank Islami are very cooperative and supportive. This is the reason why

the customer satisfaction is provoking in all the branches of the bank.

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VALUE ADDED SERVICES

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Features:

BankIslami's has a wide network of 102 Branches in 49 Cities all of which provide Online

Banking services. Online Banking means that all our 102 Branches in 49 Cities are connected with

each other so that you can instantly access your account and make transactions at any BankIslami

Branch. The following are the key benefits that you get out of using our Online branch network:

Cash Deposit for immediate credit to a remote branch.

Remote Cheque Encashment from any Online branch.

Instant Funds Transfer between any 2 Online branches.

Balance Enquiry and Statement of Account from any Online branch.

Branch Timing:

Monday - Thursday 9:00AM-5:00PM

Friday 9:00AM-12:30 PM & 3:00-5:00PM

Saturday 9:00AM-12:30 PM

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Features:

Do you want to provide ease and convenience to your friends, family, colleagues and

business associates. With our Interbank funds transfer (IBFT) facility you can easily transfer funds

in their accounts via your ATM. Now, when dealing with you they can ensure hasslefree funds

transfer in their accounts. No nuisance of waiting for Cheque clearance or going to the branch to

deposit Cash or Cheque.

IBFT facility enables you to send and receive funds Online from and to any Account holder

of 1Link IBFT participating member Banks. Following are the key benefits that you will get out of

using our IBFT facility:

Convenience

Easy to use

Instant Transfer i.e. Online

Secure

7x24 Facility- Round the Clock

IBFT totally eliminates the use of cheques and the transactions can be processed Online

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How To Use:

Insert the Card in the ATM

Wait for Authentication - using Biometric or PIN

Select "Funds Transfer" from Main Menu

Select "IBFT" from Funds Transfer Menu

Select the From Account from which Funds will be transferred.

Select Bank where Funds are to be transferred

Input the Beneficiary Account Number

Input the Amount to be transferred

Verify the Beneficiary Name retrieved Online from the Beneficiary Bank

Confirm the Transaction

Banks Linked to Inter Bank Fund Transfer Facility:

Allied Bank Limited

Askari Bank Limited

Bank Al-Habib

BankIslami Pakistan Limited

Habib Bank Limited

Soneri Bank

United Bank Limited

NIB

RBS - Royal Bank of Scotland

Tameer Micro Finance Bank

Standard Chartered Bank

Bank Al Falah

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Features:

Now you can access your account information and view your transactions history at home

or office on your personal computer/Laptop. BankIslami Internet Banking provides you the facility

to access and manage your accounts and transactions securely via Internet 24 hours a day, 7 days

a week.

BankIslami Internet Banking provides you the following Key Features:

Access to your Account mini/full statement

Funds transfer from one BankIslami account to another

Access to transaction history.

Transaction enquiry by Cheque No., transaction amount or date.

Complaint registration.

Request feature for updating contact information.

Activity log to track your transactional activities performed on Internet Banking

Personalization of Internet Banking

Term Deposit enquiry.

How It Works:

Please provide your email address at the given location on your Account Opening form.

Your email address acts as your login ID. This ensures that your login details are unique and hence

cannot be copied. You will receive a system-generated email at your assigned address. The email

will contain a URL which will take you to BankIslami's Internet Banking website. You will be asked

to log in by entering your User ID, which is your email address (in full). You will be prompted to

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set your password. You can do so by choosing at least 6 alphanumeric characters. Once password

has been specified, you will be able to log on to BankIslami Internet Banking.

Registering For Internet Banking:

New Customer:

You will have to provide your email address at the given location on your Account

Opening form.

Your email address acts as your login ID. This ensures that your login details are unique

and hence cannot be copied.

You will receive a system-generated email at your assigned address.

The email will contain a URL which will take you to BankIslami Internet Banking website.

You will be asked to log in by entering your User ID, which is your email address (in full).

You will be prompted to set your password. You can do so by choosing at least 6

alphanumeric characters.

Once password has been specified, you will be able to log on to BankIslami Internet

Banking.

Existing Customer:

Please contact our Phone Banking at 111-ISLAMI to help you register for this service. You

will need to provide your customer details and email address. You will get an email that will

help you generate your password.

The System Requirements To Use Internet Banking:

All you need to start Banking on line is a BankIslami's account and a PC with Internet

access. In a continued effort to safeguard on line Banking transactions, BankIslami requires full

128-bit encryption for Personal Internet Banking use. The following are BankIslami -supported

browsers that offer this highest level of encryption:

Internet Explorer - versions 5.5, and 6.0

Netscape - versions 7.1, and 7.2

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Safari version 1.2

Mozilla/FireFox version 1.0

If your browser does not support 128-bit encryption, you will need to download the latest

version in order for you to use Personal Internet Banking. You should also be sure your browser

options are set to accept cookies and is JavaScript enabled. There is no special software needed to

access Internet Banking. Once you sign up, you will be able to access Internet Banking anytime

from BankIslami's Internet Banking.

The Precautions That Should Be Taken While Using The Internet Banking Service:

Your Internet Banking account can be misused if your password and login id are

compromised. the the following precautions must be taken to avoid any fraudulent activity on your

account:

DO NOT reveal your ID and password to anyone, write down or use it where someone else can

see.

Change your password IMMEDIATELY, using the 'Change of Password' service, if you

suspect it has been revealed.

DO NOT use easily recognized numbers such as your telephone number etc. as your password.

REMEMBER TO LOG OUT of the system and close your browser whenever you leave your

computer, even for a short while.

Clear your browser's cache on regular basis so that your account information is removed. This

is particularly important if you are using a shared PC. You should clear it after each session.

Always use the latest recommended Internet browser so that you are using the most updated

security features available.

Call our Phone Banking immediately if you notice any unusual transactions on your account.

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Features:

OneCard is a Shariah compliant ATM/Debit card, all in one, which acts as a complete

replacement for cash. Now you have the freedom to access your Bank account 24 hours a day to

make instant and cashless payments at a multitude of shops, outlets and restaurants in addition to

its use on our ATM network.

OneCard - Your ATM Card:

You can withdraw cash anytime and anywhere from around 2,500 ATMs countrywide linked

to both the M-Net and 1-Link switches.

OneCard - Your Debit Card:

You can buy grocery, fill fuel, dine-out and make purchases at over 3,600 retail outlets

linked to the Orix Network countrywide.

Fund Transfer:

ATM: You can carry out three kinds of instant fund transfers through BankIslami ATMs

& Kiosks from your BankIslami account:

Into any of your own BankIslami Account

Into any other BankIslami Account

Into any participating I Link Bank through BankIslami's interBank funds transfer facility

Phone & Internet Banking: You can carry out two kinds of instant fund transfers through

Phone and Internet Banking from your BankIslami account:

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Into any of your own BankIslami Account

Into any other BankIslami Account

Self Service Phone Banking:You can carry out instant fund transfer into any of your own

BankIslami account

No Interest:

You do not entail any interest or credit on the payment of your transactions on OneCard because you spend from the money available in your BankIslami account.

Security:

You have maximum security withOneCard since it uses finger or thumb impression for

identification purposes apart from PIN code. (see anaxture 2, card holder SBP guidlines.)

Free Balance Enquiry & Mini Statement:

You can avail free Balance enquiry and Mini statement service to help you make fund

management simple and effective and maintain a formalized record of all the purchases and

payments you have made during a month.

No Liability:

You are protected against fraudulent transactions made on your OneCard, in case your

card is stolen or lost. Simply report your card as lost or stolen immediately by calling our 24

hour Phone Banking service at 111-ISLAMI (475-264).

24 Hour Customer Assistance:

You can contact our 24 hour Phone Banking service at 111-ISLAMI (111-475-264) if you

need any assistance.

The Transaction Limit on a One Card:

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Currently, BankIslami offers two card variants to its customers, namely, Blue and Gold

Card. Following are the various transaction limits as per delivery channel

Delivery Chanel Transaction Card Type

Blue Gold

ATM

Cash Withdrawal 20,000 50,000

Fund Transfer - Own Account Unlimited Unlimited

Fund Transfer - Trird Party BIPL Account 150,000 250,000

Inter Bank Fund Transfer (IBFT) 150,000 150,000

Fund Transfer - Own Account Unlimited Unlimited

Phone Banking Fund Transfer - Own Account Unlimited Unlimited

Internet Banking Fund Transfer - Own Account Unlimited Unlimited

KIOSK Fund Transfer - Trird Party BIPL Account 150,000 250,000

Inter Bank Fund Transfer (IBFT) 150,000 150,000

TPIN:

Your Telephone Personal Identification Number (TPIN) is your identification for Phone

Banking services and therefore should remain confidential. Please do not share it with anyone. If

you think someone has discovered your TPIN, change it immediately. It is a good idea to change

your TPIN at regular intervals.

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Features:

Enjoy secure and safe ATM transactions with BankIslami‘s Biometric ATM based on

BankIslami‘s One Card, which provides maximum security since it uses the most authentic way to

verify your identity. How? Apart from a pin-code, you can also use your finger or thumb impression

for identification purposes. After all, your fingerprints are yours and they cannot be copied.

Amazing! Isn't it?

Built with the state-of-the-art technology, these ATMs are the first of its kind in Pakistan.

How to get your Biometric Registration:

While opening an Account with BankIslami, customer will be asked to register his Biometric

identification against his/her CNIC. As per BIP standard, customer's left & right Thumb will be

used for registration purposes.

Once customer's Account opening request gets approved, his/her Biometric record will be

linked with his/her account through CNIC.

How to get One Card:

One Card will be mailed to your address in your "Welcome Pack".

Personal Identification Number "PIN" will be mailed to you at your preferred mailing address

given in the account opening form.

You will call 111-ISLAMI (475264) to activate your One Card.

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How to Use Biometric ATM:

Insert your One Card in the Biometric ATM machine

Place your Right/Left thumb impression on the space provided at the right side of the machine.

Select the type of account from which you want to withdraw funds

Select the amount to withdraw

Take your One Card

Take your Cash

Take your Receipt

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Features:

We are just a call away!!! We are there for you 24 hours a day, 7 days a week. We don't

even take breaks on Holidays and Sundays. If you need any information on any of our Products &

Services, If you need to lodge a complaint or if you just need to give feedback on any of our

Products or Services, just dial 111-ISLAMI (475-264).

We promise you will get the same level of personalized service and attention that you would

expect from our branches.

You may choose to speak to us at anytime, Just Dial 111-ISLAMI (475-264).

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Features:

eStatement is a facility that not only helps you in viewing their statements whenever and

wherever required but also brings an end to filing the Statements and keeping a paper stack. It is a

convenience that offers you ease of use along with a worldwide access to your banking

transactions.

How to Register?

Call 111 ISLAMI (111-475-264)

Speak to a Phone Banking Officer

Request for eStatement Activation

Specify the Account

Specify the Statement Frequency

Available Statement Frequencies:

Daily

Weekly

Monthly

Semi Annually

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Features:

BankIslami offers Banking at your finger tips. Forget about rushing off to the Bank during

office hours or waiting in queues - switch to Banking that's quick, secure and so very convenient.

BankIslami Self Service facility provides you the convenience and ease of making transactions or

getting your account details by just making a call to 111-Islami (475-264).

You can avail the following Phone Banking self service facilities by following a series of

simple menu choices.

Balance Inquiry

Transaction details

Pak Rupee Fund transfer

How To Use:

Call 111-ISLAMI

For Services in Urdu Press 1

For Services in English Press 2

For Self service banking Press 1

You will be asked to enter the following to proceed:

16 DIGIT 1 Card number

4 Digit TPIN (Telephone Personal identification Number)

For Balance enquiry Press 1

For Transaction details Press 2

For Pak Rupee fund transfer Press 3

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Features:

Let us make this world safer and secure for you and your family. Our Safe Deposit Locker

facility enables you to store your valuables in strong heat resistant steel lockers with 24 hour

security. Be it jewellery, passports, share certificates or title deeds, you can rest assured that your

valuables are not prone to loss, fire or theft. You can also nominate/authorize your dear and loved

ones to operate the Locker. Now you can live a carefree & stress free life while we take care of your

valuables while retaining your privacy.

Following are the key benifits that you will get out of using safe deposit locker facility:

Utter privacy to operate your locker in a comfortable, centrally air-conditioned environment.

Protection against weather conditions & power failures with smoke-sensor's, backed by fire

fighting equipment and 24 hour manned security.

A Locker custodian to offer friendly and personalized assistance.

Maximum of four (4) deposit operators per Locker.

Safety of your valuables from loss, fire and theft.

Unlimited free visits to your Locker.

Availability of different Locker sizes (Small, Medium and Large) to suit & accommodate your needs.

Takaful coverage of up to Rs. 25,000 for medium Lockers and Rs. 100,000 for large Lockers.

Locker Rent payable annually and in advance (as per schedule of charges).

Key Deposit payable in advance as a condition for Locker facility.

Eligilibility:

Individuals, firms, limited companies, associations, clubs, trusts, societies, etc may hire a locker.

An account must be maintained with the Bank.

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Remetance Department

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Remetance Department:

Remittance means transfer of funds from one

place to another this department perform the function

of transfer of money. The need of remittances is

commonly felt in today‘s business. The main function

of remittance department in a bank is the transfer of

funds. Mr. Asad Mehmood Khan Ali Zai in BIPL is the

officer for Remittances Department.

Parties To A Remittance:

Remitter

One who make a remittance. He comes to the issuing or originating branch, ask for

a remittance to be made, and deposits the money to be remitted. The bank charges him for

the remittance. He may or not be the bank‘s customer.

Remitee

Also sometimes called the beneficiary, or the payee (the person to whom the

remittance is made/ the one who receives the payment.)

Issuing Bank

The bank that affect the remittances, through the Demand Drafts, Telegraphic

Transfer, or Mail Transfer.

Paying Bank

Also known as the drawee branch (The branch on which the instrument is drawn. It

has to make the payment). Usually located in a different city or country.

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Types of Remittance:

Local Remittance

When funds are transferred within the country from one city to another city or within

the same city it is called local remittance.

Foreign Remittance

When funds are transferred outside the country it is called foreign remittance.

Modes of Remittance:

Demand Draft (D.D.)

Pay Order (P.O.)

Internal Transfer (I.T.)

Foreign Demand Draft (F.D.D.)

Foreign Telegraphic Transfer (F.T.T.)

Travlers Cheques (T.C.)

Pay Order:

A pay order is a written order issued by a bank, drawn upon & payable by itself, to pay a

specified sum of money to or to the order of a specified person. In simple words payorder is an

order to pay. Pay order abbreviated as ―P.O‖ is a negotiable instrument (such as a draft) which

instructs a payer bank to pay a certain sum to a third party within the city. It is a payment

instrument which is used by the banks to settle payment obligations on behalf of their customers.

This instrument is guaranteed by the bank for its full value and is similar to a demand draft. pay

order can only be paid at a branch of BIPL and is not payable at non BIPL Branches. pay order is

payable at any BIPL Branch all over PAkistan. At BIPL pay order is made free of cost to

customers.

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Payment through pay order is a confirmed payment. The reason is that when pay order is

made, the applicant who has an account with the Bank Islami is debited and the amount is added to

the pay order account. And from that account, the beneficiary account is credited for the amount of

pay order. BIPL only issues ―Payee Account Only‖ pay orders.

Validity:

Pay order is valid for 6 months after the date of issue. If the customer does not claim the

payment within 6 months of the issue then the amount of the pay order is included in the

―Unclaimed Account‖ and the amount stays there for 10 years.

Demand Draft

Demand Draft is issued at customer‘s demand for perticular city. Demand Draft is drawn

on a specific city and on a specific branch. A demand draft referred to as ―DD‖ is a banker‘s own

draft drawn upon another banker as per agency arrangement. BIPL issue Demand Draft only for

that city in which there is no branch of BIPL. Then BIPL will link in that city to other banks for

example HBL. BIPL will issue demand draft to the name of HBL and then the funds will transfer

through HBL to beneficiary account. BIPL DOES NOT ISSUE Demand Drafts as Pay Order and

Demand Draft are same in BIPL so a Pay Order is issued instead of Demand Draft. Demand Draft

is only issued for clearance purposes for the settlement of funds between the cities.

Procedure for the Issuance of Pay Order / Demand Draft:

The procedure for dealing with all these under local as well as foreign currency in BIPL is

that according to bank Islami pay order and demand draft concept is same. It is an online transfer

of funds. When a customer comes for the issuance of pay order, the processing steps are:

The customer is given the ―Funds Transfer- Application Form‖.

The customer fulfills the application form which includes the following details:

Transaction Details.

It includes Amount in Figures and Words.

The desired Currency.

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Mode of Payment.

Beneficiary Details (In whose favor P.O is issued).

Applicant‘s Detail (Who Requests for P.O).

The filled form along with the cheque is given to the remittance officer who verifies the form

through the following stamps:

Sign Verification (Where the customer has done the Signatures) on the application form.

Transfer Posted (Means amount is transferred from the Applicants account to the

Beneficiaries Account).

Time Stamp (Contains the Date and the Time of Receiving of Application).

Application form is given to the applicant to fill. Account Application form is then given to

the Remittances Incharge for issuance of instrument. He enters all the particulars of the application

form in the system and computer gives an Auto Control Number to the instrument. Printout is taken

on the block of payment Order. Two authorized officers of the branch then sign it. Instrument is

then protect graphed, and given to the customer. After filling the application form bank will issue

the pay order/demand draft to the applicant.

Funds will transfer to the applicant bank‘s Pay order general account and then the

customer handover that pay order or demand draft to the third party in whose name he made the

pay order/ demand draft. Then that third party will present that pay order/demand draft in his

correspondent‘s branch form where this will present to the nearest BIPL branch from where the

funds will transfer to the beneficiary account.

BIPL issue demand draft only for that city in which there is no branch of BIPL Then BIPL

will link in that city to other banks for example HBL Ahmedpur branch. BIPL will issue demand

draft to the name of HBL and then the funds will transfer through HBL to beneficiary account.

Internal Transfer:

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This type of transfer is simple in which funds are transfer from one account to second

account may be of same branch or other branch of same bank. One cheque can be credited in more

then one one accounts. The form is more then enough to transfer funds without any cheque. There

are two ways for this transfer:

With Cheque:

If money transfer by cheques and transfer in the account of concerned person then

he will bring the cheque from that branch

Without Cheque:

In which customer give a request for funds transferring from his account to the

concerned person.

