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ESSENTIALS OF ISLAMIC FINANCE

PROJECT REPORT ON

ISLAMIC BANKING VS CONVENTIONAL BANKING

(COMPARING MEEZAN BANK AND FAYSAL BANK)

SUBMITTED TO:
SIR SHAIKH NOMAN
SUBMITTED BY:
MUHAMMAD ARSAL KHAN
FIRDOUS SAEED
MADIHA AYUB
SADIA RAHAT
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INTRODUCTION
Economic performance in any country is dependent upon its financial sector. The
role of banking sector is important in channeling public savings into productive
investments which lead to economic growth. In Pakistan banking sector
comprises of both Islamic and conventional banks. Conventional banking is based
on interest and is against Islamic principles and therefore is prohibited. Islamic
banks, on the other hand, are Shariah compliant and operate according to Islamic
laws.

Islamic banks differ both in their assets and liabilities from their conventional
counterparts. On liabilities side Islamic banks accept deposits on the basis of
current and savings accounts. Current accounts are based on Islamic contract of
Qarz-e-Hasana and savings accounts are opened on the basis of Mudarbara and
Musharika. On assets side Islamic banks offer three types of Islamic modes of
finance. Firstly, sale based modes i.e., Murabaha, Salam and Istisna. Secondly
Islamic banks offer participatory modes, Musharika, Mudarbaha, and Diminishing
Musharika. Thirdly, Islamic banks offer Islamic leasing mode i.e., Ijarah. Islamic
asset products are different from conventional debt based products.

ISLAMIC BANKS CONVENTIONAL BANKS

OPERATING IN PAKISTAN OPERATING IN PAKISTAN
1. Meezan Bank Limited 1. Askari Bank
2. Dubai Islamic Bank 2. Allied Bank Limited
3. Al Baraka Bank 3. MCB Bank Limited
4. Bank Alfalah Islamic 4. Bank Alfalah
5. BankIslami Pakistan Limited 5. Bank Al Habib
6. Askari Bank Ltd 6. Faysal Bank
7. MCB Islamic Baking 7. HBL Pakistan
8. UBL Islamic Banking 8. Habib Metropolitan Bank
9. HBL Islamic Banking 9. JS Bank
10.National Bank of Pakistan 10.NIB Bank
11.Bank Al Habib Islamic Banking 11.Samba Bank Limited
12.Emirates Global Islamic Bank Limited 12.Silkbank Limited
13.Allied Bank Islamic Banking 13.Standard Chartered Pakistan
14.Soneri Bank
15.Summit Bank
16.United Bank Limited
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DIFFERENTIATING ISLAMIC BANKING AND

CONVENTIONAL BANKING
The main difference between Islamic and conventional banking is that Islamic
teaching says that money itself has no intrinsic value, and forbids people from
profiting by lending it, without accepting a level of risk – in other words, interest
(known as "riba") cannot be charged.

To make money from money is prohibited – wealth can only be generated

through legitimate trade and investment. Any gain relating to this trading is
shared between the person providing the capital and the person providing the
expertise. There are two major differences between Islamic Banking and
conventional banking:

1. Conventional banking practices are concerned with "elimination of risk" where

as Islamic banks "bear the risk" when involve in any transaction.
2. When Interest based banks involve in transaction with consumer they do not
take the liability only get the benefit from consumer in form of interest
whereas Islamic banks bear all the liability when involve in transaction with
consumer. Getting out any benefit without bearing its liability is declared
Haram in Islam.
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CONVENTIONAL BANKING ISLAMIC BANKING

