Islamic Finance

ASSIGNMENT
Bank Manager interview

Submitted to
Prof Asim Faheem

Submitted by
Ali Murtaza L1f12BBAM0445
Zeeshan Khalid L1F12BBAM2011

Person Interviewed
Mr. Mansoor Ahmad
Branch Manager
Askari Islamic bank, Johar town Lahore

1. Current account in Conventional and Islamic banking:

Conventional banking:
In conventional banking the current account holder deposits money in bank but bank is
not paying him any profit. But bank do use account holders money for profit making activities.
In current account all services are provided free of cost.

Islamic Banking:
In early Islamic banking money from current account holder is taken as ammanat . And
owner can demand it back at any time he wants. But in Islamic point of view you have to return
the same thing which was given as ammanat. For example account holder deposits $1000 in bank
in form of 10 currency notes of $100. When he demands his $1000 bank is liable to pay him
$1000 in form of $100 notes. But $100 should be same that account holder deposits i.e. same
number should be written on them.
To overcome this problem Islamic scholar suggested new way, which is Qarz.
ammanat was changed by Qarz. When someone gives you qarz you can use that qarz for
purpose of profit making and you are not liable to return same thing on demand.
In Islamic banking free services are not allowed due to some Islamic laws but bank provide
its customer with free services, the reason is competition. Services are provided as gift.

2. Type of agreements:
There are two main types of agreements.
1: liability agreement
2: asset agreement
These two have further types.

1: liability agreement

1. Mudarba
2. Musharka
3. Qarz

2: Asset agreement
1.
2.
3.
4.
5.
6.

Murabaha
Musarmah
Ijarah
Salm
Istasha
Diminishing musharka

4. Where is money used?

Money is mostly invested in real estate properties to earn profit. They mostly buy houses
buildings and other commercial ad non-commercial properties. These properties were rented out
to earn revenue. Car loan systems were also provided. They can invest in market were Islam
allows them. They cannot invest in such things that involve gambling, riba, gharar or maysur.
5.

Distribution o profit and loss:

There are two ways of distributing profit.

1. Mudarbah
2. Musharka

1: Mudarbah
In mudarbah there are two parties one is Rab-ul-maal and other one is manager. Rab-ulmaal is one with capital or one who is willing to invest capital. Manager takes care of investment
and runs business. In Islamic banking system Rab-ul-maal share cannot exceed 90% and bank

has to invest 10% in it as a manager. Profit ratio is decided between them before generation of
income.

2: Musharka:
It is basically working capital contribution. In other word you can name it as a partnership. Some
partner take part actively in running business and some are sleepy partners.
In this a sleepy partner cannot get profit share more than his capital share however it can be
reduced if active partners negotiate with him.
Restricted and unrestricted investments:
These things are not applicable in current accounts but are applicable on saving accounts of
Islamic banks.
In saving accounts profit and loss of the business were shared. And money is taken under
Mudarbah. When account is opened bank provide an account holder with list of thing where they
are going to invest account holders money. All these ways were defined by Islamic laws. They
can invest in all things except such things where these items were found.
1.
2.
3.
4.
5.
6.

Gambling
Haram (alcohol etc)
Weapons
Riba
Gharar
Maysur.