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Foreign Demand Draft (FDD):

Foreign currency demand drafts are issued in BIPL. Foreign DD is the banker‘s own draft

drawn upon another bank/ correspondent bank in a country other than the country from where it is

issued and drawn and payable in currency of the country in whose bank/ branch it is drawn. For

this purpose, the bank has maintained its ―Nostro A/c‖ with different banks world wide for demand

draft Purposes. BIPL does its remittance in abroad with HBL. Through Nostro account, outward

remittance in FDD takes place. I will explain the term Nostro A/C for outward and Vostro A/c for

inward remittances as follows:

Nostro A/c

To best remember it is ―Our account with them in their currency‖. Nostro accounts

are usually in the currency of the foreign country. This allows for easy cash management

because currency does not need to be converted.

Vostro A/c

To best remember it is ―Their account with us in our currency‖. These accounts are

maintained by the correspondent banks in the currency of the country in which the account is

opened. These accounts are also known as ―Loro Account‖.

Telegraphic Transfer Through SWIFT:

It is largely the obsolete method of transferring funds through a telegraph or telex link from

one country to another. With the help of this service a customer can transfer money to the bank

account of a beneficiary in most foreign countries of the world also called wire transfer; it has been

replaced by secure cable and wireless telecommunications networks. In BIPL, the transfer of funds

through this medium is implemented through SWIFT which is the standard in all banks of the

industry. The telegraphic transfer is of two types:

Local TT.

Foreign TT.

Local TT:

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In local Telegraphic Transfer, the funds are transferred from one city to another. The local

transfer system is not been used in BIPL. The method was that the customer who wanted to avail

this facility was given the funds transfer application. The person who wanted to remit the money

used to provide the details of the receiving person. The transaction was done between the banks.

The bank remitting the money used to credit the account of the person sending the money and the

paying bank used to debit such account and made payment to the receiving person. The payments

were done on the counters. The NIC of the persons were taken in that kind of transactions. This

system is not in use today because the SBP has started restricted the counter payments due to the

fraudulent nature of the transaction.

Foreign TT:

The foreign telegraphic transfer means the transfer of funds to a foreign country. Both

inward and outward is done at BIPL. The Foreign Telegraphic Transfer is done through SWIFT

which is acting as a quickest mode for the transfer of funds to abroad. The FTT is only done

account to account in BIPL. The procedure for the Foreign Telegraphic Transfer followed by the

remittance officer is explained as:

The customer comes to the bank for the purpose of FTT.

The customer is given the Funds Transfer Form on which the customer provides these details:

Amount of the Transaction in Words and Figures.

The Desired Currency.

Beneficiary Details to whom the funds are to be transferred.

Beneficiary Bank‘s details in the abroad.

Applicant‘s Details.

After filling out the information, the customer signs the form and hands it over to the

remittance officer along with the cheque.

The remittance officer makes sure that the purpose of remittance is provided by the customer.

The charges of TT are deducted from the account which is flat 10 US dollars.

The stamping is done on the form and the remittance officer signs the form.

The form also gets signed by the operations manager.

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The completed form along with the cheque is sent to the BIPL Head Office where all the

SWIFT operations are taken place. The Head Office makes all the dealing with the

correspondent banks in abroad for the purpose of FTT.

The Role of SWIFT In Telegraphic Transfer:

SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication, a

member-owned cooperative through which the financial world conducts its business operations

with speed, certainty and confidence. Over 8,300 banking organizations, securities institutions and

corporate customers in more than 208 countries are the members of SWIFT and every day

exchange millions of standardized financial messages.

Its role is two-fold. They provide the proprietary communications platform, products and

services that allow its customers to connect and exchange financial information securely and

reliably. They also act as the catalyst that brings the financial community together to work

collaboratively to shape market practice, define standards and consider solutions to issues of

mutual interest.

SWIFT enables its customers to automate and standardize financial transactions, thereby

lowering costs, reducing operational risk and eliminating inefficiencies from their operations.

By using SWIFT customers can also create new business opportunities and revenue streams.

SWIFT has its headquarters in Belgium and has offices in the world's major financial centers

and developing markets.

SWIFT is solely a carrier of messages. It does not hold funds nor does it manage accounts on

behalf of customers, nor does it store financial information on an ongoing basis. As a data

carrier, SWIFT transports messages between two financial institutions. This activity involves

the secure exchange of proprietary data while ensuring its confidentiality and integrity.

Services Provided by SWIFT

SWIFT Network Provides The Following Services To The Banks:

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The exchange of real-time messages using XML standards.

The exchange of bulk messages (e.g. non-urgent and low value payments).

A secure browser for accessing account information.

Joining SWIFT:

In Pakistan banks get the membership of SWIFT through State Bank of Pakistan. The

Financial documents along with the registration application are submitted to SBP and from there

they are transferred to the SWIFT. After verification, SWIFT gives the membership to the Bank.

Following are steps to join SWIFT, connect to the SWIFT network and become fully operational.

Procedure:

Every client has its own SWIFT BIC code, in order to identify Financial Institutions. BIC

stands for Bank Identifier Code. To transfer messages securely and efficiently, the client bank

connects through SWIFTNet network by the assigned SWIFT BIC code. SWIFT clients can

configure their existing email infrastructure to pass email messages through the highly secure and

reliable SWIFTNet network instead of the open Internet. SWIFTNet Mail is intended for the secure

transfer of sensitive business documents, such as invoices, contracts and signatories, and is

designed to replace existing telex and courier services, as well as the transmission of security-

sensitive data over the open Internet.

SWIFT Code:

The SWIFT code is 11 characters made up of:

4 characters: Bank code (only letters).

2 characters: 3166-1 alpha 2 country code (only letters).

2 characters: location code (letters and digits).

3 characters: Branch code, optional (xxx for primary office) (letters and digits).

Procedure For International Clearing:

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Outward Transfer

For the purpose of outward transfer, as the foreign bank branch receives the SWIFT

message, the Nostro account is debited for the bank‘s record. The transferee has account

with the foreign bank, the funds simply transfers to the transferee‘s account.

Inward Transfer

For the purpose of inward transfer, as the domestic bank branch receives the SWIFT

message, the Vostro account is debited for the bank‘s record. The transferee has account

with the domestic bank, the funds simply transfers to the transferee‘s account.

Travelers Cheques:

Traveler cheques (TC) is form of currency cheques for travelers which is convenient to

carry and incase of misplace or lost one can easily have their cash again. In previous years

businessmen were mostly carrying their cash in form of currency notes, usually they were worried

about their cash, and it shouldn‘t be stolen or lost by them. For those reasons and for the comfort

of the business community internationally countries decided to issue them travelers‘ cheques, and

now a day‘s business community could use it easily without any fear of lost and steal.

This is not a product of BIPL. These are the banks instruments issued to only major account

holders of a bank. TC‘s are issued to the facilities the customers during the travel. Travelers

Cheques are just like cheques which contains 2 counter signatures of the customer who made these

cheques and one authorized signature name. They can be made in local as well as foreign currency.

Travelers Cheques can be made for Rs. 1,000, Rs. 5,000, Rs. 10,000 and Rs. 20,000.

Withholding tax of 3% is charged for encashment of Travelers Cheques and are payable at any

branch of any bank.

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Collection Department

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Clearing Department

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Clearing Department:

Clearing is a system by which bank exchange cheques and other negotiable instruments

drawn one each other within specified area and securing the payment for their clients through the

clearing house. Clearing stands for mutual settlement of claims made in among member banks at

an agreed time and place in respect of instruments drawn on each other. Clearing is the way

through which Bank Islami clears cheque of other banks and clear the cheques of its own bank from

other banks.

Every bank acts in two ways:

Paying Bank

Collecting Bank

A large part of this work is carried out through the bankers clearing house wherever it is

established.

Functins of Clearing Department:

To accept transfer, clearing and collection cheques from the customers and to arrange for

their collection.

Transfer Cheques: are the cheques, which are collected and paid by the same branch of

the bank.

Clearing Cheques: are those cheques which are drawn on the branches of some other

bank of the same city or of another city which are covered by a particular clearing house.

Collection Cheques: are those cheques which are drawn on the branches of other banks

for the cities which are not coming in their clearing house.

Clearing House:

Clearing house is the place where representatives of all the banks of the city get together for

the purpose of settlement of payments and receipts of cheque drawn on each other. Clearing House

is an arrangement under which member banks agree to meet, through their representatives, at the

appointed time and place to deliver instruments drawn on the other and in exchange to receive

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instruments drawn on them. Normally clearing is carried out in State Bank of Pakistan but in the

areas where there is no branch of SBP National Bank work as subsidiary of SBP. Clearing cheques

received from other banks are sent to branches, which will clear the cheques and instruments to

respective amount. The net amount payable or receivable as the case may be is settled through an

account kept with the controlling bank, in pakitan it is the State Bank of Pakistan.

For a bank, following are the requirement of being a member of clearing house:

It must be scheduled Bank i.e. It is registered is State Bank of Pakistan.

50 cheques per day must be drawn on it for continuously three months.

It must have account with State Bank of Pakistan.

Sufficient balance should be in this account.

Types of Clearing:

Inward Clearing

In inward clearing the cheques received from other banks are collected and sent to

branches for their payment. It means the instruments received by a bank of its own branch

for clearing from other banks. When a particular branch receives instruments, which are on

themselves and sent by other member bank for collection are treated as Inward Clearing of

that branch. This branch is known as paying branch.

Outward Clearing

It is an instrument that is sent by the originating bank to the other banks for the

collection of funds. As the customer deposits cheques and other instruments of other banks

for collection from other bank, the bank sends the cheques in outward clearing. When a

particular branch receives instruments drawn on the other bank within the clearing zone

and sends those instruments for collection through the clearing arrangement is considered

as Outward Clearing for that particular branch. This branch is known as collecting branch.

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Instruments Used In Clearing:

Demand Draft/Pay Order

Call Deposit Receipt (Same City)

Cheques

Bills for Collection(All types of cheques of SBP and Treasury cheques)

Role of NIFT in Clearing:

NIFT stands for National Institutional Facilitation Technologies Pvt. Limited. The

institution was incorporated in September 1995 as joint venture between a consortium of six banks

and entrepreneurs from the private sector. All banks in Pakistan, a total of 42, are participating

members of NIFT with branches spread throughout the country. Six equity holder banks are:

Habib Bank Limited.

MCB Bank Limited.

National Bank of Pakistan.

United Bank Limited.

Allied Bank Limited.

First Women Bank Limited.

As of June 2007, 40 commercial banks and their 4500 branches in 100 major cities utilize

NIFT‘s services. NIFT has signed an agreement with the central bank for provision of automated

clearing services to all banks and their branches; SBP has a monitoring role in the clearing

operations of NIFT. NIFT has setup elaborate data centers geared to provide automated services

for document processing particularly in the payment arena.

NIFT is responsible for the establishment and management of automated clearing house

facilities in Pakistan. NIFT is actively involved in the modernization of payment systems in the

country. All commercial banks in Pakistan are members of NIFT‘s clearing system and bank plays

monitoring role on the clearing operations of NIFT.

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Payment and settlement systems are crucially important to the smooth functioning of the

economy. It is the responsibility of a central bank to promote sound and efficient payment and

settlement systems.

Financial institutions use payment systems to settle financial market transactions. State

Bank of Pakistan has made incredible efforts for improving the efficiency of the payment system.

Being an operational arm, the SBP facilitates in maintaining an efficient, safe and reliable payment

and settlement system. During the period under review, payment instruments of commercial banks

have been standardized to facilitate the automated clearing facilities provided by the National

Institutional Facilitation Technologies (NIFT).

In major cities, the functions of the SBP clearing house have been handed over to NIFT to

the extent of sorting of payment instruments and preparing clearing schedules. The agent of NIFT

directly collects the cheques from each branch of the bank instead of collecting from head office.

Now the process of segregation and sorting the cheques is done by the NIFT rather commercial

banks through the automated system. NIFT also keeps the record of cleared cheques and also

provides the net position to the banks.

Services Provided by NIFT:

Its main responsibility is to pick and drop instruments from one bank and realize it from

other banks and report to State Bank of Pakistan. NIFT deduct charges of its duty. The services

provided by NIFT includes collection and delivery, inter-branch settlement, reconciliation, return

(un-paid) cheques processing, the same day clearing (express) two-hours, clearing services and

inter-city clearing to all commercial banks and their branches in Karachi, Lahore, Rawalpindi,

Islamabad, Hyderabad, Faisalabad & Peshawar. NIFT services cover over 90 percent of all

cheques clearing transactions that take place in the country.

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Explaining the procedure, the NIFT collects the outward clearing directly from every

branch and arranges processing, presentment and processing of returns, providing the net position,

etc to the banks and their branches.

Procedure of Clearing:

Before 9.00 am authorized representatives of all the bank of the city get together in State

Bank of Pakistan for 1St clearing, where in clearing house register bank wise entry is made and

exchange of cheques takes place, here 1st clearing ends.

In outward clearing if customer want to transfer his funds from Bank Al-Falah to Bank

Islami then the customer will make a cheque from Bank Al-Falah‘s chequebook and cross this

cheque and deposit this cheque in Bank Islami. After receiving, instruments should be crossed with the

bank’s “Crossing Stamp” immediately. The Bank Islami will make a deposit slip against the cheque

deposited and paste its crossing stamp with its clearing stamp and an endorsement stamp behind

the cheque that reads ―Payee‘s Account Will Be Credited‖ upon the cheque. Deposit slip is handed

over to customer as a proof then Bank Islami will handover that instrument to NIFT as outward

clearing for Bank Islami at almost 3:00 pm that day. The Bank Islami will fulfill three

requirements:

Bundle cover

Summary/delivery receipt

Manual statement of list of instruments

Now NIFT role come into existance. NIFT member will received these above things from

Bank Islami and will go to SBP for exchange of instruments where members of NIFT for each bank

sit together and each member receive the instruments of his concerned bank and in the next day

before 9.00 am, after recording it in their computer systems, NIFT will handover the cheque of

Bank Al-Falah to its respective branch. Bank Al-Falah will receive these instruments as inward

clearing for itself.

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After 2:00 pm all the representatives again get together for second clearing where payment

& receipt of passed cheques takes place and dishonored cheques are delivered back to the

representatives of respective banks. No physical payment or receipt of cash takes place, actually

every clearing house agent (bank) have account with SBP which is debited or credited or debited

respectively; with an amount equal to the diffrence in payments and receipts of each bank.

Before 2.00pm Bank Al-Falah will pass the entry in the system and check the account of that

person, will clear it and report to NIFT of nill returns. Incase the instruments or cheques are

reeturned/dishonoured then a memo showing the reason of dishonor is attached with them and are

reported to NIFT. At this time Bank Al-Falah will also hand over those cheques of other banks,

which it has collected during the day for clearing, to NIFT as outward clearing for itself. Then

NIFT will go to SBP and then after feeding it in system the cheque is returned to the respective bank

with the cheques drawn on that bank for clearing.

In inward clearing if Bank Al-Falah received a cheque of Bank Islami during the working

day then it would be crossed with the bank’s “Crossing Stamp” immediately. The Bank Al-Falah will

make a deposit slip against the cheque deposited and paste its crossing stamp with its clearing

stamp and an endorsement stamp behind the cheque that reads ―Payee‘s Account Will Be

Credited‖ upon the cheque. Deposit slip is handed over to customer as a proof then Bank Al-Falah

will handover that instrument to NIFT as outward clearing for Bank Al-Falah at almost 3:00 pm

that day. The Bank Al-Falah will fulfill three requirements:

Bundle cover

Summary/delivery receipt

Manual statement of list of instruments

Now NIFT role come into existance. NIFT member will received these above things from

Bank Al-Falah and will go to SBP for exchange of instruments where members of NIFT for each

bank sit together and each member receive the instruments of his concerned bank and in the next

day before 9.00 am, after recording it in their computer systems, NIFT will handover the cheque of

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Bank Islami to its branch. Bank Islami will receive these instruments as inward clearing for itself.

After 2:00 pm all the representatives again get together for second clearing where payment

& receipt of passed cheques takes place and dishonored cheques are delivered back to the

representatives of respective banks. Before 2.00pm Bank Islami will pass the entry in the system

and check the account of that person, will clear it and report to NIFT of nill returns. Incase the

instruments or cheques are reeturned/dishonoured then a memo showing the reason of dishonor is

attached with them and are reported to NIFT. At this time Bank Islami will also hand over those

cheques of other banks, which it has collected during the day for clearing, to NIFT as outward

clearing for itself. Then NIFT will go to SBP and then after feeding it in system the cheque is

returned to the respective bank with the cheques drawn on that bank for clearing.

Types of Returns:

Outward Return: Clearing returns (outward) include those cheques that are presented to us

by other banks but we have to return them unpaid to the collecting banks due to various

reasons.

Inward Return: Clearing returns (inward) consists of those instruments which are presented

by us to other banks for payment but have been returned and unpaid by them due to specified

reason through the clearinghouse.

Advantages of Clearing:

1. Since clearing does not involve cash and all the transactions take place through entries in the

computer, the number of transactions can be unlimited.

2. No cash is needed as such the risk of robbery and embezzlement is totally eliminated.

3. Systematic arrangement for collection and clearance of cheques.

4. Speedy and economic collection and clearance of cheques.

5. Clearance of cheques and other instruments of different branches of different banks in a

systematic manner without any flaw and mistake.

6. The collection and clearance of government bills, instruments and cheque.

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7. The collection of government revenue through cheque, pay orders and drafts payable through

State Bank of Pakistan and National Bank of Pakistan.

8. It avoids the difficulties and cumbrances faced by the branches if they collect the instruments

directly from branch to branch.

9. Confidence among the clearing members is produced.

Stamping on the Cheques and Deposit Slips:

For Cheques, Two Stamps Are Affixed:

―Payee‘s Account Will Be Credited‖ on the back of the cheque.

―Clearing Stamp‖ on the front of the cheque.

For Pay Orders, Two Stamps Are Affixed:

―Disbursement Guaranteed‖ on the back of the cheque.

―Clearing Stamp‖ on the front of the cheque.

For Deposit Slips, Only One Stamp Is Used:

Clearing Stamp.

The stamps are duly signed by the authorized officer of the bank. The date on the clearing

stamp is always one day ahead, because the cheques are presented in the concerned branches the

next day for payment.

Same Day Clearing:

The practice of issuing SBP cheque on behalf of the customers for the purpose of same day

adjustment adopted by the banks have been dis-continued and a system has been introduced for

same day clearing through NIFT.

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Pre- Requisites for Same Day Clearing:

The following are the requirements for availing this facility:

Same day clearing is restricted to instruments valued at a minimum of Rs. 100,000/- and

above and received by 10:00 AM.

The depositor must make specific request to the branch for Same Day Clearing.