Money is a commodity besides medium Money is not a commodity though it is
of exchange and store of value. used as a medium of exchange and
Therefore, it can be sold at a price store of value. Therefore, it cannot be
higher than its face value and it can also sold at a price higher than its face value
be rented out. or rented out.
Time value is the basis for charging Profit on trade of goods or charging on
interest on capital. providing service is the basis for earning
profit.
Interest is charged even in case the Islamic bank operates on the basis of
organization suffers losses. Therefore, it profit and loss sharing. In case, the
is not based on profit and loss sharing. businessman has suffered losses, the
bank will share these losses based on
the mode of finance used (Mudarabah,
Musharakah).
While disbursing cash finance, running The execution of agreements for the
finance or working capital finance, no exchange of goods & services is a must,
agreement for exchange of goods & while disbursing funds under
services is made. Murabaha, Salam & Istisna contracts.
Conventional banks use money as a Islamic banking tends to create link
commodity which leads to inflation. with the real sectors of the economic
system by using trade related activities.
Since, the money is linked with the real
assets therefore it contributes directly
in the economic development.

HISTORY OF BANKING IN PAKISTAN:

At the time of independence, there were 487 offices of scheduled banks in the
territories now constituting Pakistan. Following the announcement of
independence plan in June 1947, the Hindus residing in the territories now
comprising Pakistan started transferring their registered offices in Pakistan,
transferred them to India in order to bring a collapse of the new state. By 30th
June 1948, the number of offices of scheduled banks in Pakistan declined from
487 to only 195.
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PERFORMANCE OF ISLAMIC AND CONVENTIONAL

BANKS IN PAKISTAN
In Pakistan Islamic banking started in year 2002 and as of December 2015 there
are 6 full-fledged Islamic banks operating in Pakistan. Most of the conventional
banks are also running Islamic banking parallel to their conventional banking
business. Islamic banking in Pakistan is growing and currently share of Islamic
banking industry stood at 11.4% of overall banking industry as on December 2015.
Total Islamic banking branch network comprises of 2.075 branches as on
December 2015 across the country where almost half of the branches are
operating in Punjab province.

Islamic banking having distinct modes of operations as compared to conventional

banks has been started in the 1970s to address the problem of Riba. The
committed and resourceful individuals, professional bankers, Islamic economists
and religious scholars are attributed to be pioneer of Islamic banking. Its
philosophies and principles are, however, not new having been outlined in the
Holy Qur'an and the Sunnah of Prophet Muhammad (p.b.u.h.) more than 1,400
years ago. The emergence of Islamic banking is often related to the revival of
Islamic financial system which is totally usury (Riba) free. There was no initial
working model to act upon, except the thought that interest-based banking might
be replaced by banking on the basis of profit-and-loss sharing. The basic purpose
of Riba-free financial system was the elimination of all interest based
transactions. Effort for the establishment of this system took place when the
financial system at large, as also the regulatory environment, was Riba-based. At
the start Riba free financial institute were established through private parties but
soon things began to change in the late seventies and in the early eighties when
Iran, Sudan, Pakistan and Malaysia realized the need to develop Riba-free
financial system in all these countries (Ahmad, 1991).

Islamic banking started with the establishment of two financial institutions in Mit-
Ghamr in the Nile Delta and in Karachi from 1963-1967. The progress was made in
this movement by the establishment of full- fledged Islamic bank with the name
of Dubai Islamic Bank in 1965. By the end of 1996, the number of Islamic financial
institutions reached to 166 in at least 34 Muslim and non-Muslim countries.
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Islamic banking got popularity in 1970s (Chapra, 2001). Now, Islamic banks are
operating in more than sixty countries (Aggarwal and Yousaf , 2000).

There are more than 300 Islamic financial institutions all over the world with
investment funds in excess of $400 billion (El-Qorchi, 2005).The Islamic banking
industry's world-wide annual growth rate is more than 16%. Islamic banking has
also gained approval by international financial institutions (IFI), professional
bankers and the academic world. Islamic banking has successfully established its
identity and performing its operations distinct from its conventional counterparts.
Islamic banking in the modern world, generally aims to promote and develop the
application of Islamic principles, law and traditions to transactions of financial,
banking and related business affairs. Islamic banks, by doing so, will safeguard the
Islamic communities and societies from activities that are forbidden in Islam
(Tahir, 2003).

Pakistan is an ideological state and was created in the name of Islam in 1947. The
Islamic banking is getting popularity in the country. Many efforts are being made
to make it workable and successful in the era of conventional banking. The State
Bank of Pakistan (SBP) had initiated the process of converting the conventional
banking system into Islamic Banking. SBP developed a Three-step strategy to fulfill
this purpose. The first step is to Setup exclusive Islamic banks. In the second step
existing conventional banks is permitted to have Islamic Banking subsidiaries.
Third step of this strategy is the establishment of stand alone branches by existing
commercial banks. The State Bank also appointed Shariah Board to regulate and
approve guidelines for the emerging Islamic Banking industry. Being a Muslim
country there is huge scope for Islamic and Modaraba Banking system in the
country. The country's first full-fledged Islamic Bank, which is Meezan Bank
licensed by SBP in 2002, is a successful business enterprise and a premier one. It
has been very careful in its expansion drive. National Bank of Pakistan has started
Mudaraba banking and trying its level best to enhance its profitability and
accommodate the general masses. Muslim Commercial Bank (MCB), Faysal Bank
and Al-Meezan banks are also in the Islamic banking field. Pak-Kuwait Investment
Company Limited, which is one of the country's premiere joint venture financial
institutions, is launching the first ever Islamic Insurance Company in Pakistan.
There is huge market of Islamic banking i.e. $2.5 to 3 billion in the country (Khan,
2004).
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Presently, there are six full-fledged Islamic banks operating in Pakistan. These
banks with their year of incorporation are:

1. AlBaraka Islamic Bank Pakistan (1991)

2. Meezan Bank Limited (2002 – restructured as Islamic bank)
3. BankIslami Pakistan Limited (2003)
4. Dubai Islamic Bank Pakistan Limited (2005)
5. Emirates Global Islamic Bank Limited (2007)
6. Dawood Islamic Bank Limited (2007)

FULL FLEDGED ISLAMIC BANKS IN PAKISTAN

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HISTORY AND BACKGROUND OF FAYSAL BANK:

Faysal Bank started operations in Pakistan in 1987, first as a branch set-up of
Faysal Islamic Bank of Bahrain and then in 1995 as a locally incorporate Pakistani
bank under the present name of Faysal Bank Limited. On January 1, 2002, Al
Faysal Investment Bank Limited, another group entity in Pakistan, merged into
Faysal Bank Limited which resulted in a larger, stronger and much more versatile
institution. In fact it has the highest share capital amongst private banks in
Pakistan and is amongst the largest in terms of equity.

Faysal Bank Limited has been duly licensed as a Commercial Bank by the State
Bank of Pakistan (SBP). Barkat, the dedicated Islamic Banking division of Faysal
Bank has also been provided the license to operate as a standalone division
having separate Islamic operations from conventional. It carries on banking
business activities in line with the Banking Companies Ordinance, 1962.

OUR VISION
Excellence in all that we do

OUR MISSION
Achieve leadership in providing financial services in chosen markets through
innovation.

OUR VALUES
Our daily code of conduct is exemplified by eight core values:
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT

DECEMBER 31, 2016
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History and Background of Meezan Bank:

Meezan Bank, Pakistan’s first and largest Islamic bank, is a publicly listed company
with a paid-up capital of Rs. 10 billion. It is one of the fastest growing financial
institutions in the banking sector of the country. With its Vision of establishing
‘Islamic banking as banking of first choice ...’ – the Bank commenced operations in
2002, after being issued the first-ever Islamic commercial banking licence by the
State Bank of Pakistan.

The Bank provides a comprehensive range of Islamic banking products and

services through a retail banking network of more than 570 branches in more
than 140 cities of the country. Backed by a state-of-the art T-24 core banking
system, the branch network is supported by 24/7 banking services that include
over 570 ATMs, VISA and MasterCard Debit cards, a Call Center, Internet Banking,
Mobile Application and SMS Banking facility.