The Same Day Clearing is restricted to the branches that are designated only, which will

ensure that the timings in this respect are strictly followed.

Cheques Returned in Outward Clearing:

The cheques which are sent for local clearing may be returned for the following reasons:

Funds Insufficient

Signatures Differs

Dormant Account

Stop Payment by the Drawer etc.

The returned cheques are entered in the separate register called ―Returned Cheques in

Outward Clearing‖ the day when they received. After making the entries, the client is called for the

collection of such cheques. If the client does not come to the bank after the reasonable time period,

the cheque is then dispatched to the customer along with the letter containing the details of the

cheque like cheque date, cheque number and the reason for return of the cheque. The photocopy of

both the cheque and the letter is kept in a file called ―Returned Cheques Dispatched‖.

If the client comes to collect the cheque, photocopy of the cheque and the return memo is also kept

and then receiving of the client is taken on the cheque return register and the photocopies of both

the cheque and the return memo are kept in a file named as ―Returned Cheques‖.

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OBC:

OBC stands for Outward Bills for Collection. The instrument out of station i.e. beyond

clearing house area are called Outward Bills for Collection (OBC). A schedule is prepared for

OBC where mentioned the proceed remitted. OBCs instrument must always be endorsed. The

endorsement of the instrument is always endorsement –3. OBCs are recorded in a register with

date, serial number, drawee‘s bank, amount. It is done through the following 3 ways:

Inter City Clearing

Through Our Branch

Direct To The Relevent Bank

IBC:

IBC stands for Inward Bills for Collection. The instrument sent to us from the outstation

branches of the banks for collection are called Inward Bills for Collection (IBC). Such instruments

may be drawn on us or on other branches /banks of the city. On receipt of the IBC the same is to be

inserted in the IBC register and IBC No. is to be written on the forwarding letter of the same by

fixing rubber stamp. It is done through the following 3 ways:

Inter City Clearing

Through Our Branch

Direct To The Relevent Bank

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Inter City Clearing:

Other checques of another city are called Inter City Clearing and is delt under OBC/IBC. It

is also done by NIFT.

Stamping for OBC:

On The Face:

Clearing Stamp With the Date of Next Day

Inter City Clearing Stamp

OBC Stamp

On The Back

Payee‘s A/C Will Be Credited For Cheque

Disbursement Garanteed For DD or PO

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Cash Department

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Cash:

This is very important department because

cash is the most liquid asset and mostly frauds are

made in this department. Here the individuals that

are authorized to go in this department have to be

very careful because when at the end of day the cash

is balanced, a little more or little less balance can

cause problem and then they have to see where they have made mistake. So extra care is taken in

this department and nobody is allowed to enter in this department except authorized persons only.

When cash is received at the counter, this entry is recorded in the computer by the cashier.

At the close of the day, these entries are balanced with each other and cash shown in system is

balanced with physical cash.

When the cheque or any negotiable instrument is presented at the counter for payment, the

cashier at first ask for the photocopy of CNIC of the person who has come, instead of actual

account holder, with the cheque and then they record the transaction in the computer and then

payment is made to the payee. At the end of the day, the entries the cashier has made are balanced

with the entries that have been made by the assistant manager.

The consolidated figure of the receipt and payment of the cash is entered in the cash

balance book (in the computer) and drawn closing balance of cash.

Opening Balance + Receipts – Payments = Closing Balance

Here they have to maintain the cash regulatory requirement (reserve) that a maximum cash

reserve requirement that a bank should possess is 50 millon and at every day end the cash details

are e-mailed to the head office which uses this information to insure the cash at a branch.

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Utility bills are also accepted at this department while unsorted, reissuable notes, defective

(numbers mismatch) or soiled notes etc are also accepted at this department. The bank is also

authorized by the State Bank of Pakistan to replace these notes with the new ones i.e. Fresh Cash or

Sorted Cash. Here the online charges, consisting of only withholding tax, are charged from those

who want to avail the facility of online banking for a amount more then Rs. 25,000.

Things used at the Cash Departmnet are:

1. Counting Machine

This machine is used to count cash. It is helpful in counting large sums of money instently

thus reducing service time.

2. Binding Machine

It is used to bind cash into bundles of 100 Notes.

3. Ultravoilet Rays Or Note Detector

It is a machine that uses ultravoilet rays to detect that the note is orignal or fake.

4. Boards

These are boards suplied by the State Bank of Pakistan to the bank to display near the Cash

Counter. These bords include the Mohtasib Board and the Cash Bords that describe the

feachers in the currency notes that are used to check that the currency note is orignal or

fake.

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Liability Department

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Consumer Banking

Page 184 of 300

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design, we''ll help you build it.

Construction Tenure Maximum 2 Years

Financing Tenure Minimum 2 Years (excluding construction period)

Maximum 20 Years (including construction period)

Financing Range Rs. 200K – 10M

Page 185 of 300

Bank Investment Ratio

Salaried / Selected SEPs*:

• Up to 80% for financing upto Rs. 10M.

• Up to 70% for financing > Rs. 10M.

Businessmen/NRPs: Up to 70% for all financing amounts.

Prepayment Option

available

No Penalty apply after one year.

In case Customer applies for purchase of early units or pre-payment

within 12 months after disbursement, additional Musharakah Units will be

revalued at 5% higher than face value.

Home Renovation:

Thinking of remodelling your kitchen to fulfill your wife's long awaited wish, or build a

study area for your kids, or a cozy library for your parents, or just want to give your home a new

look? you plan it, we'll help you renovate it.

Construction Tenure Maximum 6 months

Financing Tenure 2-7 Years

Financing Range Rs. 150K – 10M

Bank Investment Ratio

Maximum 50% for Salaried / Selected SEPs*

Maximum 50% for Businessmen/NRPs

(* Doctors, Engineers, Architectures, Chartered Accountants)

Prepayment Option

available

No Penalty apply after one year.

In case Customer applies for purchase of early units or pre-payment

within 12 months after disbursement, additional Musharakah Units will be

revalued at 5% higher than face value.

Home Replacement:

Don't lay the foundation of your Dream home on interest. If you already have a

Conventional Mortgage loan and want to switch to Shariah compliant means of Financing, we'll

help you transfer it.

Financing Tenure 2-20 Years

Financing Range Rs. 200K - 10M

Page 186 of 300

Bank Investment

Ratio

Salaried / Selected SEPs (Doctors, Engineers, Architectures, Chartered Accountants):

Up to 80% for all financing

Businessmen/NRPs:

Up to 70% for all financing amounts.

Prepayment Option

available

No Penalty apply after one year.

In case Customer applies for purchase of early units or pre-payment within

12 months after disbursement, additional Musharakah Units will be revalued

at 5% higher than face value.

The MUSKUN Home financing facility is based on the principle of Diminishing

Musharakah and Ijarah. The Diminishing Musharakah transaction is based on Shirkat-ul-Milk

where you and the Bank participate in ownership of a property. The share of the bank is then leased

to you on the basis of Ijarah and is divided into a number of units. It is then agreed that you will

buy the units of the bank periodically, thereby increasing your own share till all the units of the

Bank are purchased by you which will make you the sole owner of the property. Till that time, you

pay the Bank rent for its units leased to you. The rent keeps on decreasing as your ownership in the

property increases and that of the Bank decreases.

Benefits:

Quick Processing

Financing up to 50% of the value of the property

Financing limit Rs. 10 Million

Tenor up to 20 years

No pre payment additional price charged after one year

Flexible & Affordable installments with Sahulat payment schedule

Clubbing of family income

No Negative Area

How It Works:

Page 187 of 300

You will approach BankIslami and inform about your needs of financing for Home

Purchase, Construction, Renovation or Balance transfer facility. You will then submit the filled

Application Form along with the required documents and a cheque for processing fee. Our

Business Executive will guide you during the whole process. The Bank will conduct verification of

your residence & office addresses as well as those of the references provided by you. The Bank will

then conduct your Income estimation to determine the maximum financing that can be provided to

you. In case you are Self Employed, our agent will approach you for the necessary income details

and documents. In case you are Salaried, we will approach your employer for this purpose. A legal

opinion is then obtained by the Bank on the property documents submitted by you.

Valuation of the property is done to determine its Market value. The Bank then issues you an

offer letter for the financing amount you qualified for based on your evaluation. After your

acceptance, a Shirkat-ul-Milk (Musharaka) Agreement is signed between you and the Bank,

whereby, the Bank and you will become joint owners (partners) in the Musharakah property.

A Pay Order is issued in the name of the seller in case of MUSKUN Home purchase by the

bank. Your Business Executive and our in house / Externa lawyer will accompany you for the

transfer of property in your name. The Pay Order is then handed over to the seller. In case of

MUSKUN Home Construction / Renovation / Replacement Cases, the financing amount is simply

credited to your account. It is ensured through Shariah-compliance checks that the funds are

utilized only for construction/renovation/replacement.

You and the Bank now jointly own the home. You and the Bank also execute a Monthly Payment

Agreement whereby you agree to pay a monthly payment to the Bank for the use of the bank's

ownership in home. Undertaking to Purchase is given by you, under which you undertake to

purchase the Musharakah Units (representing Bank's undivided ownership share in the property)

from the Bank periodically. On monthly basis, you purchase Musharakah units from the Bank.

When you have purchased all units of Bank, you become the sole owner with a free and clear title to

your home.

Page 188 of 300

Fatwa:

BankIslami's commitment to Shariah is strict and absolute. We have the distinction of being

the only Bank to have a full time Shariah adviser as well as having a prestigious local Shariah

board of global repute. Muskun Home financing products are approved and verified by our Shariah

Board. To view our Shariah Board's approval of Muskun Home Financing products please see

Anaxture:

MUSKUN Property Purchase

MUSKUN Replacement

MUSKUN Property Construction & Renovation

Eligibility:

Citizenship Pakistani

Cities Karachi , Lahore and Islamabad/Rawalpindi

Age Limit

Salaried/Businessmen/Selected Professionals:

Primary Applicant: 25-65 Years

Co- Applicant: 21-70 Years

NRPs:

Primary Applicant: 25-60 Years.

Co- Applicant: 21-70 Years.

Employment Tenor

Salaried:

Minimum 6 months at current employment and 2 years continuous

employment experience in the same industry/field.

Businessmen:3 years of business / practice.

Minimum Income

Salaried: Rs. 35,000/-

Business man: Rs. 50,000/-

NRPs: Rs. 100,000/-

Additional Criteria

for NRPs

An NRP needs to have a Co-applicant residing in Pakistan as an Authorized

Person on behalf of the NRP.

Only Salaried NRPs can avail MUSKUN Home Financing.

Documents Required:

General:

Page 189 of 300

Copy of CNIC (Applicant and Co-applicant)

2 passport size photographs (Applicant and Co-applicant)

Completely filled Application form with Applicant's Profile Report

Copies of Last 6 months paid utility bills

Property Documents:

Copy of chain of all title documents

Approved Building plan

Public notice

For Salaried Persons:

Employment certificate issued by employer

Last three Salary Slips

Bank Statement of last 12 months

Detail of other financing along with its repayment

For Businessmen:

Income tax return for last three years ,

Proprietorship Letter/Partnership ded/ Memorandum and Articles of Association

Company Bank Statment of last 12 months

Detail of other financing along with its repayment

For NRPs:

We offer NRPs (only Salaried segment) purchase/construct/renovate/balance transfer

facility of a House/Property only in Pakistan only

Last three months Salary Slip

Copy of Passport

Copy of NICOP

VISA/residential status proof

Tax deduction details

Employment Certificate and Contract Copy

Bank Letter and Banks Statement of last 12 months

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

All the above mentioned documents relating to NRP should be duly attested by Pakistani

Consulate

Page 190 of 300

broshure

Brochure

New Vehicle

Page 191 of 300

Features:

Drive your Dream Car-the right way with Islami Auto Ijarah. Now you can avail Auto

finance facility for a Car of your choice in a completely Shariah compliant manner.

BankIslami's Auto Ijarah facility is based on the concept of Ijarah. It is a Shariah compliant

alternative to Conventional leasing where Bank acts as a Lessor and you act as a Lessee. The Bank

requires you to pay a monthly rent for the use of the Vehicle. In this while, the ownership of the

vehicle remains with the Bank, only the rights of use is transferred to you. At the end of the Ijarah

Agreement, you will be given a choice whether to return the vehicle to the Bank and receive back

the initial security deposit you paid* or to purchase it at a price as low as the security deposit.

Ijarah facility for New Vehicles

Tenure of Ijarah Min- 3 Years, Max-5 years

Minimum Cost of Vehicle Rs. 250,000

Security Deposit Min -30%, Max-50%

Processing Charges Rs. 4,500/- (Rs. 1,000 Pre Processing is part of the Rs. 4,500/-

Amount)

Tracker Installation All Vehicles costing above Rs. 600,000 are required to be installed

with tracker

Takaful Takaful coverage on all vehicles is compulsory and is provided by

Takaful Pakistan

*conditions apply

Concept of Ijarah:

Page 192 of 300

Ijarah means 'to give something on rent'.It is a Shariah compliant alternative to

Conventional leasing where Bank acts as a Lessor and you act as a Lessee. The Lessor (Bank)

allows the Lessee (You) to use the vehicle owned by the Lessor in return for a monthly rent. The

following are rights and responsibilities of the Lessor and Lessee in an Auto Ijarah arrangement:

The Lessee has the right to use the vehicle whereas the ownership rests with the Lessor.

All liabilities resulting from the ownership (Islamic insurance, transportation, duties etc) shall

be borne by the Lessor and all the liabilities relating to use of the vehicle shall be borne by

the Lessee.

The vehicle will remain in the risk of the Lessor throughout the lease period. Any damage or

loss caused by factors which are beyond the control of the Lessee shall be borne by the

Lessor.

The Lessee is liable for any damage to the vehicle caused by any misuse or negligence on

his/her part.

The period of lease must be determined in clear terms and the vehicle must be fully identified

and quantified by both parties.

The Lessor cannot increase the rent unilaterally.

The Lease period will commence from the date on which the vehicle is delivered to the Lessee

whether the Lessee has started using it or not.

If the leased vehicle has lost its function and no repair is possible, the lease shall terminate on

the day on which such loss occurred. However, if the loss is caused due to misuse or

negligence of the Lessee, he/she will be liable to compensate the Lessor at a value that was

prevailing in the market immediately before loss.

The Lessee will bear the maintenance and operating costs of the vehicle during the lease

period.

The Lessor will bear the cost of Takaful of the vehicle and its annual renewals during the

lease period.

All ownership related expenses (registration, Takaful) shall be borne by the Lessor.

Rent will start after delivery of vehicle to the Lessee.

Page 193 of 300

After completion of the tenor of lease, the Lessor will go for any of the four options with the

mutual consent of the Lessee:

Give an option to the lessee to purchase the vehicle at a pre agreed price.

Take the vehicle back from the Lessee

Renew the Lease contract for another tenure.

Lease it out to another party.

The Differences between Conventional Lease & Auto Ijarah:

Conventional Lease Auto Ijarah

Lease commences the very day on which the

price is paid by the Bank, whether the Customer

has taken the delivery or not

At BankIslami, rentals start after the delivery of

asset, not from the day the price has been paid

by BankIslami

Expenses incurred in the process of purchase of

asset are paid by the Customer

BankIslami is the owner of the asset therefore it

is liable to pay all expenses incurred in the

process of its purchase

Lease does not differentiate between wear &

tear or losses caused by the negligence of

Customer and Customer is liable for cost

incurred due to natural disasters

The Customer is responsible only for misuse and

negligence, but not for events beyond control. In

Auto Ijarah, each situation is treated separately

Penalty charges are taken from Customer on

late payment. They are taken as income by the

Bank

If the Customer fails to pay rental on due date, a

certain amount will be taken from the Customer

and given to charity by BankIslami

In a lease agreement it has been noticed that

unrestricted power has been given to Bank to

terminate the lease unilaterally whenever it

wishes

If the Customer breaks any term of the

agreement, BankIslami has a right to terminate

Auto Ijarah unilaterally. However, if there is no

contravention at Customer‘s end Auto Ijarah

cannot be terminated without mutual consent

Page 194 of 300

How It Works:

You will approach BankIslami and identify the vehicle you want on Auto Ijarah. You will fill

in the Application Form and submit the required documents. BankIslami will process your

application and approve or reject the credit application, depending on how you fit the bank‘s risk

criteria. If the application is approved, you will sign an Undertaking to Ijarah whereby you will

undertake to lease the vehicle. This document is signed in booking cases only once it arrives at the

dealer. After the vehicle arrives at the dealer and is purchased by the Bank, you will sign an Ijarah

agreement with the bank, whereby the Bank will rent out the vehicle to to you subject to the terms

and conditions of the Ijarah Agreement.

Under the Ijarah Agreement, you will undertake to pay a monthly payment for the right to

use the vehicle in line with the Terms & Conditions of the Agreement. Under the Ijarah Agreement

the customer also signed the undertaking to purchase document. Under the Agreement, all the cost

associated with the ownership of the vehicle will be borne by the Bank, while you will be

responsible for all usage-related expenses of the vehicle. At the end of the Ijarah period, you will be

offered to buy the Vehicle at a pre-agreed value from the Bank or get your security deposit refunded

to you by returning the vehicle to the Bank.

Elijibility:

Citizenship Pakistani

Cities Karachi, Lahore and Islamabad/Rawalpindi

Income Minimum Rs. 20,000 (Net Disposable)

Age Limit

For Salaried:

Minimum 23 Year (at the time of Maturity)

Maximum 60 Years (at the time of Maturity)

For Self employed:

Minimum 23 Years (at the time of Maturity)

Maximum 65 Years (at the time of Maturity)

Fatwa:

Page 195 of 300

BankIslami's commitment to Shariah is strict and absolute. We have the distinction of being

the only Bank to have a full time Shariah adviser as well as having a prestigious local Shariah

board of global repute. Islami Auto Ijarah is approved and verified by our Shariah Board. To view

our Shariah Board's approval of Islami Auto Ijarah please see Anaxture 2.

Documents Required:

Salaried Individual:

Last six months Bank Statement

Copy of CNIC

2 Photographs

Copy of N.T.N Certificate( if available)

Paid Utility/mobile/card bills-within last 2 months

Salary Slip

Employment letter ( should be from HR and should disclose the tenure of employment,

designation, salary breakup)

Businessmen/Self Employed Professional:

Last one year Bank Statement

Copy of CNIC

2 Photographs

Copy of N.T.N Certificate or Proprietorship letter

Visiting Card

1 month current and paid Utility /mobile/card bill

3 years Business Proof

Page 196 of 300

Used / Imported Vehicle

Features:

Drive your Dream Car-the right way with Islami Auto Ijarah. Now you can avail Auto

finance facility for a Car of your choice in a completely Shariah compliant manner.

BankIslami's Auto Ijarah facility is based on the concept of Ijarah. It is a Shariah compliant

alternative to Conventional leasing where Bank acts as a Lessor and you act as a Lessee. The Bank

requires you to pay a monthly rent for the use of the Vehicle. In this while, the ownership of the

vehicle remains with the Bank, only the rights of use is transferred to you. At the end of the Ijarah

Agreement, you will be given a choice whether to return the vehicle to the Bank and receive back

the initial security deposit you paid* or to purchase it at a price as low as the security deposit.

Ijarah facility for New Vehicles

Tenure of Ijarah Min- 3 Years, Max-5 years

Minimum Cost of Vehicle Rs. 250,000

Security Deposit Min -30%, Max-50%

Processing Charges Rs. 4,500/- (Rs. 1,000 Pre Processing is part of the Rs. 4,500/-

Amount)

Tracker Installation All Vehicles costing above Rs. 600,000 are required to be installed

with tracker

Takaful Takaful coverage on all vehicles is compulsory and is provided by

Takaful Pakistan

*conditions apply

Concept of Ijarah:

Page 197 of 300

Ijarah means 'to give something on rent'.It is a Shariah compliant alternative to

Conventional leasing where Bank acts as a Lessor and you act as a Lessee. The Lessor (Bank)

allows the Lessee (You) to use the vehicle owned by the Lessor in return for a monthly rent. The

following are rights and responsibilities of the Lessor and Lessee in an Auto Ijarah arrangement:

The Lessee has the right to use the vehicle whereas the ownership rests with the Lessor.

All liabilities resulting from the ownership (Islamic insurance, transportation, duties etc) shall

be borne by the Lessor and all the liabilities relating to use of the vehicle shall be borne by

the Lessee.

The vehicle will remain in the risk of the Lessor throughout the lease period. Any damage or

loss caused by factors which are beyond the control of the Lessee shall be borne by the

Lessor.

The Lessee is liable for any damage to the vehicle caused by any misuse or negligence on

his/her part.

The period of lease must be determined in clear terms and the vehicle must be fully identified

and quantified by both parties.

The Lessor cannot increase the rent unilaterally.

The Lease period will commence from the date on which the vehicle is delivered to the Lessee

whether the Lessee has started using it or not.

If the leased vehicle has lost its function and no repair is possible, the lease shall terminate on

the day on which such loss occurred. However, if the loss is caused due to misuse or

negligence of the Lessee, he/she will be liable to compensate the Lessor at a value that was

prevailing in the market immediately before loss.

The Lessee will bear the maintenance and operating costs of the vehicle during the lease

period.

The Lessor will bear the cost of Takaful of the vehicle and its annual renewals during the

lease period.

All ownership related expenses (registration, Takaful) shall be borne by the Lessor.

Rent will start after delivery of vehicle to the Lessee.

Page 198 of 300

After completion of the tenor of lease, the Lessor will go for any of the four options with the

mutual consent of the Lessee:

Give an option to the lessee to purchase the vehicle at a pre agreed price.

Take the vehicle back from the Lessee

Renew the Lease contract for another tenure.

Lease it out to another party.

The Differences between Conventional Lease & Auto Ijarah:

Conventional Lease Auto Ijarah

Lease commences the very day on which the

price is paid by the Bank, whether the Customer

has taken the delivery or not

At BankIslami, rentals start after the delivery of

asset, not from the day the price has been paid

by BankIslami

Expenses incurred in the process of purchase of

asset are paid by the Customer

BankIslami is the owner of the asset therefore it

is liable to pay all expenses incurred in the

process of its purchase

Lease does not differentiate between wear &

tear or losses caused by the negligence of

Customer and Customer is liable for cost

incurred due to natural disasters

The Customer is responsible only for misuse and

negligence, but not for events beyond control. In

Auto Ijarah, each situation is treated separately

Penalty charges are taken from Customer on

late payment. They are taken as income by the

Bank

If the Customer fails to pay rental on due date, a

certain amount will be taken from the Customer

and given to charity by BankIslami

In a lease agreement it has been noticed that

unrestricted power has been given to Bank to

terminate the lease unilaterally whenever it

wishes

If the Customer breaks any term of the

agreement, BankIslami has a right to terminate

Auto Ijarah unilaterally. However, if there is no

contravention at Customer‘s end Auto Ijarah

cannot be terminated without mutual consent

Page 199 of 300

How It Works:

You will approach BankIslami and identify the vehicle you want on Auto Ijarah. You will fill

in the Application Form and submit the required documents. BankIslami will process your

application and approve or reject the credit application, depending on how you fit the bank‘s risk

criteria. If the application is approved, you will sign an Undertaking to Ijarah whereby you will

undertake to lease the vehicle. This document is signed in booking cases only once it arrives at the

dealer. After the vehicle arrives at the dealer and is purchased by the Bank, you will sign an Ijarah

agreement with the bank, whereby the Bank will rent out the vehicle to to you subject to the terms

and conditions of the Ijarah Agreement.

Under the Ijarah Agreement, you will undertake to pay a monthly payment for the right to

use the vehicle in line with the Terms & Conditions of the Agreement. Under the Ijarah Agreement

the customer also signed the undertaking to purchase document. Under the Agreement, all the cost

associated with the ownership of the vehicle will be borne by the Bank, while you will be

responsible for all usage-related expenses of the vehicle. At the end of the Ijarah period, you will be

offered to buy the Vehicle at a pre-agreed value from the Bank or get your security deposit refunded

to you by returning the vehicle to the Bank.

Elijibility:

Citizenship Pakistani

Cities Karachi, Lahore and Islamabad/Rawalpindi

Income Minimum Rs. 20,000 (Net Disposable)

Age Limit

For Salaried:

Minimum 23 Year (at the time of Maturity)

Maximum 60 Years (at the time of Maturity)

For Self employed:

Minimum 23 Years (at the time of Maturity)

Maximum 65 Years (at the time of Maturity)

Page 200 of 300

Fatwa:

BankIslami's commitment to Shariah is strict and absolute. We have the distinction of being

the only Bank to have a full time Shariah adviser as well as having a prestigious local Shariah

board of global repute. Islami Auto Ijarah is approved and verified by our Shariah Board. To view

our Shariah Board's approval of Islami Auto Ijarah please see Anaxture 2.

Documents Required:

Salaried Individual:

Last six months Bank Statement

Copy of CNIC

2 Photographs

Copy of N.T.N Certificate( if available)

Paid Utility/mobile/card bills-within last 2 months

Salary Slip

Employment letter ( should be from HR and should disclose the tenure of employment,

designation, salary breakup)

Businessmen/Self Employed Professional:

Last one year Bank Statement

Copy of CNIC

2 Photographs

Copy of N.T.N Certificate or Proprietorship letter

Visiting Card

1 month current and paid Utility /mobile/card bill

3 years Business Proof

Additional Docs required for Used & Imported Cars:

Copy of Sales invoice & Sales certificate

Copy of registration book

Import documents if imported

Copy of N.T.N Certificate or Proprietorship letter

Visiting Card

1 month current and paid Utility /mobile/card bill

3 years Business Proof

Page 201 of 300

Brochure

Page 202 of 300

Is it permissible for an Islamic bank to impose penalty for late payment?

In Islamic law it is permissible to penalize a debtor who is financially sound but delays

payment of debt without any genuine reason. Such act of the debtor is unjust as the Prophet

(PBUH) has said, "A rich debtor who delays payment of debt commits Zulm".

A heavy non-performing portfolio and default on part of the clients is a serious problem

confronting the financial institutions all over the world including Pakistan. This problem could be a

threat to success of Islamic banking system. If clients do not honor their commitment in respect of

timely payment of a debt created in installment sale, Murabaha, leasing or do not pay banks‘ share

of profit in participatory modes or do not deliver goods at stipulated time in Salam and Istisna‘a, it

could cause irreparable loss to the system, the banks and financial institutions and ultimately to

savers and the economy.

The jurists allow punishment (T´azir) to such borrower in the form of fine. In the opinion of

some Maliki jurists a delaying borrower would be obliged to pay for charitable activities. In view of

the severity of the problem, all Shariah bodies like Islamic Fiqh Academy of the OIC, Shariat

Appellate Bench of the Supreme Court of Pakistan, etc. have approved the provision of penalty

clause in the contractual agreements that keeps a balance between the requirement in view of

severity of the problem and that of the Shariah conditions/principles to keep the fine difference

between interest and Murabaha profit intact. However, the penalty proceeds would be used for

charity because penalty on default in repayment cannot become an automatic source of income for

the creditor.

Page 203 of 300

Corporate Banking

Page 204 of 300

What We Offer:

You are the major drivers of our economy and we are glad to be at your service. All of your

financial needs are within the reach of our highly qualified professionals who are fully capable and

committed to understand your business and provide timely and effective financial services on an on

going basis.

We offer the following products and services to help you achieve your business objectives:

Account Services

Trade Services

Working Capital Finance

Project Finance

Musharakah Finance

Mudarabah Finance

Ijarah

Page 205 of 300

Account Services:

BankIslami offers all basic banking services to suit your routine business needs.

Current Accounts with zero account maintenance fees

Choice of currency-PKR, EURO, USD, GBP & JPY

Transfer of funds with lowest transaction fees

Access to quick and timely foreign exchange services

Access to the entire online branch network 102 Branches in 49 Cities

Unlimited within city and intercity online transactions

Free Deposit and Withdrawal over the counter services at all BankIslami branches

Trade Services:

BankIslami offers a wide range of export and import services designed to assist you in

building on your strengths, so that your company can seize new business opportunities around the

world. These include:

Bank Guarantee

Services for Exporters

Export Bills for Collection

L/C Advising & Confirmation services

Islamic Export Refinance facility

Financing against Export Sight and Usance Bills (Shariah-compliant alternative for Bill

Discounting)

Pre-Shipment and Post-Shipment financing on Islamic modes of financing

Services for Importers

Letter of Credit

Import Financing (by way of Murabaha/Ijarah)

Financing:

Page 206 of 300

Working Capital Finance: for your short term financing needs.

At BankIsami, we understand that your business needs constant access to low cost

and flexible financing, in order to meet day-to-day funding needs. Our team of experienced

Relationship Managers with wide sector experience offer you effective cash flow

management by way of financing arrangements suitably structured to your needs and your

risk profile.

Cash is the lifeline of your business. Let your business have a blooming &

prosperous life with our Working capital finance facility. To fulfill your working-capital

financing requirements, BankIslami offers a wide range of products as follows:

Murabahah Financing: Murabahah is a type of sale in which the seller discloses the

cost of goods and profit to the buyer. Through this short-term financing mode,

BankIslami can finance the 'asset-purchase requirement' of the Corporate Customers.

The Customer, intending to utilize the Murabahah facility, identifies the

commodities ('assets') it needs to purchase through Murabahah facility. BankIslami

purchases the assets from Supplier and then sells the same to the Corporate Customer

against an agreed price (including disclosed profit portion) on deferred payment basis.

Istisna Financing: Istisna is a contract of sale of specified items to be

manufactured/constructed, with an obligation on the part of the manufacturer/seller to

deliver them to the buyer upon completion.

Istisna can be used for made-to-order commodities where the buyer (BankIslami)

would order a specific good with some specifications to be manufactured by the

Corporate Client in a particular period of time and deliver to BankIslami after

completion.

Page 207 of 300

Salam Financing: Salam is a sale, whereby, the seller undertakes to supply some

specific commodity to the buyer at a future date in exchange for an advanced price fully

paid on the spot. As a matter of principle, the sale of a commodity which is not in the

possession of the seller is unlawful. Thus, the practice of Salam is legalized as an

exception and is allowed under certain terms and conditions.

Salam is allowed for commodities only which are homogeneous and fungible in

nature i.e. every unit of the commodity should be identical and substitutable in nature

e.g. sugar, rice, wheat etc. Therefore, Salam is an ideal mode for financing for

agricultural concerns. Salam financing can also fulfill all working capital requirements

of manufacturers/traders dealing in homogeneous commodities.

Project Finance: for your Medium & Long term financing needs.

BankIslami offers medium and long-term financing facilities for infrastructure, BMR

and industrial projects in all sectors directly or on syndication basis.

Ijarah: Ijarah is a contract, whereby, BankIslami will lease out an asset to the Corporate

Client and receive periodical rentals from the Client for the use of that asset. The asset

will remain in the ownership of the Bank throughout the term of Ijarah. At the end of the

Ijarah term, the asset can be purchased by the Client at an agreed price.

Ijarah is mainly used for long and medium term fixed asset financing for

infrastructure, BMR and industrial projects.

Page 208 of 300

Diminishing Musharakah: The product of Diminishing Musharakah is offered on the

basis of 'Shirkat-ul-Milk'. Shirkat-ul-Milk means partnership of persons in an undivided

property. Process of Diminishing Musharakah financing involves BankIslami taking share

in the ownership of a specific asset along with the Corporate Client and then gradual

purchase of the Client of BankIslami's ownership share in the asset through out the term

of Diminishing Musharakah. At the end of the Diminishing Musharakah term, Client

becomes the sole owner of the asset.

Diminishing Musharakah is mainly used for long and medium term fixed asset

financing for infrastructure, BMR and industrial projects. Diminishing Musharakah is

also an ideal mode for Real Estate Financing.

Musharakah Finance:

In Musharakah, a joint enterprise is formed for conducting some business in which all

partners share the profit according to a mutually agreed pre-determined ratio, whereas, the

loss is shared in the ratio of capital investment. From Shariah perspective, Musharakah is one

of the preferred modes of financing.

The scope of Musharakah is broad. Musharakah can be applied to fulfill project

financing needs as well as working capital financing needs of Corporate Clients. Since

Musharakah transactions are based on pure profit and loss sharing arrangement, therefore,

the risks associated with such transactions are greater as compared to other financing modes.

Due to this reason, Musharakah transactions are executed subject to satisfactory review of

feasibility of the proposed transaction/project.

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Mudarabah Finance:

Mudarabah is a kind of partnership where one partner gives money to another for

investing in a commercial enterprise. The investment comes from the first partner who is

called 'Rabb-ul-Maal' while the management of the business is an exclusive responsibility of

the other, who is called 'Mudarib'. The profits generated are shared according to a mutually

agreed pre-determined ratio, whereas, loss is borne by Rabb-ul-Maal unless the loss is due to

negligence of Mudarib.

The scope of Mudarabah is broad. Mudarabah can be applied to fulfill project

financing needs as well as working capital financing needs of Corporate Clients. Since

Mudarabah transactions are based on pure profit and loss sharing arrangement, therefore,

the risks associated with such transactions are greater as compared to other financing modes.

Due to this reason, Mudarabah transactions are executed subject to satisfactory review of

feasibility of the proposed transaction/project.

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InvestmentBanking

Page 211 of 300

What We Offer:

The external and internal market conditions have had a major impact in certain sectors of

the economy, yet their impact lies short term only. The overall market share of the Investment

Banking activities has remained robust and intact. The Bounce Factors in the equity markets is

seeing improvements which are likely to see activity in IPO offerings and mushrooming of Mutual

Funds. A good pipeline of Capital raising opportunities exists, particularly in Infrastructure,

Textile and Services industry. Amiable investment opportunities for the medium term may provide

leverage into credit and marketing activities. BankIslami Pakistan Limited takes deep pride in

providing Investment Banking to its valued customers, as its core business, revolving around the

concept of Wealth Management.

Products & Services:

BankIslami's Investment Banking Division offers a full range of the comprehensive,

innovative and uniquely structured customer centric advisory solutions to its clients. After

classifying the products and services of low, medium and high risk the product is structured on the

guidelines of Shariah.

Following are the Products and Services:

Advisory Trusteeship Fund Raising Trusteeship for SUKUKs etc Corporate Restructuring Fiduciary Roles in Mutual Funds Mergers & Acquisitions Specialized Roles Infrastructure Development Private Equity Project Financing Special Projects

Ijarah and Musharkah Syndications

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Structuring Underwriting

Securitizations SUKUKs' Distressed Assets Sales Equity Structured Finance Musharakah Certificates Initial Public Offerings

Clients:

Shahmurad Sugar Mills Pak Elektron Limited Three Stars Hosiery

Mills (Pvt.) Limited

New Allied Electronics

Industries (Pvt.) Limited

Eden Housing Limited SSGC Pace (Pakistan) Limited AMTEX Pvt. Limited

Haq Bahu Sugar Mills

(Pvt.) Limted

LESCO (Lahore

Electricity Supply

Corporation) Limited

Fatima Sugar Mills

Limited

Al Noor Sugar Mills

Limited Optimus Limited

Transections:

Privately Placed SUKUK Issue of Shahmurad Sugar Mills Limited amounting to

Rs.500,000,000/-

(rated A- by JCR – VIS)

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Privately Placed SUKUK Issue of Pak Elektron Limited amounting to

Rs.1,200,000,000/-

(rated A+ by PACRA)

Privately Placed SUKUK Issue of Amtex Limited amounting to Rs. 650,000,000/-

(rated A+ by JCR – VIS)

Privately Placed SUKUK Issue of New Allied Electronics Industries (Private) Limited

amounting to Rs. 750,000,000/- (rated A by JCR – VIS)

Privately Placed SUKUK Issue of Eden Housing Limited amounting to

Rs.1,630,000,000/-

(rated A by JCR – VIS)

Privately Placed SUKUK Issue of Eden Developers (Private) Limited amounting to

Rs.200,000,000/-

(rated A- by PACRA)

Privately Placed SUKUK Issue of Sui Southern Gas Company Limited amounting to

Rs. 5,000,000,000/-

(rated AA by PACRA)

Privately Placed SUKUK Issue of Eden Housing Limited amounting to

Rs.730,000,000/-

(rated A by JCR – VIS)

Privately Placed SUKUK Issue of Pak Elektron Limited amounting to

Rs.1,100,000,000/-

(rated A+ by PACRA)

Privately Placed SUKUK Issue of Pace (Pakistan) Limited amounting to

Rs.2,000,000,000/-

(rated AA- by PACRA)

Privately Placed SUKUK Issue of Lahore Electric Supply Corporation Limited

amounting to Rs. 5,000,000,000/- (backed by GoP Guarantee)

Privately Placed SUKUK Issue of Optimus Limited Amounting to Rs. 250,000,000/-

(Rated A - by JCRVIS)

Privately Placed SUKUK Issue of Haq Bahu Sugar Mills Limited Amounting to

Rs.295,000,000/-

Privately Placed SUKUK Issue of Three Stars Hosiery Mills (Pvt.) Limited Amounting

to Rs. 400,000,000/-

(Rated A + by PACRA)

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I.T. Department

Page 215 of 300

IT Department

The rapid advancement in Information

and Communication Technology (ICT) has

had a profound impact on the banking

industry and the wider financial sector over

the last two decades and it has now become a

tool that facilitates banks‘ organizational

structures, business strategies, customer

services and other related functions. The

recent ―IT revolution‖ has exerted far-reaching impacts on economies, in general, and the

financial services industry, in particular.