The Bank operates strictly under the principles of Islamic Shariah and is well-
recognized for its product development capability, Islamic banking research and
advisory services. In order to ensure strict Shariah-compliance in all its products
and services, the Bank has established a dedicated Product Development and
Shariah Compliance department that operates under the supervision of the
Bank’s in-house Resident Shariah Board Member and a Shariah Supervisory Board
comprising of internationally renowned Shariah scholars.

Meezan Bank has consistently been recognized as the Best Islamic Bank in
Pakistan by numerous local and international institutions, which is a testimony of
the Bank’s commitment to excellence. These institutions include Islamic Finance
News - Malaysia, Global Finance magazine - New York, Asset AAA - Hong Kong,
 Page 12 of 22

Asiamoney – Hong Kong, The Banker – United Kingdom, South Asian Federation of
Accountants, Islamic Finance Forum of South Asian Awards, Pakistan Banking
Awards – Dawn & IBP Pakistan, Employers Federation of Pakistan and CFA
Association - Pakistan.

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

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

OUR VALUES
Shariah-compliance, Integrity, Professionalism, Innovation, Service Excellence,
Social Responsibility. Staff that is committed, motivated and professionally
trained and who are empathic to their customers’ needs.

TIMELINE

 1991: Procedure adopted by banks in 1985 was declared un-Islamic by the

Federal Shariat Court (FSC). The Government and some banks/DFIs made
appeals to the Shariat Appellate Bench (SAB) of the Supreme Court of
Pakistan.
 1997: Al-Meezan Investment Bank is established with a mandate to pursue
Islamic Banking. Mr. Irfan Siddiqui appointed as first and founding Chief
Executive Officer.
 1999: The Shariat Appellate Bench of the Supreme Court of Pakistan rejects
the appeals and directs all laws on interest banking to cease. The government
sets up a high level commission, task forces and committees to institute and
promote Islamic banking on parallel basis with conventional system.
 2001: The Shariah Supervisory Board is established at Al-Meezan Investment
Bank led by Justice (Retd.) Muhammad Taqi Usmani as Chairman. State Bank
of Pakistan sets criteria for establishment of Islamic commercial banks in
private sector and subsidiaries and stand-alone branches by existing
commercial banks to conduct Islamic banking in the country.
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 2002: Meezan Bank acquires the Pakistan operations of Societe Generale and
concurrently Al Meezan Investment Bank converts itself into a full-fledged
Islamic commercial bank. The first Islamic banking license is issued to the Bank
and it is renamed Meezan Bank.
 2003: Meezan Bank establishes itself as the pioneer of Islamic Banking in
Pakistan and quickly establishes branches in all major cities of the country. A
wide range of products are developed and launched. Al Meezan Investment
Management Limited (AMIM), the asset management arm of Meezan Bank,
introduces Meezan Islamic Fund (MIF), the country’s first open-end Islamic
Mutual Fund.
 2004: The State Bank establishes a dedicated Islamic Banking Department
(IBD) by merging the Islamic Economics Division of the Research Department
with the Islamic Banking Division of the Banking Policy Department. A Shariah
Board has been appointed to regulate and approve guidelines for the
emerging Islamic Banking industry. The Government of Pakistan awards the
mandate for debut of international Sukuk (Bond) offering for USD 500 million.
The offering is a success and establishes a benchmark for Pakistan. Meezan
Bank acts as the Shariah Structuring Advisor for this transaction.
 2006: 62 branches in 21 cities
 2007: Bank’s branch network reached the milestone number of 100 branches.
The Bank introduced Istisna' financing to cater to the working capital needs of
customers.
 2008: Meezan Bank introduced Tijarah financing to allow customers to raise
funds for financing of stocks of finished goods.
 2009: The branch network reached 201 branches (including sub-branches) in
54 cities nationwide.
 2010: The Bank developed Meezan Business Plus, a Mudaraba-based account
that offers an array of free services for businesses, Meezan Euro Savings
Account and Meezan Pound Savings Account. Bank’s branch network reached
222 branches in 63 cities across Pakistan.
 2011: The inauguration of the new Head office in Karachi. During the year, 53
branches were opened to reach a landmark of 275 branches in 83 cities across
Pakistan.
 2013: Over 350 branches in over 100 cities
On 18 October 2014, the Bank acquired the HSBC Pakistan operations. After
conversion of the business and branches of HSBC Pakistan to Meezan Bank; the
HSBC Pakistan Accounts and Term Deposit Receipts (TDRs) converted to Meezan
Bank accounts and Certificates of Islamic Investments (COIIs).
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT

DECEMBER 31, 2016
 Page 15 of 22

Meezan Bank Products Faysal Bank Products

Current Account: Current Account:
Riba Free - Current Account Faysal Sahulat

Saving Account: Saving Account:

Riba Free - Rupee Saving Account Faysal Savings Account
Riba Free - Dollar Saving Account FCY Saving Plus
Meezan Bachat Account Faysal Mahfooz Sarmaya
Meezan Business Plus Account Faysal Premium
Karobari Munafa Account Faysal Moavin
Labbaik Saving Aasaan Faysal Market Link
Rozana Munafa Plus Account
Consumer Financing:
Car Ijarah - Islamic Auto Finance Consumer Financing:
Easy Home – Islamic Housing finance Faysal Car Finance
Faysal Home Finance
Key Features of Meezan Faysal Personal Finance
current A/c Products: Faysal Khushaal Kisan Scheme
1. Free access to account through
online banking at all Meezan Bank KeyFeatures of Faysal Current
branches countrywide. A/c Products:
2. Unlimited transaction facilities. 1. Free access to account through
3. On maintaining a monthly average online banking at all Faysal Bank
balance of Rs. 1000,000 or more branches countrywide.
following additional facilities are 2. Unlimited transaction facilities.
provided, free of cost: 3. On maintaining a monthly average
 Cheque Book balance of Rs. 500,000 or more
 Pay orders following additional facilities are
Visa ATM/Debit Card provided, free of cost:
 Cheque Book
Rupee saving Account (Riba  Pay orders
Free): Visa ATM/Debit Card
With a minimum of only PKR 10,000
The Rupee Saving Account can be Faysal Savings Account:
opened under Musharakah Agreement. Faysal Savings is specially designed to
The profit earned is calculated every cater to the need of those who like to
month. And if the client maintains a earn on their hard earned savings. This
monthly balance of PKR 10,000 the account provides convenience for the
client is eligible for the profits that will account holders. Account can be

be disbursed every month.
Rupee saving Account (Riba
Free):
With a minimum of only PKR 10,000
The Rupee Saving Account can be
opened under Musharakah Agreement.
The profit earned is calculated every
month. And if the client maintains a
monthly balance of PKR 10,000 the
client is eligible for the profits that will
be disbursed every month.
Meezan Bachat Account (Riba-
Free):
Meezan Bachat Account is a unique
saving account that provides high
monthly returns with the flexibility to
withdraw savings if needed. Account
Holders receive profit even if their
balance falls below Rs. 25,000/- in any
month. Profit is credited to their
account every month and is calculated
with reference to the minimum balance
maintained in the account during the
preceding month. The Riba-Free
Meezan Bachat Account works under
the principles of Mudarabah. Maximum
balance limit for getting highest profit
rate is Rs. 1,000,000/-
Meezan Business Plus:
Meezan Business Plus is a Mudarabah-
based account that allows customers to
conduct their banking transactions
while availing a wide range of free
services and therefore provides the
ideal blend of convenience & flexibility
that you deserve in Islamic banking.
Minimum investment required to open
Faysal Moavin Savings
an account is Rs. 100,000/- There is no
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opened with an initial deposit of Rs.
10,000/. Profit is calculated on monthly
minimum balance. Profit is paid on six
monthly bases
Faysal Savings Account:
Faysal Savings is specially designed to
cater to the need of those who like to
earn on their hard earned savings. This
account provides convenience for the
account holders. Account can be
opened with an initial deposit of Rs.
10,000/. Profit is calculated on monthly
minimum balance. Profit is paid on six
monthly bases
Rozana Munafa Plus:
Rozana Munafa Plus is a savings
account in which profit (Interest) is
calculated on day end balance, and is
disbursed on a monthly basis. The
customer gets benefited because it
provides customer with the option of a
high value monthly profit (Interest)
account. Account opening and
minimum balance requirement of Rs.
100,000 for individual customers and
Rs. 500,000 for corporate customers.
Faysal Premium:
Faysal Premium is a savings account
specially designed for high value
deposits with attractive profit rates.
Account can be opened with an initial
deposit of Rs. 5 million. Profit is
calculated on daily balance basis. Profit
is paid on monthly basis. Access to
account through on-line banking at all
Faysal Bank branches across Pakistan.