Within the financial services industry, the banking sector was one of the first to embrace

rapid globalization and benefit significantly from IT development.

Bank Islami is one of the leading banks of the world and it is completely dependent on the

use of technology i.e. it is doing the paperless banking.

Information Technology Department (ITD) is responsible for management and support of

the technology architecture, hardware, software, and the respective resources throughout the

country.

The IT department of Bank Islami is one of the most sensitive departments as the working of

the bank is completely dependent on the computer based and the web based technology and any

problem at any part can negatively impact the whole working of the bank. Thus, great care is taken

in the management of IT Department.

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The whole system of Bank Islami is using two lines of electricity. One is provided by the

WAPDA and the other is the use of UPS. In case the electricity is powered of, the UPS is started

which causes the computers not turn off and in this case there is no case of data loss and keeps the

important systems on for 10-15 seconds after which the generators are powered on which provides

the electricity to the whole bank.

The IT Department of the Bank Islami Bahawalpur Branch consists of the following:

1. Server of HP Company.

2. Router of CISCO Company

3. Dish With Switche of I-Direct Company

4. Switches

5. Biomatrix System

6. DTU Loop

7. Line Condetioner

8. UPS (Uninterrupted Power Supply)

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Duration of My Internship Program

Page 218 of 300

Duration of My Internship Program:

1st Week:

My internship started on Monday 28th June 2010. I went to the branch and met the branch

manager Mr. Hafiz Aqeel. He told me the basics of banking the structure of the organization the

way recruitment is done the systems used and introduced me to the staff of the branch. He also told

me that the cash counter is the most important part of the bank and it acts as the brain of the bank.

He also told me that we should always remember the past and learn from it and thus he told me

about the doomed fate of BCCI Bank. Then he told me the importance of clearance department.

Then he told me that we are using two system parallel PIBAS and IMal as we are shifting from

PIBAS to IMal. He taught me how to fill a deposit slip. He also took me for a ride to the cent where

he had to collect some deposit of a charitable organization.

The next day Mr. Hafiz Aqeel introduced me to Mr. Asad Mehmood Khan Ali Zai the

Customer Service Officer. I was told that he would be my menter and gide for the next one week. He

gave me the glosery of islamic banking and the policies and procedures manual to read. I read

them for quite a long time. He told me how to fill a deposit slip, a Know Your Customer Form

(KYC)and an Account Opening Forn (AOF). I made a lost of mistakes in them mostly doubling or

cutting mistake and I was asked to fill them again and again. I learned how to get customer

biomatrix and the requirements for account opening. In short I learned the whole process of

account opening. They gave me a complete set of aof to study and Mr Hafiz Aqeel gave me my

Internship Letter.

The third day was a surprise for the whole branch as the auditors had come on a surprise

visit. I met the auditors and then they left the branch and told that they would come for a thorough

audit on Monday. As it was the end of the fiscal year we kept on collecting government cheqes. The

next day was a holi day and the manager told me take a leave for the next day.

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The next day that is the forth day today I studed the zakat exemption form or the declaration

that a person gives us to not deduct zakat from his account. I studied the policies and procedures

manual. As NADRA Varisis was down so we could not open accounts.

2nd

Week:

The 2nd

week was the auditors week so we did not to much then sit observe the auditors and

see what they are doing and then clearing their objections. I learned how to brake a deal and do

premature encashment of islami mahana munafa account. 2 signatures of the customer at the back

is enough to brake the deal. I learned the whole process. I also learned how to issue a cheque book.

We entered the zakat exemption forms on the register and then we kept on coordinating with the

auditors.

I learned how to calculate profit to tell a customer how much profit will he get. I also

dispatched letters to the dormant account holders. I made fresh entries of zakat exemption stam

papers. i also arranged the forms and informed mr asad about the missing stam papers. I learned

how to make entries in IMal. I learned how to issue a TDR(Term Deposit Recipt). I lso lerned how

to stamp an AOF and related documents. I wrote dormant account on back of the dormant account

SS Cards.

3rd

Week:

This 3rd week was of full working and learning. The new internee from my class Ms. Freeha

Nazeer had joined in at the internship. I learned about the majour islamic banks and the way all

types of accounts work at bank islami. I studied how profit was given and how accounts are opened

as the new internee was here so everything had to start from a scratch. Learned aboud withholding

tax. I learned the different staff positions in a branch. We again discussed in detail how to brake a

deal. Learned how to make entry on IMal for deal brake.

We received the profit rates for this month from head office through e-mail. We made fresh

calculations on the basis of new rates. We learned about high risk accounts and how to fill a KYC

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(Know Your Customer) form. Discussed how islamic banking is intrest or riba free. We also

discussed what are the main activities of bank islami and how financing is done in ijarah, murabha

and musharka. We discussed the requirements for each of them. We learned what is product based

financing. Another person from commerce department joined us at internship named Mr. M. Anise.

We studied the products of bank islami and the value added services. We discussed account

types in deatail and the requirements for each of them. We discussed foreign currency accounts and

the Scedual Of Charges (SOC). We also discussed the requirements for foreign currency accounts.

We learned how accounts are declared deceased or dormant or credit block and the requirements

for re opening or payment of funds and closure of accounts. We learned about stop payment. We

discussed miner‘s account and disabled persons account like blind, etc. we learned about BB

Accounts and (CDR) Call Deposit Recipt and with this another week ends.

4th

Week:

In the 4th week we started off with money londering. We studied the Money Londering

manual and then discussed it in detail leraned how money londring is done and how bank tries to

prevent money londering. Learned how to stamp a tdr form. We started remetance department. We

Learned what is a Demand Draft (D.D.), Pay Order (P.O.), Telegraphic Transfer / Foreign

Telegraphic Transfer (T.T / F.T.T.), Internal Transfer (I.T.), Foreign Demand Draft (F.D.D) And

Travlers Cheques (T.C.); how they are made; what are the requirements for them; how are they

cleared and how they work at bank islami and other banks.

We also studied the clearing department. We learned how clearing is done and what is the

process of clearing. Learned about nift and the controle and administration policies of clearing at

bank islami. We read clearing from the policies and procedures manual. Learned about inward and

outward clearing, same day and inter city clearing, and 1st and 2nd clearing.we studied Outward

Branch Clearing (OBC) and all the stamps related to clearing. With this ends the 4th week.

5th

Week:

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This 5th

week was of full working and learning. On the 1st day we studied ATM. I was late

for the cash replanishment of the atm and the other 2 internees had seen how cash replanishment is

done. Then we theoratically studied all the aliments for the ATM including how replanishment is

done. We also studied the functions and working of the letter of credit (LC) for export and inport

purpose.

I discussed the organogram with the Branch Manager Mr. Hafiz Aqeel.we also studied the

cash boards by the SBP. We examined the notes for the 12 signs on the board and we saw the notes

under the ultravoilet light and saw the counting machine. We studied the instructions on the cash

counter and discussed the stamps that are used at the cash counter with the Cashior Mr Mian

Faisal. We also studied the types of cash; sorted reissuable cash and fresh cash are reissuable

while unsorted cash, soil cash and defective cash are not issuable.

We also learned concept and prectical application of mudarbha, ijara, musharka,

istisna,guarantee, letter of credit (LC) and Mudarba. I studied in depth the way these things of

financing are done, what are the requirements for each of them and the situation they are

applicable in.

6th

Week:

In the 6th

and last week of my internship. During this last week we studied the it department

and the accounts department and their working. I learned how cash is handed over to pheonix

armer and how it is received. I also learned about Service Quality Coordinator‘s (SQC) duties and

responsibilities.

I also saw the cash replanishment of the ATM. I was shown the cash cassets reject bin and

the system that operates the ATM Machine. And thus my traning was completed. For the rest of the

days of my internship I studied the policies ad procedures manual. I also filled a lot of Account

Opening Forms. I saw one of the bussiest day in the bank on the 2nd

last day of my internship and it

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taught me how to work in such a busy situation and how to give time to all the customers equally

and how to assign priority to the tasks.

To put it in a nutshell I would lik to say that this internship experience at the Bank Islami

was a uniqe and life changing one. It has taught me a lot about banking and life itself. My

experiences ar unforgetable. I loved the job and the people at the branch. The auditors visit proved

as a bonus for my internship. I learned a lot of things about banking through out my internship. I

also learned how to deal with customers. I have gained in-depth insight into the banking operations

of an islamic bank.. Its been fun working at Bank Islami. I love it. I have gained in-depth insight

into the banking operations of an islamic bank. My experience so far has been fabulous and I hope

what so ever I have learned helps me to develoup my career in future. My experiences have been

splendid and I hope that I would serve my country the Right way!

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Financial Analysis

Page 224 of 300

Financial Analysis:

1. Break Up Value:

Years 2006 2007 2008 2009

Break Up Value (Rs) 10.01 12.01 9.83 8.98

Interpretation:

The combined market value of a firm's assets if each were sold separately, as contrasted

with selling the firm as an ongoing business. Analysts look for companies with a large break-up

value relative to their market value to identify potential takeover targets. Investors can calculate a

breakup value on a perfectly healthy company as a way to determine a potential floor for the stock,

or a potential entry point for a prospective buyer. In order to accurately calculate a company's

breakup value, detailed data is needed on the revenue, earnings and cash flows for each distinct

operating unit of the company. Companies considering taking over another use the breakup value,

among other metrics, to determine whether a takeover is worth the time and expense. It is also

called the private market value. The Brake-up Value of Bank Islami increased from 2006 to 2007

but since then it is on a constant decline in 2008 and 2009. This is the result of the bank‘s corporate

strategy of expention. The expention to 102 branch network cost increased the loss to many times

the total accumilated loss thus resulting in a decrease in brakeup value.

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2. Market Value Per Share:

Years 2006 2007 2008 2009

Market Value Per Share (Rs) 10.55 16.20 7.25 5.89

Interpretation:

Market Value of Share in which price the share is available in the market. Market value of

the share is the current price at which the share is being traded in stock markets. The market price is

determined by the demand and supply forces in the market. If demand for a particular stock is more

than its supply (volume of trading) then the price of the share will go up and vice-versa. The Market

Value Per Share of Bank Islami was improved from 2006 to 2007 but then it plunged to a very low of

Rs. 7.25 in 2008 and it is on a continuous decline ever since. This is the result of the bank‘s

corporate strategy of expansion. The expansion to 102 branch network cost increased the loss to

many times the total accumulated loss thus resulting in a drop off in Market Value per Share.

3. Earnings Per Share:

Earning Per Share of Comman Share = Net Income

Weighted Average Number of Shares

Years 2006 2007 2008 2009

Earnings Per Share (Rs) (0.04) (0.13) (0.12) (0.91)

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Interpretation:

The portion of a company's profit allocated to each outstanding share of common stock.

Earning per common share is the amount of income earned on a share of common stock during an

accounting period. Earnings per share serves as an indicator of a company's profitability. It applies

to common stock and to corporate income statement. Earnings per share is generally considered to

be the single most important variable in determining a share's price. It is also a major component

used to calculate the price-to-earnings valuation ratio. The earning per sharefollowing an overall

decreasing trend from 2006 to 2009. The overall treind shows a decrease in earnings per share

from -0.04 in 2006 to -0.91 in 2009. But in year 2008 percentage of net loss decreases due to

increase in operating expenses and number of common shares increased due to which earning per

share decreased. While the overall decresing Earnings per share is the result of the bank‘s

corporate strategy of expention. The expention to 102 branch network cost increased the loss to

many times the total accumilated loss thus resulting in a crash off in Earnings per share.

4. Net Spread To Gross Return:

Years 2006 2007 2008 2009

Net Spread To Gross Return 81.34% 49.5% 50.3% 44.3%

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Interpretation:

The chart shows an overall dclining net spread to gross returns. The main reason for this is the branch

network expention strategy.

5. Financing To Deposit Ratio ADR:

Years 2006 2007 2008 2009

Financing To Deposit Ratio ADR 53.94% 40% 52% 47%

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Interpretation:

The graph shows that the ratio first declined in 2007 from 2006 but then it increased again in 2008 and fell a

bit in 2009 this trend is also due to the branch network expention strategy that the bank had adopted to

increase the branch network of the bank.

6. Capital Adequacy Ratio:

Capital Adequacy Ratio = Total Equity

Total Assets

Years 2006 2007 2008 2009

Capital Adequacy Ratio 61.83% 37.92% 39.83% 20.39%

Interpretation:

Capital Adequacy Ratio (CAR) is a ratio that regulators in the banking system use to watch bank's

health, specifically bank's capital to its risk. Regulators in the banking system track a bank's CAR

to ensure that it can absorb a reasonable amount of loss. Capital adequacy ratio is the ratio which

determines the capacity of a bank in terms of meeting the time liabilities and other risk such as

credit risk, market risk, operational risk, and others. It is a measure of how much capital is used to

support the banks' risk assets. This ratio is used to protect depositors and promote the stability and

efficiency of financial systems around the world.

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The ratio signifies the bank‘s contribution of equity in total assets. Strong equity base

indicates the low risk factor. A measure of a bank's capital. It is expressed as a percentage of a

bank's risk weighted credit exposures. In usual practice of banks, they emphasize more on deposits

than injecting new equity in the business. In case of the BIPL there is an overall decreasing trend in

the ratio from 2006 to 2009. Only in the year 2008 we saw a minute increase in percentage of

Capital Adequacy Ratio because number of common shares increased due to which Capital

Adequacy Ratio increased.

7. Cash Flow Margin:

Cash Flow Margin = Cash Flow From Operating Activities/Cash Flows

Net Sales

Years 2006 2007 2008 2009

Cash Flow Margin -73.43% 879% 75.54% 204%

Interpretation:

The Cash Flow Margin Ratio is an important ratio as it expresses the relationship between

cash generated from operations and sales. The company needs cash to pay dividends, suppliers,

service debt, and invest in new capital assets, so cash is just as important as profit to a business

firm. The Cash Flow Margin ratio measures the ability of a firm to translate sales into cash. The

numerator of the equation comes from the firm's Statement of Cash Flows. The denominator comes

from the Income Statement. The larger the percentage, the better. The chart shows that in 2006 the

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Cash Flow Margin Ratio was negative. It hiked up in year 2007 but then it plunged down again in

the year 2008 the reason was that the branch network expention strategy was showing its impact. It

improved in 2009 and it is a good percentage.

8. Cash Return on Assets:

Cash Return on Assets = Cash Flow From Operating Activities/Cash Flows

Total Assets

Years 2006 2007 2008 2009

Cash Return on Assets -1.83% 36.63% 5.81% 13.05%

Interpretation:

The Cash Return on Assets Ratio is generally used only in more advanced profitability ratio

analysis. It is used as a comparison to return on assets since it is a cash comparison to this ratio as

return on assets is stated on an accrual basis. Cash is required for future investments. The

numerator is taken from the Statement of Cash Flows and the denominator from the balance sheet.

The higher the percentage, the better. The chart shows that in 2006 the Cash Return on Assets

Ratio was negative. It hiked up in year 2007 but then it plunged down again in the year 2008 the

reason was that the branch network expention strategy was showing its impact. It improved in 2009

and it is a good percentage now.

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9. Return On Investment:

Return on Investment = ( Net Income

L.T.D+Equity ) 100

Years 2006 2007 2008 2009

Return on Investment -0.21% -0.26% -0.28% -2.7%

Interpretation:

A performance measure used to evaluate the efficiency of an investment or to compare the

efficiency of a number of different investments. Return on Investment (ROI) analysis is one of

several commonly used approaches for evaluating the financial consequences of business

investments, decisions, or actions. ROI gives an indication that how efficiently debt and equity

sources of the bank are contributing towards earning ability of the bank. This ratio indicates the

profit earned by the bank on the resources employed. ROI analysis compares the magnitude

and timing of investment gains directly with the magnitude and timing of investment costs. A high

ROI means that investment gains compare favorably to investment costs. A consistent increasing

loss trend can be noted in the ROI of the bank from 2006 to 2009 this is again the result of the

bank‘s corporate strategy of expention. Thee abrupt fall of ROI in 2009 is the direct result of the

strategy. The expention to 102 branch network cost increased the loss to many times the total

accumilated loss thus resulting in a drop off in Return on Investment.

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10. Return On Equity:

Return on Total Equity = ( Net Income

Avg.Equity ) 100

Years 2006 2007 2008 2009

R.T.E Ratio -0.42% -0.096% -0.012% -0.096%

Interpretation:

One of the most important profitability metrics is return on equity (or ROE for short). This

is the amount of net income returned as a percentage of shareholders equity. Return on equity

reveals how much profit a company earned in comparison to the total amount of shareholder equity

found on the balance sheet. This ratio i.e. return on equity shows the return the owners of the

business enjoy after paying all the financial expenses and other liabilities of the business. A

business that has a high return on equity is more likely to be one that is capable of generating cash

internally. For the most part, the higher a company's return on equity compared to its industry, the

better. The ratio got better in the year 2007 followed by 2008 and then worsened abruptly and

drastically in 2009. This was also due to the large capital funds accumulation of the bank for

expansion of the branch network of the bank.

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11. Due To Banks To Total Deposits:

Formula = Due To Banks

Total Deposits

Years 2006 2007 2008 2009

Due to banks to Total deposits 2.81% 0.70% 1.97% .56%

Interpretation:

This ratio signifies the financial mix of bank. In ideal situations, there should be decreasing

trend or consistency in this ratio. In case of BIPL, although there is a tremendous increase in

deposits but borrowing is also increasing considerably. The ratio has dropped dramatically in the

year 2007. The hasty increase in bank borrowing may be due to the expansion in branch network,

where more funds are required in initial years. A minor decrease shows good management. The

significant fall in 2009 is a proof of Bank Islami‘s efficient management. This ratio is better in

comparison to other banks.

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12. Return on Deposits:

Return on Deposits = Net Income After Taxes

Total Deposits

Years 2006 2007 2008 2009

Return On Deposits -0.47% -0.37% -0.42% -1.71%

Interpretation:

This ratio indicates to what extent deposits which represent funds mobilization on the part

of the bank contribute towards income generation. At BIPL this ratio shows a decreasing low trend

through out the year 2007 to 2008 as compare to year2006. This is again because of increase in

bank‘s setup and expansion all over the Pakistan. The grate drop in the return on deposit ratio is

also the result of the bank‘s expention in branch network strategy. So far bank had to bear lot of

expenses as compare with its income till 2008, the year of expention in branch network. These costs

earned a huge loss that is many times then the loss of last year and the deposits just almost doubled.

Thus that the gigentic increase in net loss resulted in a grate fall in return on deposit. It is still

better if we compare it with other well established banks. The bank is expected to have a great rise

in these ratios in years to come.

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13. Advances To Deposit Ratio:

Formula = . Advances .

Total Deposits

Years 2006 2007 2008 2009

Advances To Deposit Ratio 54% 40% 53% 48%

Interpretation:

This ratio, a comparison of funds generation and its funds mobilization, indicates the total

loans sanctioned by the bank in relation to total amount of money deposited with the bank. In

simple words it is how much they have coming in (deposits) vs how much they have going out

(loans). The more money the bank has loaned out generates more profit income provided the loans

are to secure borrowers. The bank has high advances to deposits ratio in the year 2006. In the year

2007 the advances to deposits ratio decreased but it was still even better as compared to other

banks. It took Bank Islami no time to regain its old advances to deposits ratio in the year 2008 but

it then fell again a bit in 2009 because of the branch network expention strategy which reduced the

bank‘s capacity to lend but still this is a good ratio and demonstrates good performance and grate

governance of the bank.

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14. Advances to Deposits+Borrowing Ratio:

Formula = . Advances .

Deposits+Bank Borrwings

Years 2006 2007 2008 2009

Advances to Deposits + Borrowing Ratio 52.5% 39.6% 51.3% 47.19%

Interpretation:

As continuous increase has been observed in borrowing from other banks because of

expansion in branch network the ratio has firstly decreased in year 2007 as compared to 2006 and

then it regains strength in year2008 but this is due to increase in deposits as the branch network

grew. It plunges down a little in 2009 because of the full cost impact of the branch network

expansion strategy which reduced the bank‘s capacity to lend.

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15. Deposit to Total Liability Ratio:

Formula = . Deposits .

Total Liabilities

Years 2006 2007 2008 2009

Deposit to Total Liability Ratio 87.9% 93.7% 89.8% 94.72%

Interpretation:

This ratio is used to see that banks deposits are what percentage of its total liabelities. A

There is an overall cyclical trent which is quite hard to explain because there is no clear patren but

an consistint increasing patren can be identified in the deposits to total liability ratio from 2006-

2009. The ratio increased in the year 2007 as compared to 2006 but then it droped off a bit in 2008

but it was still higher then the year 2006 and then it again jumped to a highest of 94.72% in 2009.

It shows that bank is increasing its borrowings from the people. The ratio is better as compared to

other banks.

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16. Cash to Deposit Ratio:

Formula = . Cash .

Total Deposits

Years 2006 2007 2008 2009

Cash To Deposit Ratio 63.49% 40.37% 35.13% 22.43%

Interpretation:

This ratio shows that how much cash is available to meet the demand liabilities of

depositors. Here we can clearely notice a decreasing trend because of the higher expenditure of the

bank on its expansion and branch setup. This is not a good trend and the bank should try to

stabilize this ratio at a higher level then in the year 2009 or it will have to face severe conciquences

incase the trend continues.

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17. Investment to Total Assets Ratio:

Formula = . Investments .

Total Assets

Years 2006 2007 2008 2009

Investment to Total Assets Ratio 12.25% 26.75% 26.3% 19.87%

Interpretation:

The Investment to Total Assets Ratio is an important ratio because it measures the efficiency

with which the company is managing its investment in assets and using them to generate profit.

Investment to total asset ratio has been continuously increasing from year 2006 to year 2008.

Although 2008 saw a little fall in the ratio but this decrease was much grater in 2009 it is due to the

fact that investments are increasing but assets are also increasing at a much faster speed as

compare to the investments. This is another impact of the branch network expention strategy.

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18. Cost of Borrowings Ratio:

Formula = Return on Deposits

Deposits

Years 2006 2007 2008 2009

Cost of Borrowings Ratio 1.05% 3.05% 5.85% 4.37%

Interpretation:

There is increasing trend of the ratio from the year 2006 till 2008 due to increase in the

deposits and as the bank Islami is offering variable profit rate and conducting Halal business so

number of customers are increasing due to which deposits are increasing and bank investments are

increasing as a result of that cost of borrowing ratio is showing increasing trend. This ratio

declined in the year 2009 as a result of the bank‘s branch network expention strategy, due to

investing heavily in branch network expention the bank had less to invest in sakouk and thus the

return on deposits decreased.

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19. Current Ratio:

Formula = . Current Assets .

Current Liabilities

Years 2006 2007 2008 2009

Current Ratio (Times) 2.13 1.17 1.025 0.84

Interpretation:

This ratio shows that how many times the banks most lequid current assets can be used fulfil

its payoff current liabelities. A constently declining trend can be observed for the Current Ratio.

The bank‘s current libelities are increasing and current assets are decreasing. This is not a good

indecater. Although the ratio was good till year 2008 but the bank must try to increase the ratio by

reucing its current liabelities and should atleast have a current ratio of 1.

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20. Liquid Ratio:

Formula = . Current Assets – (Inventory + Prepaid Expenses) .

Current Liabilities

Years 2006 2007 2008 2009

Liquid Ratio 2.08 1.15 1.00 0.838

Interpretation:

This ratio shows that how liquid the bank is. It means that is bank in a condetion to pay off

its current liabelites now if it has to. A constently declining trend can be observed for the Liquid

Ratio. The bank‘s current libelities are increasing and current assets are decreasing. This is not a

good indecater. This means the bank is not in a condetion to payoff its current liabelities if it has to

pay them today. Although the ratio was good till year 2008 but the bank must try to increase the

ratio by reucing its current liabelities and should atleast have a Liquid Ratio of 1.

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21. Debt Ratio:

Debt Ratio = . Total Assets .

Total Liabilities

Years 2006 2007 2008 2009

Debt Ratio (Times) 1.99 1.36 1.37 1.16

Interpretation:

A ratio that indicates what proportion of debt a company has relative to its assets. The

measure gives an idea to the leverage of the company along with the potential risks the company

faces in terms of its debt-load. A debt ratio of greater than 1 indicates that a company has more

debt than assets, meanwhile, a debt ratio of less than 1 indicates that a company has more assets

than debt. Used in conjunction with other measures of financial health, the debt ratio can help

investors determine a company's level of risk. There is a constently decreasing trent in Debt Equity

Ratio which is not a good indecater of the bank‘s financial health but still the ratio at Bank Islami

is good and better then other banks.

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22. Debt Equity Ratio:

Debt Equity Ratio = . Long-Term Debt .

Total Capitalization

Years 2006 2007 2008 2009

Debt Equity Ratio (Times) 0.29 0.56 0.56 0.73

Interpretation:

A measure of a company's financial leverage calculated by dividing its total liabilities by

stockholders' equity. It indicates what proportion of equity and debt the bank is using to finance its

assets. The Debt to Equity Ratio measures how much money a bank should safely be able to borrow

over long periods of time. A high debt/equity ratio generally means that a bank has been aggressive

in financing its growth with debt. This can result in volatile earnings as a result of the additional

interest expense. If a lot of debt is used to finance increased operations (high debt to equity), the

Bank could potentially generate more earnings than it would have without this outside financing. If

this were to increase earnings by a greater amount than the debt cost (interest), then the

shareholders benefit as more earnings are being spread among the same amount of shareholders.

This means how many times the long term debt can cover total capetalization and the constently

increasing trend at Bank Islami is not a good financial indicater it means the bank is using debt to

finance the business more and more and is not focussing to use capital fo this purpose.

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23. Total Assets Turnover:

Total Assets Turnover = . Annual Sales .

Average Total Assets

Years 2006 2007 2008 2009

Total Assets Turnover (Times) 0.036 0.065 0.088 0.082

Interpretation:

The amount of sales generated for every Rupee's worth of assets. It is calculated by dividing

sales in Rupee by assets in Rupee. Asset turnover measures a firm's efficiency at using its assets in

generating sales or revenue - the higher the number the better. It also indicates pricing strategy:

companies with low profit margins tend to have high asset turnover, while those with high profit

margins have low asset turnover. There is as constently increasing trend in total assets turnover

from 2006 to 2008 but there is a slight decresi in the ratio for the year 2009. This is the impact of

the bank‘s branch network expention strategy although annual sales increased but the average total

assets also increased but at a higher pace thus resulting in a decrease in total assets turnover.

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24. Net Profit Margin:

Net Profit Margin = . Net Profit .×100

Sales

Years 2006 2007 2008 2009

Net Profit Margin -8.35% -6.15% -3.60% -21.83%

Interpretation:

Looking at the earnings of a company often doesn't tell the entire story. Increased earnings

are good, but an increase does not mean that the profit margin of a company is improving. The Net

Profit Margin calculated as net income divided by revenues or net profits divided by sales. It

measures how much out of every Rupee of sales a company actually keeps in earnings. Profit

margin is very useful when comparing companies in similar industries. A higher profit margin

indicates a more profitable company that has better control over its costs compared to its

competitors. Profit margin is displayed as a percentage; a 20% profit margin, for example, means

the company has a net income of $0.20 for each dollar of sales. The Net profit Margen was getting

better from 2006 to 2008 but here has been a sharp fall in the net profit margen that is the result of

the bank‘s branch network expention strategy.

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25. Price-Earning Ratio:

Price-Earning Ratio = . Market Price Per Share .

Earning Per Share

Years 2006 2007 2008 2009

Price-Earning Ratio (Times) -263.75 -124.62 -60.42 -6.47

Interpretation:

A valuation ratio of a company's current share price compared to its per-share earnings. In

general, a high Price Earnings suggests that investors are expecting higher earnings growth in the

future compared to companies with a lower Price Earnings Ratio. However, the Price Earnings

Ratio doesn't tell us the whole story by itself. It's usually more useful to compare the Price Earnings

Ratio of one company to other companies in the same industry, to the market in general or against

the company's own historical Price Earnings Ratio. It would not be useful for investors using the

Price Earnings Ratio as a basis for their investment to compare the Price Earnings Ratio of a

technology company (high Price Earnings Ratio) to a utility company (low Price Earnings Ratio)

as each industry has much different growth prospects. The Price Earnings Ratio is sometimes

referred to as the "multiple", because it shows how much investors are willing to pay per Rupee of

earnings. If a company were currently trading at a multiple (Price Earnings Ratio) of 20, the

interpretation is that an investor is willing to pay $20 for $1 of current earnings. We can notice a

continuously improving trend in Price Earnings Ratio.

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26. Earning Yield Ratio:

Earning Yield Ratio = . Earning Per Share .

Market Price Per Share

Years 2006 2007 2008 2009

Earning Yield Ratio (Times) -3.79 -8.02 -0.017 -0.15

Interpretation:

The earnings per share for the most recent 12-month period divided by the current market

price per share. The earnings yield (which is the inverse of the Price Earnings Ratio) shows the

percentage of each Rupee invested in the stock that was earned by the company. The earnings yield

is used by many investment managers to determine optimal asset allocations. We can se that the

earning yield ratio got worse in 2007 from 2006 but it improved in 2008 then droped a bit again in

2009. It is not a good indecatedr to judge financial posetion because fluctuations in the stock

exchange can change the results entirely.

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SWOT Analysis

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t is always the desire of every banking corporation to launch stable, long lasting and robust

strategies to compete and compare their competitors. Banks regulate the economy of

country, through, self and market based monetary and credit polices, strong corporate

governance, liberalization of foreign exchange regime and effective control through prudential and

other regulations. Strict compliances and competitiveness also enables to improve the quality of

Information Technology, Human Resource Development, Statement of Internal Control, Credit

Rating, Service Standards and automation of services.

All strategies must be capable, acceptable, flexible, compatible, reliable, stable, and

bearable for borrowers of that specific institution. The strategies should work for improvement of

assets, profitability, financial ratio, funds creation, long & short-term advances, shareholders,

capital adequacy ratio standards and for reflection of the expanding network of branches.

Strategies show the significant improvement in focus on the bank‘s core business. All these

important indicators show excellent base for the banks growth. Regular operational strategies,

plough back for profits, strong position and generate capability of taking up increasingly complex

and large transactions.

Deliberation for implementing potential synergies is a desire of management to create a

very strong organization, which will be able to compete with the leading players in the financial

sector.

As far as Bank Islami Pakistan Limited is concerned, the bank‘s performance is outstanding

– highlighting steady and continuous growth, due to prolong and strict compliance of regulations

and its own standards.

Few strengths, weaknesses, opportunities and threats for the bank are appended hereunder:

I

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Strengths:

The gratest strength of Bank Islami was that it has created history by esteblishing 102

branches in 49 cities across Pakistan in just two years of its operations after being established

in 2006. This is the fastest ever branch network growth by any bank in Pakistan‘s banking

history. Thus Bank Islami has shown a very competitive growth potential.

Bank Islami Pakistan Limited is conducting its business in an Islamic Shariah Compliant

manner following puritan Islamic rules. As compared to conventional banks pure Islamic

banking in total complience with Islamic Sharia gives Bank Islami an upper edge. This is

Bank Islami‘s greatest strength.

People who seek to avoid ―Riba‖ (as it is prohebited in Islam and there is severe punishment

for riba according to Quran and Hadis), prefer to open an account in Bank Islami. This gives

them a feeling of satisfaction that their money is not being utilized in any interest related

activity.

Bank Islami offers the most comprehensive and bonafide Islamic banking solutions to its

customers; with a diversified portfolio of Shariah complaint products and state of the art

technology.

BIPL achieved ―A1‖ rating for the short term obligations and its long term rating stands at A.

Bank Islami Pakistan Limited offers services that magnetically attract customers toward the

bank. Free online and internet bankinga along with free eStatements, Pay order issuance

facility, ATM, cheque book issuance and 24/7 call center etc. gives BIPL diffrential advantage

upon other banks.

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Bank Islami has Internationally renowened scholars as members of its Shariah Board. These

members of the Shariah Board are serving on the boards of many Islamic banks operating in

different countries – as Justice (Retd.) Muhammad Taqi Usmani who closely supervises all the

Islamic modes of the bank. This phenomenon enhances the bank‘s goodwill and people‘s trust

in the bank.

Bank Islami Pakistan Limited uses a centralized network system. Operations of all the Bank

Islami branches all over Pakistan are monitored by the head office in Karachi on daily basis.

The Head Office keeps a close check and balance on all Bank Islami branches through the

centralized system. This ensures that Bank Islami is providing reliable services to its

customers.

The Bank has a well developed intra-net and internet communication network as well. Intra-

net provides the employs a chance to have access to that data that they can not access without

the intranet. It provides data that helps the employs reduce the stress thye encounter during

work.

Those customers who do not have time to personally visit the bank are delighted to use Bank

Islami‘s Telephone and Internet Banking services. Banking through the use of phone line or

though the use of internet saves the precious time of the customers.

The management of the bank believes in customer oriented banking rather than product

oriented banking. Thus the customer is the center of all key activities and keen interest is

taken while designing products and services for the customers and the element of flexibility is

the key focus point so that customers‘ needs are met effectively and efficiently. The products

and services designed by the bank are specifically tailored to the individual needs of its

customers.

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Bank enjoys a strategic competitive advantage over all domestic players by virtue of the

leadership in technological innovations. Staff welfare has always been a priority as well.

The human resource philosophy at Bank Islami Pakistan Limited focuses on multi talented

hiring, professional grooming on the job as well as off site training, and a meritorious reward

system.

The management team in all the branches of Bank Islami Pakistan Limited is based on young

graduates who are highly qualified and experienced in the field of banking. These young

people are highly motivated and vigorous and thus they outperform the staff of many other

banks in improving the purformance of the bank.

Bank Islami is also using Smart Marketing Ideas that resonate well with the public mind. Thus

its marketing is very much successful.

There is a centralized safety system to look after any type of unusual situations in banking

operations.

The Bank Islami Pakistan Limited staff is highly experienced in dealing with bank customers

in friendly manner and developing good, strong and long lasting customer relationships.

Bank‘s customer relationship managers are well equipped and well trained to provide most

efficient and personalized services to each and every customer at hand.

Gracious bonuses are offered to employees, which in turn keeps them motivated all year long.

Increments in salary are also a part of motivation strategies applied by the bank, thus the staff

is motivated all days a week, all weeks a month and all montes a year.

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Bank Islami Pakistan Limited has an efficient and effective human resource department that

has responded well to the challenges of recruitment. Regular training sessions are held by the

bank through which staff turnover remains one of the lowest in the industry.

Bank Islami‘s instruments are Payable at any BIPL Branch all over the Pakistan which is its

greatest strength as compared to other banks.

BIPL has a very reliable online network all over the country which is a greatest service for its

customers.

BIPL is proud of the pioneering role in providing the latest modern technological services to

its customers. BIPL is the only bank that provides biomatric thumb recognition in ATM

Machines. It‘s the bank‘s gratest strength!

All the forty five branches of Bank Islami Pakistan Limited are located at extremely crucial

and vital locations in their respective cities, which is indeed a very significant factor towards

earning more profit. Moreover all of the branches are very well furnished which is an integral

characteristic of a good bank in this age of consumerism.

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Weaknesses:

Bank Islami Pakistan Limited offers its credit services in only a limited number of cities. Many

branches of BIPL are not offering credit facilities and most of the financing is done in urban

areas, while little attention is paid towards the rural areas, which have potential of a lot of

customers.

The Bank is not giving any emphasis on the small scale businesses which are in abundance in

Pakistan.

Bank is not offering financing schemes for farmers, especially in agrarian cities.

There is a single branch of BIPL in Bahawalpur City that is why the bank staff has to face a

huge work load sometimes, and the staff gets heavily burdened along with customer dis-

satisfaction as its unavoidable twin.

Bahawalpur Branch of Bank Islami is not providing full fledged services to customers because

it was established in 2008 and is chiefly focused on retail banking. So all the departments are

not entirely operational in this branch yet.

Bahawalpur Branch of Bank Islami does not have a proper parking that causes trouble for

customers and the staff in parking their vehicles.

Due to lesser number of branches as compared to other banks customers may prefer to go to

the other feasible options instead of visiting the branches located at a greater distance as

compaired with other banks‘ branches.

The Bank needs a grieveance handling department that should be repsponsible for handling

the internal problems of the employees.