restriction on withdrawals or numbers
of transactions Meezan Business Plus
Account can be opened by Individuals,
Sole Proprietorships, Partnerships,
Limited Companies.
Karobari Munafa Account(Riba
Free):
Karobari Munafa is a high profit savings
account specifically tailored for large
Corporate or GoP (Govt. Of Pakistan)
controlled entities. It allows customers
to earn higher returns on surplus cash
balances. It has no preset transaction
limits and comes with a variety of free
packaged benefits. Profit will be
calculated on a Daily Product Basis
Minimum balance requirement for
account opening is Rs. 1 Million. No
restriction on deposits and withdrawals.
Dollar saving Account (Riba
Free):
With a minimum of only $100 you
can open a Dollar Saving Account in
Meezan bank under a Mudarabah
Arrangement. That is strictly in
conformity with the principles of Islamic
Shariah. The return earned on the
Mudarabah Pool is calculated every
month and the profit ratio for all
investors is declared at the beginning of
the month.
The Karobari Munafa Account:
The Karobari Munafa Account works
under the principles of Mudarabah and
is strictly in conformity with the rules of
Islamic Shariah. Profit calculation and
all banking transactions are in strict
adherence to the Islamic Shariah,
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Account:
Faysal Moavin is a Savings account
made for genuine individual savers.
Faysal Moavin offers the perfect
combination of savings account
matched with the flexibility of a current
account. Account can be opened with
an initial deposit of Rs. 20,000. No
restriction on the number of
transactions. Profit is calculated on
daily balance basis and paid on monthly
basis. Tiered profit structure providing
an incentive to save more. This means,
as the deposit amount increases, the
profit also increases.
Faysal Mahfooz Sarmaya:
To provide convenience and value to
customers with foreign currency related
needs, Faysal Bank's Mahfooz Sarmaya
foreign currency account offers
attractive features. Account can be
opened in three major international
currencies: US Dollars, Pound Sterling
and Euro. Minimum balance for
opening Mahfooz Sarmaya is 1000 units
of the currency in which the account is
opened.
FCY Saving Plus:
FCY Saving Plus is a new foreign
currency savings account with
attractive profit rates where customers
get their profit on a monthly basis.
Account can be opened in US Dollars,
Pound Sterling and Euro currency.
Minimum balance for opening FCY
Saving Plus is 500 units of the currency
in which the account is opened. Profit is
calculated on monthly average balance.
Profit is disbursed on monthly basis. No
 Page 18 of 22