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There is a dire need of more IT related personnel as the staff is not in touch with IT. Thus due

to lack of a computer specialist, assistance from the head office is seeked time and again,

which wastes time.

People have incomplete knowledge about Islamic banking and thus they can not easily

diffrentiate it from conventional banking. They have no reason to switch to Islamic banking

and the promotional activities of the BIPL are not as much effective. Under such conditions

the promotional activities of the BIPL need to be improved. The bank should create awareness

in people about how Islamic banking is different from conventional banking and what are the

benefits of islamic banking instead of conventional banking.

BIPL is a newly established bank and its setup is only in Pakistan, so it is at a comparitive

disadvantage with those banks that have overseas branch networks and huge number of

investors.

Decision making is Centralized at BIPL, this can cause problems in the organization and it

wastes time in many operations of the bank.

BIPL Bahawalpur Branch faces the problem of Lack of space and furniture facility. At rush or

peek hours or busy days it causes inconvenience for staff, customers and internees as well.

The seating arrangement and the furniture of wating areas is not of such a good quality or

design that the customer feels himself well accomodated or comfortable. This is the reason

customers avoid to sit in the wating area.

Lack of staff is clearly noticed in BIPL Bahawalpur branch.

Bank has no grievance department for the internal problems of employees.

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There is no research cell in the bank, which should be engaged in gathering the information

about the present actions of its competitors and demands of its customers.

Lack of female staff can be noticed in almost all BIPL Branches. This creates some problems

for female (pardanasheen) customers. Women are reluctant to give their personal information

to or in the presence of male staff.

BIPL has no marketing and HR department at the branch level.

The air conditioning units in the branch are not capable enough to cool the huge hall in

scorching summer heat which is clearly expressed by many customers as a huge

inconvenience. Thus there is a need for another aircondetioning unit in the hall.

Supplies do not reach the branch on time and as a result the customers suffer delays.

The computer systems in BIPL are very slow and another reson for the slow speed is that the

router was damaged due to power fluctuations. The IT expert needs to find a way to speed up

the system speed. Because of slow speed, customers have to wait to give their biomatrics and

get their Pay Orders issued.

Speed of the intra-net is too slow and thus employs don‘t use it and waste such a precious

resource.

The Bahawalpur branch has no lockers facility for its customers.

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Opportunities:

BIPL provides its customers many services free of cost, its products promise customers

maximum possible benefits and uses the latest technologies. These diffrential advantages give

BIPL an edge over all other conventional and Islamic Banks.

BIPL is currently a local bank, it needs to go multinational. BIPL should start opening

branches all around the world in the world‘s biggest finacial markets like USA, UK and UAE.

A large number of Muslim communities are living in these countries who are intrested in

authentic Islamic banking.

Bahawalpur Branch of Bank Islami needs to have a proper parking for customers and the

staff to park their vehicles.

Bank can offer special financing schemes for farmers especially in agrarian cities.

The Bank should increase its advertising programs by using all available Medias of

advertising like TV, cable, radio and bill-boards to increase its business by providing more

information to people about Bank Islami. It should also bring some new elements in its

advertising campaigns like how Islamic banking is different from conventional banking, what

are the unique features of Bank Islami and what are the benefits of islamic banking instead of

conventional banking. BIPL needs to show its differential advantages to its current and

potential customers through advertisement.

The trend of Islamic banking is on the way of tremendous popularity and spreading out to the

whole world. If BIPL establishes a vast branch network through out the world then it can

make progress in leaps and bounds as compared to other banks.

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Its an era of information technology and due to heavy competetion in the market, only the

fittest will survive (survival of the fittest) only those organizations can survive that follow new

technology and keep themselves up to date with the latest developments in technology. BIPL

has all the competence and capabilities to avail maximum benefit out of the new technology

that they are using for their banking setup.

Previously and even now many people were not in the favour of conventional banking system

due to ―Riba‖. BIPL provides a chance to people to do ―Riba free‖ banking. People are now

switching from conventional to Islamic banking. This increasing trend towards Islamic

banking is a grand opportunity for BIPL.

Pakistan is a country with Muslims in majority. Thus there is a strong potential of Islamic

banking in Pakistan because it is already working at its peak in some Asian countries and

many other Islamic countries. This proves to be another opportunity for BIPL to make sky

rocketing progress.

BIPL has an opportunity to hire young highly qualified and talented candidates who do not

prefer to work with those banks who deal in ―Riba‖. This is a great opportunity for BIPL to

attract fresh minds and competitors‘ Employees as well.

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Threats:

Many new Islamic banks and islamic sections of already existing banks are now being

established in Pakistan. BIPL will face intense competition in the coming year.

Many other banks now a days are providing services based on latest technologies although

they are not providing all latest services like free online banking, etc. These banks can prove

to be a threat in the long run.

Now the world is a global village so competitors may arise from anywhere in the world at any

time. Many commercial banks are now dealing in ‗Islamic modes of financing‘ and ‗Islamic

Banking‘ like bank Al-Falah, etc. These banks have an established goodwill in the market and

many customers would prefer these banks when they will deal in both conventional and

Islamic banking. These banks can also attract BIPL‘s existing customers thus they are a great

threat for BIPL.

Usually people have a mindset that there is no diffrence between Islamic banking and

conventional banking and Islamic banks are deceiving under the name of Islam. These wrong

perceptions need to be removed otherwise they can also cause problems for BIPL.

Meezan Bank Limited is the premier Islamic bank and providing its services nearly in the

same way as BIPL is providing and it also has a strong network of branches all over Pakistan

thus resulting in a reduction in overall market share of BIPL.

Due to the recent international financial crisis, terrorist activities in Pakistan and the recent

severe floods in Pakistan has broght the economy of the country to an almost stand still. It

means there is less investment and low financing demands in the banking sector.

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As bank does not posess a large branch network so customers face inconvenience in dealing

with the bank.

Law and order situation in Pakistan is shoddier discouraging and is totally reducing invester

confidence to invest anywhere.

High rate of taxes on banking companies.

In the near future the world is going to be a free trade zone so the concept of ―survival of

fittest‖ will be in action.

Due to terrorist activities in Pakistan the economy is moving very slow. It means less

investment and as a result low financing demand.

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Limitations:

The time period of internship was too short to get grip on all the aspects of banking.

The bank has recently been established in Bahawalpur, so all the departments are not

practicing full fledged working capacity at Bahawalpur. Thus the internship experience was

of limited areas only.

Due to the high security of the vault and the cash room I was unable to practice the cash

department.

Due to privacy of the account holders and the security of the bank‘s information I was not

allowed to operate I Mal and PIBAS by myself.

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Suggestions and Recomendations

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Recommendations & Suggestions:

It was an interesting experience to do an internship in Bank Islami Pakistan Limited. The

staff was highly cooperative and due to their help I learned a great deal about modern banking.

I suggest that such an internship program be highly integrative for the students of business

education so that the students should be imparted with the knowledge of practical world. I do

summarize that it would be a great help to me in the selection of my job or my future field of work.

Here I am putting some suggestions and recomendations, which will in my point of view

enable the bank to compete with other banks more effectively & efficiently.

The BIPL should expand its Branch network throughout Pakistan especially in rural areas

and foreign countries as well.

To attract customers from competitors BIPL must provide some extra facilities and should

diversify itself towards a wider range of products.

Bank can offer special financing schemes for farmers especially in agrarian cities.

Although bank has agency relations with the foreign banks but it should open its own foreign

branches to compete with the competitors.

Enhancing promotional offers is must to stay competitive and to communicate effectively with

its customers.

BIPL should have a Marketing, Human Resource and IT specialist in all its branches.

BIPL should conduct Annual functions for awarding and rewarding its hardworking

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employees for showing extra ordinary performance. This is a great way to motivate others to

work harder. This also motivates employs in a positive manner toward greater performance

and achievements. It is better if the CEO, Board of Directors and senior staff of the bank is

also present at this function to backup and encourage the employs to work even harder.

BIPL Bahawalpur branch is currently doing retail banking only but its time now that it should

start other departments as well, which are not functional as of yet, to capture even more

customers in areas of consumer banking, investment banking, and corporate banking etc. the

reason behind this is that although Bahawalpur Branch started in year 2008 but within these

two years its a profitable branch and the deposits are quite much for a small and non-

industrial city like Bahawalpur.

Lockers facility should be provided to the customers at BIPL Bahawalpur branch.

BIPL Bahawalpur Branch needs to be at the very least refurbished or altogether changed as it

is too small for its current operations. I advise that the vault, a new locker facility and the IT

Room should be in the basement and the ground floor should have proper wating areas and

sitting arrangements.

Bahawalpur Branch of Bank Islami needs to have a proper parking, on urgent basis, for the

customers and the staff.

There is a need of a separate information desk of BIPL in each branch that is essential to

provide complete information about Islamic banking and all the products, services and

facilities provided by the Bank to potential or walk-in customers.

There should be a separate IT specialist in each branch for dealing with IT related issues and

for the proper guidance of staff members for using the softwares like PIBAS and i-Mal.

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Speed of intra-net also needs to be improved so that the employs should take benefit of this

precious resource.

There should be at least one female staff member in the BIPL Bahawalpur branch to deal with

female customers.

It is observed that the employees were overburdened so they have to stay at branch till late at

night. In this way their efficiency is affected and hiring more employees, although seemingly

expensive at the bank‘s part, can reduce their work and result in much more overall profit.

Internship should be started as a systematic regular activity in BIPL Bahawalpur branch and

a proper and sufficient amount of stipend should be paid to the internees to create a positive

and caring image of the bank.

Frequent Training programs should be provided to employees to enhance their skills.

Adequate furniture facility should be maintained within the bank.

Expenditures must be controlled, which are very high especially telephone and electricity

bills.

There should be a research cell in the bank, which should be engaged in gathering the

information about the present actions of its competitors and demands of its customers.

The computer systems in BIPL are very slow and another reason for the slow speed is that the

router was damaged due to pawer fluctuations. The IT expert needs to find a way to speed up

the system speed. Because of slow speed customers have to wait to give their biomatrics and

get their Pay Orders issued.

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Suggestion box should be introduced in the bank. The suggestions of customers and

employees should be welcomed.

There should be a supplies manager hwo should be responsible for providing essential

supplies to the branches within 5 to 7 days of the request made by the branch.

Bank Islami should have a close look on regularity measures of anti-money laundering.

The air conditioning units in the branch are not enough to cool the huge hall in scorching

summer heat. BIPL needs to install another aircondetioning unit in the main hall.

The Internship Incharge should be paid a bonus or incriment for giving traning to the students

so that he should be more motivated to explain everything to the students and one incharge

should not be over burdened by asigning him countless number of internees. One incharge

should only give traning to a maximum of 3 students, traning more then three students makes

the trained too exausted to purform his daily duties and the internees also don‘t get proper

attention.

There must be some visits by the Internship Incharge in the organization during the time of

students‘ internship.

There must be a clear statement obtained from the bank about the activities of the student on

weekly basis.

The institute must provide counselling in making the internship reports.

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Conclusion

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Conclusion

The whole period of my internship at Bank Islami and the preparation of this report have

been really helpful in making me understand Islamic and conventional banking in theory and in

practice and my experiences are so vast that I have no words to express them. Now after completing

this internship report I am confident that I have practically experienced banking and this would

help me a lot in my career. While making this report I got a chance to understand the concepts in

depth and to throw light at the concepts I had not either understood or had forgotten till the end of

my internship. Now after completing this report its time for me to conclude what I have learned

through out.

A bank is a financial institution that accepts deposits and channels those deposits into

lending activities. The Banks primarily provide financial services to customers while the main goal

is enriching investors. Banks are important players in financial markets and offer services such as

investment funds and loans. The first banks were most probably the religious temples of the ancient

world, and were most likely established sometime during the third millennium B.C. After the fall of

Rome, banking was abandoned in western Europe and did not revive until the time of the crusades.

Today banks work in a hybrid fashion providing a variety of services to their customers to yield

heavy profits. ―The days of conventional banking are long gone; it‘s the era of customer oriented

banking.‖, said Mr. Hafiz Aqeel Ahmed (Branch Manager, Bank Islami Bahawalpur Branch).

Islamic banking refers to a system of banking or banking activity that is consistent with the

principles of the Shari'ah and its practical application through the development of Islamic

economics. The principles which emphasize moral and ethical values in all dealings have wide

universal appeal. Shari'ah prohibits the payment or acceptance of interest charges (Riba) for the

lending and accepting of money, as well as carrying out trade and other activities that provide

goods or services considered contrary to its principles.

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Interest free banking is a narrow concept denoting a number of banking instruments or

operations, which avoid interest. Islamic banking, the more general term is expected not only to

avoid interest-based transactions, prohibited in the Islamic Shariah, but also to avoid unethical

practices and participate actively in achieving the goals and objectives of an Islamic economy.

"Those who benefit from interest shall be raised like those who have been driven to madness

by the touch of the Devil; this is because they say: "Trade is like interest" while God has permitted

trade and forbidden interest. Hence those who have received the admonition from their Lord and

desist may keep their previous gains, their case being entrusted to God; but those who revert shall

be the inhabitants of the fire and abide therein for ever." (275)

Islamic Shariah prohibits ‗interest‘ (Riba) but it does not prohibit all gains on capital. It is

only the increase stipulated or sought over the principal of a loan or debt that is prohibited. Islamic

principles requires consideration of capital performance while rewarding the capital. The

prohibition of a risk free return and permission of trading, as enshrined in the Verse 2:275 of the

Holy Quran, makes the financial activities in an Islamic set-up real asset-backed with ability to

cause ‗value addition‘. The forms of businesses allowed by Islam at the time the Holy Quran was

revealed included joint ventures based on sharing of risks & profits and provision of services

through trading, both cash and credit, and leasing activities. In the Verse II:275, Allah Almighty

did not deny the apparent similarity between trade profit in credit sale and Riba in loaning, but

resolutely informed that Allah has permitted trade and prohibited Riba.

Islamic banking system is based on risk-sharing, owning and handling of physical goods,

involvement in the process of trading, leasing and construction contracts using various Islamic

modes of finance. Profit has been recognized as ‗reward‘ for the use of capital and Islam permits

gainful deployment of surplus resources for enhancement of their value. However, along with the

entitlement of profit, the liability of risk of loss on capital rests with the capital itself; no other

factor can be made to bear the burden of the risk of loss. As such, Islamic banks deal with asset

management for the purpose of income generation. They will have to prudently handle the unique

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risks involved in management of assets by adherence to best practices of corporate governance.

Once the banks have stable stream of Halal income, depositors will also receive stable and Halal

income. This is what Bank Islami is doing, rather it is quite sucessfully doing so.

Besides trading, Islam allows leasing of assets and getting rentals against the usufruct taken

by the lessee. All such things/assets corpus of which is not consumed with their use can be leased

out against fixed rentals. The ownership in leased assets remains with the lessor who assumes risks

and gets rewards of his ownership.

The principles of Islamic finance are established in the Qur'an, which Muslims believe are

the exact Words of God as revealed to the Prophet Mohammed. These Islamic principles of finance

can be narrowed down to four individual concepts without even a single one of these principles

financing will no longer be Islamic:

1. Prohibition of Interest or Usury

2. Ethical Standards

3. Moral and Social Values

4. Liability and Business Risk

In order to insure that these principles are followed, each Islamic institution must establish

and provide itself with an advisory council known as a Sharia'a Board. The members of Sharia'a

Boards can include bankers, lawyers or religious scholars as long as they are trained in the Islamic

law, or Sharia'a.

A very common misconception regarding "deposit" is that it is a form of amanah

(security/trust). However, according to Shariah definition, deposit has more resemblance to qard

(loan) than amanah. Deposits cannot be termed amanah, as it does not bear all the features of

amanah, and can be used by the bank for its business or benefit and the bank is liable in case of any

damage or loss to the deposit resulting from circumstances beyond its control. The main intention

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of the depositors is not to put the assets in banks as amanah; rather as qard by having collateral

security by appointing the bank as guarantor.

BankIslami Pakistan Limited (the Bank) was incorporated in Pakistan as a public limited

company on October 18, 2004 under the Companies Ordinance, 1984 to carry out business of an

Islamic Commercial Bank in accordance with the principles of Islamic Shariah. The registered

office of the Bank is situated at 11th Floor, Dolmen City, Marine Drive, Block-4, Clifton, Karachi.

The Bank commenced its operations from April 07, 2006. The shares of the Bank are quoted on the

Karachi Stock Exchange The Bank is operating with one hundred and two branches including thirty

two sub branches (2007: thirty six branches) as at December 31, 2008.

During the year 2008 the Bank has issued right shares representing 207.968 million

ordinary shares. BankIslami Mudaraba Investments Limited (Subsidiary company) The subsidiary

was incorporated in Pakistan on January 22, 1986 under the Companies Ordinance 1984. Later on

it was registered as a Mudaraba Company with the Registrar of Mudaraba Companies and

Mudaraba (Floatation and Control) Ordinance, 1980. The principal activity of the subsidiary is to

float and operate Mudaraba. The subsidiary is managing its Mudaraba with the name of

MODARBA AL-MALI. The principal place of business of the Subsidiary is situated at Tenth Floor,

Progressive Square, Shah rah -e-Faisal, Karachi.

BankIslami is the Joint venture project of 3 groups with 18.75% equity each, namely

Jahangir Siddiqui & Co. Pakistan, DCD Group UK, & Dubai Bank. Irrespective of stiff competition

in the market the Bank has successfully managed to grow over 400% during last one year and all

set to be a 102 Online Branch Network by the year end 2008. BankIslami has become a hallmark of

innovation and bringing new products and services in the market and by introducing the Bio-Metric

ATM facility it became the first bank of the region to offer such services and till date no bank has

been able to replicate this service.

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BankIslami has been able to form a strong image of having authentic basis for its banking

operations by using smart marketing ideas that resonate well with the public mind. For example,

the calligraphy of the bank's name in Urdu is claimed to have been done by the same calligraphers

who have done similar work in the Holy Mosque of Madina in Saudi Arabia. Marketing Department

of the Bank was at the forefront of re-branding exercise and achieving greater standardization

across the network. All branches of BankIslami have the same look and feel irrespective of location.

BankIslami claims in its logo story, ―Do you think Authenticity will ever escape our attention in

whatever we do?‖

The foremost achievement of the Bank during the year 2010 has been its emergence as a

serious Islamic Bank which is increasingly being seen as the most authentic provider of Islamic

Financial Solutions.

Another key achievement of bank Islami was the completion of branch expansion target of

100 branches and sub-branches. Bank Islami actually opened 102 branches and sub-branches

covering 49 cities in all four provinces, Azad Kashmir and Northern Areas. Not only does

BankIslami offer the best coverage compared with any Islamic Bank, but also this is the fastest

expansion achieved by any Bank in Pakistan's Banking industry. Almost all branches are online,

serviced with 24×7 Phone banking and offer the same standard facilities across the network. For

year 2010, BankIslami intends consolidating its network and operations.

On the business, liability side first towards the end of the first quarter last year, it was

decided to focus almost exclusively on the retail segment. As a result, institutional deposits were

shed as and when they matured. This enabled bank management not only to deal with the liquidity

crisis of un-parallel magnitude but also to develop a competitive depository franchise. At the end of

the year 2008 more than 80% of the deposits came from this segment. Bank‘s management

confidence and competitiveness in this segment led management to successfully launch a 10 year

depository product at the peak of the liquidity crisis. In 2009, management intends consolidating

gains in this segment with new saving oriented products of varying tenors.

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Bank Islami core Banking system, iMal, was successfully deployed in the first branch in

November 2008. The core banking module was completed deployment in nine largest branches

towards end of the year2008. Now all the branches of Bank Islami are using iMal successfully.

Deployment of iMal has made BankIslami the only bank in Pakistan to use Banking software that

has been designed for Islamic Banking as well as the bank was the fifth largest net acquirer on the

1 Link ATM network.

Besides Systems and SOPs employees are the major contributor to success or failure of any

organization. BankIslami has greatly emphasized on Islamic banking products to ensure Shari'ah

compliance from their end. Human Resources Department responded well to the challenge of

recruitment for 66 branches. Staff strength rose from 563 as on December 31, 2007 to 1,188 on

December 31, 2008 to 1,471 0n December 31, 2009. In all, 2,500 interviews were conducted and

785 training sessions were held. Online recruitment was launched with success. Staff turnover

remained one of the lowest in the industry at 1.9%.

With a handsome budget allocated for training program and state of the art Training

Centers have been established in Karachi, Lahore and Islamabad, a detailed Training Calender

was prepared to organize the sessions properly and to ensure that every employee gets proper

training. Case study based Method of training was introduced which was found very useful by the

participants. Training manuals for Murabahah, Ijarah and Diminishing Musharakah products were

also developed.

BankIslami was the first Bank that has a full time Shariah Adviser the scope of the Shariah

Department and the first Shariah Audit of the Bank was conducted in year 2008 and it reported that

not even a single deviation was found. The affairs of BIPL have been carried out in accordance

with rules and principles of Shariah, SBP regulations and guidelines related to Shariah compliance

and other rules as well as specific fatwa‘s and rulings issued by Shariah Adviser from time to time.

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Bank Islami‘s areas of working include Retail Banking which offers the customers a range

of saving and investment alternatives to help them grow their money in safe and secure manner;

Consumer Banking which offers the customers superior financing products and quality service to

help them own their home or car for a better quality life; Corporate Banking in which we are the

customer‘s financial partners to help them meet their business needs with timely and cost effective

financial solutions; and Value Added Services that provide state of the art banking services and

channels to help customers access their funds with utmost ease and convenience.

BankIslami, capitalizing on its expanded outreach, experienced substantial growth in

finances in 2008. This enabled BankIslami to register a significant increase in its net interest

revenue. Other operating income witnessed an upsurge on account of higher fee and commission.

Meanwhile, there was a sizeable increase in personnel and other expenses, owing to the ongoing

network expansion. Moreover, BankIslami made a net provision of PKR 130mln, due to sizeable

increase in the classified portfolio. This resulted in doubling the pre-tax loss of the bank. The

performance trend remained the same in 1Q09 with a slight addition in NPLs.

Going forward, BankIslami intends to leverage its expanded outreach to enhance both its

deposit base and finances portfolio. Although the bank has plans to penetrate the retail segment, no

significant lending is expected over the near-term, owing to currently weak credit environment.

BankIslami would continue with its recent strategy of focusing the corporate segment, though

cautiously here as well. The bank, with a view to reduce its cost of funds, plans to focus more on

demand deposits. BankIslami, to augment further its retail franchise, has entered into agreements

with different organizations to launch new products and services. Meanwhile, BankIslami, with

surplus liquidity and support of strong sponsors, eyes acquisition of banks as a strategy to achieve

sizeable growth. These initiatives exhibit clarity of direction but the extent to which they materialize

remains to be seen.

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The target is to take consumer financing, over the medium term, upto 10%-15% of the total

advances. With expansion in outreach, the bank intends to rationalize its deposit mix by substituting

a portion of term deposits with current deposits. Nevertheless, deployment of excess liquidity would

remain a challenge in the absence of an active Shariah compliant money market. Earnings from

investment banking business are expected to grow significantly.

The deal pipeline is currently healthy. Meanwhile, BIPL plans to lay down requisite

infrastructure for offering wealth management services, going forward. BankIslami, due to initial

stage of operations, maintains ample liquidity and has a very low deposit concentration, which

clearly stands out among close peers. The bank‘s investment portfolio is modest in size (end-08:

PKR 207mln) – mainly dominated by strategic investment (PKR 191mln). The bank recently

expanded its exposure to the sukuk market. There is a revaluation surplus, though slight, available

on this investment (PKR 16 mln).

BankIslami, mainly due to un-utilized resources, has a relatively high level of capitalization

(CAR), which offers significant room for credit expansion. However, with restricted internal

generation, the bank would remain dependent on its sponsors meeting

BIPL perceives the management of risk not to be limited to a department or a function, but

rather should read into our daily business routine. Ideas and decisions are heavily based on the

risk/ reward trade-off some of the ideas which never see the light of the day are usually the ones

which have been shelved due to an unacceptable risk level. The risks when identified and analyzed

are further weighed against the applicable risk weights and its impact reviewed on a periodic basis.

This pro-active approach helps in outlining the organization‘s risk tolerance level vis-a-vis BIPL's

risk appetite in relation to its size, current position and market standing, with a view to refine

processes, controls and guidelines to not only mitigate, but also to effectively manage risk.

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A well formulated policy and procedure is critical for an effective risk management

framework; it than needs to be reinforced through a strong control culture that promotes sound risk

governance. Our Risk Management Framework has been developed keeping in mind 3 things 1) To

be effective, strong monitoring and control activities should be integral to the Bank; 2) Critical

Decision Making should be based on relevant research, proper analysis and effective

communication within the Bank; and 3) Every loss or near miss event should provide some KLO

(Key Learning Outcome), developing a better risk analysis ability.

At strategic level, the risk related functions are approved by the senior management and the

Board. These include; defining risks, setting parameters, ascertaining institutions risk appetite,

formulating strategy and policies for managing risks and establishing adequate systems and

controls to ensure that overall risk remains within acceptable level and the reward compensates'

for the risk taken.

It encompasses risk management within a business area or across business lines. Generally

the risk management activities performed by middle management or units devoted to risk reviews

fall into this category. Periodical sensitivity / scenario analysis, stress testing is performed, to

review sensitivity and resilience of the portfolio.

Risk management at micro level, is of critical importance. This function if performed with

diligence and understanding, can be of maximum benefit to the organization. Micro level risk

management includes the business line acquisition, strong adherence to the credit and other related

criteria.

BIPL‘s objectives for a sound capital management are: 1) to ensure that the Group

complies with the regulatory Minimum Capital Requirement (MCR) 2) maintain a strong credit

rating 3) maintain healthy capital ratios to support business and to maximize shareholder value

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and 4) to operate with a Revolving Planning Horizon and be able to take advantage of new

investment opportunities when they appear.

The State Bank of Pakistan through its BSD Circular No.07 dated April 15, 2009 requires

the minimum paid up capital (free of losses) for Banks / Development Finance Institutions to be

raised to Rs.10 billion by the year ending December 31, 2013. The raise is to be achieved in a

phased manner requiring Rs.6 billion paid up capital (free of losses) by the end of the financial

year 2009.

The paid up capital of the Bank (free of losses) as of December 31, 2009 amounts to Rs

4.706 billion. However, the Bank had been granted an exemption till March 31, 2010 to meet the

Minimum Capital Requirement by the SBP, vide its letter BSD/BAI-3/608/191/2010 dated March 3,

2010. The Board of Directors, in order to comply with the enhanced capital requirement, is

considering various options including but not limited to issue of right shares and acquisition

options. In this connection, the Bank has already made an announcement to Karachi Stock

Exchange about its decision to enter into a Memorandum of Understanding (MoU) with another

Islamic Commercial Bank in relation to its merger/acquisition into/by the Bank. The Board is

confident that it will meet the Minimum Capital Requirement within the stipulated time.

In addition, the Group was also required to maintain a minimum Capital Adequacy Ratio

(CAR) of 10% of the risk weighted exposure of the Group. The Group CAR as at December 31,

2009 was 20.87% of its risk weighted exposures.

The requirements of the Code of Corporate Governance set out by the Karachi Stock

Exchange in its listing regulation relevant for the year ended 31st December 2009 have been

adopted by the Bank and have been duly complied with. A statement to this effect is annexed with

the report.

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The Bank has been assigned a long term entity rating of 'A' and short term rating of 'A 1' by

Pakistan Credit Rating Agency Limited (PACRA), reflecting BankIslami well conceived business

strategy and establishment of an effective operating platform to execute the business strategy.

During the year under review efforts have been made for an effective and efficient internal

control system. In accordance with SBP-BSD Circular No. 7 of 2004, the Bank formulated all the

key policies and procedures for its different lines of business. While formulating such policies clear

line of authority and responsibility have been established in order to ensure an effective internal

control system. The Bank has established an audit function independent of line management. The

control activities are being closely monitored across the Bank through audit group / compliance &

control, which covers all banking activities in general and key risk areas in particular. The Audit

Committee of the Board reviews the audit function quarterly which includes program as well as

surprise audits.

Internal control system in the Bank is designed to manage, rather than to eliminate the risk

of failure to achieve the business objective, and can only provide reasonable and not absolute

assurance against material misstatement or loss. However, it is an on going process that includes

identification, evaluation and management of significant risks faced by the Bank.

The vision of Islamic bank is to be recognized as the leading authentic Islamic bank the

Mission of BankIslami is to create value for Stakeholders by offering Authentic, Shariah Compliant

and technologically advanced product and services. With a diversified portfolio of Shariah

compliant products and state-of-the art technology, bank Islami offers the most comprehensive and

authentic Islamic banking solutions. With a network of 102 online branches in 49 cities and such as

Biometric Atm, internet banking, 24/7 phone banking, interbank funds transfer, Deposit ATMs and

estatement, Bank Islami is truly serving its customers in the right way. The products offered by bank

Islami are following Islami Auto Ijarah, Islamic current account, Islami Mahana Munafa account,

Islami Amdani certificate, Ijarah, Musharakah Financing, MUSKUN-Home financing, Islami

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Bachat Account, Murabahah Financing, Islamic Export re-finance, Istisna Financing, Deminishing

Musharkah Financing. And value added services of bank Islami are 24 hours call center, free ATM,

free online, free internet banking, free eStatement, and intra bank transfer.

Due to a heavy expansion last year, the full cost impact of which came this year, BIPL is

reporting a loss of Rs. 563M before tax and Earning Per Share stood (0.91). This is approximately

Rs. 250M more than what we had budgeted. Due to economic in-stability, we preferred to conserve

the liquidity. At the same time, private corporate credit off take was slow there by drying up

appetite for quality credit. While our closing ADR is still less than 50%, going forward the signs

are very positive. Almost 30% growth came in the last quarter only.

The success story of the year was the growth in deposits, which came almost entirely from

retail segment. BIPL is one of the few banks in Pakistan which has a genuine deposit franchise.

Instead of targeting large, rate sensitive accounts, BIPL as strategy focused on retail customer

which are stable, less rate sensitive and loyal. Current and Saving Accounts recorded impressive

growth. Even growth in Fixed Deposits was propelled by our five and ten depository products

which now accounts for 21% of the deposit base. Despite of 124% increase in deposits, cost of

funds actually declined. BIPL will continue to follow the same strategy – strong focus on retail

deposits, a further 5% to 10% reduction in cost of fund coupled with at least 50% increase in the

deposit base.

Our technology infra-structure was further strengthened during the year with full

deployment of state of art sharia compliant core banking system, iMal. We remain the largest user

of Linux in Pakistan which has helped us to have a stable, cost effective platform compared to our

peers. Our market share in ATM transactions has improved to 11th position amongst 1-LINK

members. We are aiming to complete deployment of the next phases of iMal during 2010. BIPL also

continued with focus marketing initiatives. Our greatest asset today is probably our brand name

'BankIslami'. Going forward, we plan to maintain presence in selected media segments.

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As discussed earlier, the reason for our losses this year is non-absorption of operating costs

due to lower asset volumes. Besides that, BIPL has all the right straits which a successful bank may

wish to have. Our net-work is large and well spread out, deposit base is stable and cost effective,

intermediation cost is within the top quartile in the industry, NPLs are low and that too contained

and technology base is one of the best. With improving asset deployment, BankIslami achieved

operating break from December. On full year basis, we will inshallah report a profit starting from

first quarter. No large expansion in net-work is envisaged this year.

The departments that are currently in practice in Bahawalpur branch are Cash Department

and Operations department that includes the Account opening department, remittance department,

clearing department, accounts department, foreign exchange department.

The department that is responsible for opening and closing an account assumes immense

significance and holds a central place in the basic banking operationsThis department is the best

way to start with the banking career or training. This is because the ways you deal with the

customers give a lot exposure to you for the coming days in banking because the bankers are

always in contact with customers as customers are the biggest source of assets for the bank. I really

enjoyed my stay at this department as I got to interact with the customers directly for the first time.

The banking history is full of various examples of fraud largely due to incorrect opening of

accounts. These frauds could have been avoided if the branch mangers and other designated

officers had taken due care and exercised precautions at the time of opening of accounts. As the

branch manager once said ―fraud starts when an account is opened‖. If you do not guess the right

monthly and yearly turnover of the customer‘s account then this may lead to a fraud or money

londering. Banks today are more careful about money londering then anything ever before. Money

londering is the same like normal londering in which dirty clotes go into a londery and are cleaned

the same way illigal or black money goes into the bank as a big laundry machine and then comes

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out clean. If someone is depositing more then the expected monthly deposit then we have to cunfurm

to the head office about where the money came from.

Bank Islami provides its customers with four types of accounts 1) Islami Current Account,

2) Islami Foreign Currency Account, 3) Islami Bachat Account and 4) Islami Dollar Bachat

Account; and two types of Term Deposit Recipt (TDR) Certificates 1) Islami Mahana Munafa

Account, and 2) Islami Amadni Certificatewith a bonus of a lot of our Value Added Services i.e.

Online Banking, Inter Bank Fund Transfer, Internet Banking, ATM/Debit Card, Biometric ATM,

24/7 Phone Banking, e-Statement, Self Service Phone Banking and Lockers.

Cash department is the major point of contact among the customer and the bank. All cash

dealings are done through the cash department and the officer in this department is called ―teller‖.

His main responsibility is to deal with the cash payment and receipts.

Clearing department is the way through which Bank Islami clears cheque of other banks

and clears the cheques of its own bank from other banks. Every bank acts in two ways i.e. Paying

bank and collecting bank. A large part of this work is carried out through the bankers clearing

house wherever it is established.

Remittance department transfer funds from one place to another. This department performs

the function of transfer of money. The need of remittances is commonly felt in today‘s business.

Bank Islami is one of the leading banks of the world and it is completely dependent on the

use of technology i.e. it is doing the paperless banking. Information Technology Department (ITD)

is responsible for management and support of the technology architecture, hardware, software, and

the respective resources throughout the country. The IT department of Bank Islami is one of the

most sensitive departments as the working of the bank is completely dependent on the computer

based and the web based technology and any problem at any part can negatively impact the whole

working of the bank. Thus, great care is taken in the management of IT Department.

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The SWOT analysis of the bank shows that the bank has a lot of strengths to maintain and a

large no of opportunities which it must grasp. If the management focusses on my suggestions then it

can easily grasp opportunities leaving behind the threats and it can reduce its weekneces to a

minimum as well by concedering my suggestions.

Through out the Financial Analysis I noted that the bank is performing very well as

compared to other bbanks although its performance has declined due to the expention of the branch

network but it is recharging its batries once again to surprise all with another bold decesion. In my

openion the overall financial posetion of the bank is quite strong.

The aforementioned discussion renders obvious that Bank Islami is a force to reckon with in

the Industry. It shows all potential to continue its growth and expand its roots. It is definitely

bringing some genious and generic solutions which can add more variety to the existing financial

network. This emerging bank on the contrary is a sure shot going in giving a tough time to its

competitors.

To my internship experience I would like to say that this internship experience at the Bank

Islami was a unique and life changing one. It has taught me a lot about banking and life itself. The

auditors‘ visit proved as a bonus for my internship. I learned a lot of things about banking

throughout my internship. I also learned how to deal with customers. I have gained in-depth insight

into the banking operations of an Islamic bank.. My experience so far has been fabulous and I hope

what so ever I have learned helps me to develop my career in future. I also wish to serve my country

the Right way!

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To put it in a nutshell I would not like to miss an opportunity here without stating that the

overall analysis of Bank Islami establishes clearly that bank Islami is performing at a more than

satisfactory level. It is one of the best modern banks in the country and can be of the world even if

taken to such heights of operations, because it is providing Shariah based products – a rare mix in

the banking sector, and modern facilities that use the latest technology in the banking sector like its

I-Mall and PIBAS. Bank Islami is also constantly bringing forth innovative differentiated products

to become highly competitive with its competitors. The customers are increasing day by day and the

overall deposits of the bank are at an unbelievable increasing rate and the bank is robustly moving

towards growth. Equity base of the bank is also increasing and total assets of the bank are also

increasing. By the end of 2009 its assets were worth a phenomenal Rs. 34,286.77 Millions as for a

private bank. Its human resource department is in full bloom too. The year 2010 will undoubtedly

offer an increased competition in the secured assets business as more Islamic banks emerge in the

market. But being the pioneer in its product base and with its well thought strategies and product

development initiatives, Bank Islami is at a whole new level to be competing with. The bank enjoys

an excellent repute in the market as well, when people tend to be hurt by the slightest of bad trust.

Overall the bank is doing good business which shows all is well for now, but there are few

problems for which I have tried suggest some points that in my humble view might help improve the

company from the inevitable short falls. I wish a prosperous and succesful future to Bank Islami

Pakistan Limited.

I can find no better words to sum-up and conclude Bank Islami in a few words then

“Serving you, the Right way!”