monitored by our Shariah Advisor and FCY cash deposit charges. On

the Shariah Supervisory Board maintaining the monthly average
balance equivalent to USD 50k or
Labbaik Saving Aasaan: above, the following additional facilities
Labbaik Saving Aasaan is ideal for are provided. Borrowing in PKR up to
customers if they are a small saver and 90% of FCY. Preferential rates on
wish to save for their spouse, children, consumer finance.
parents etc. They can take benefit from
this special Mudarabah based Deposit KeyFeatures of Faysal Saving
account (available from 6 months to 20 A/c Products:
year plans) for Umrah & Hajj where you  Access to account through on-
will also be entitled for profit on the line banking at all Faysal Bank
deposited amount thus providing you a branches across Pakistan.
bigger incentive to save for Umrah/Hajj  Profit payment on monthly basis
through Labbaik Saving Aasaan. open for individuals only.
 Free online banking.
KeyFeatures of Meezan Saving
 Priority Banking
A/c Products:
 Free facilities: cheque books and
 Halal & High Competitive returns
pay orders
 Profit payment on monthly basis
open for individuals only. Faysal Car Finance:
 Waiver of application fee for Car Faysal Car Finance is the most flexible
Ijarah & Easy Home for accounts product designed to meet customer
with minimum balance of Rs. needs. Car Financing for locally
500,000 manufactured new and used cars and
 Free bank balance certificates imported cars. Car Financing up to five
 Visa Debit Card. years. Down payment only 20% of the
 Free facilities: cheque books and car value plus Minimum documentation
pay orders charges. Fast processing. Option to
 Saving Account opened under prematurely terminate the facility.
Musharakah Agreement.
Eligibility:
Islamic Car Financing: Now you can swiftly, easily and cost
Car Ijarah is Pakistan's first "Interest
effectively owns a car if you are:
Free" car-financing based on Islamic
 A Pakistani National holding the
financing mode of Ijarah or Islamic
New Computerized Identity Card
leasing. This product is ideal for
(NADRA)
interest averse individuals, looking for
 Minimum 20 years of age at the
a car financing that provides the
time of financing.
convenience of a well designed product
 A Businessman or Self-Employed
while avoiding an interest based

transaction. Car Ijarah totally Halal
auto finance facility that is very
affordable, with quick processing and
minimal documentation. Car financing
that is very competitively priced, hassle-
free, and totally Halal.
As Ijarah is basically is the transfer of
usufruct of a fixed asset to another
person for an agreed period, at an
agreed consideration. Under car Ijarah
agreement the car will be given to the
customer for the period agreed on the
time of contract. In car Ijarah the asset
remains in the ownership and risk of
bank and the customers only pay the
rentals for use of the asset: just like
house rent. The product has grown all
over the country with a portfolio of Rs
291 million as of 31st December with
non-performing contracts.
Features:
 No application fee
 Ease of acquiring any new locally
assembled car
 No upfront Insurance Payment
 Low Monthly Rent
 No advance Rental
 Available in tenures of 3, 4 and 5
years
 Minimum security deposit as low
as 20%
Easy Home Finance:
Easy Home is Pakistan’s first totally
Shariah-compliant Home Finance
facility. One that is comprehensive,
affordable, and totally hassle-free. For
at Meezan Bank, They are committed to
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with a minimum of one year
experience in the same business
and profession.
 A Salaried person with at least
two years employment history.
Limitations:
Faysal bank not leases cars to judges,
lawyers, army, and police. Mostly
prefer the salaried persons rather than
landlord.
Insurance Company: ADAM G and EFU
Insurance: 5%
Lease term: 3, 4 and 5 years
Internal rate of return: 18.5%
Down payment: 20% of asset value
Soft ware use: Symbol and Lims
Debt burden: should less than 33%
Faysal Housing Finance:
Faysal Housing Finance gives their
customers so much more than great
financing rates. They help their
customers all the way to make their
next move in an easy and timely
manner. Whether they want to build a
new home or are in a hurry to move
into a ready built house or just want to
renovate their existing home or even
transfer their existing expensive
mortgage finance balance, They offer
the following Housing Finance Package.
A Pakistani Resident and National
holding the New Computerized Identity
Card (NADRA) or Non-Resident
Pakistani holding a NICOP.
 Buy a Home
 Build a House
 Home Renovation
 Balance Transfer Facility

meeting their customers’ needs, in a
truly Shariah-compliant manner
coupled with dedicated service
excellence.
Easy Home: Islamic Housing Finance.
The nation’s 1st Islamic Housing Facility.
It is a very comprehensive product
based on the Diminishing Musharakah
Mode that provides the market a long
awaited totally Shariah-Complaint
mortgage facility that allows home
purchase, building, renovation, and
even replacement of an existing
mortgage. They offer the following
Housing Finance Packages.
 Easy Buyer
 Easy Builder
 Easy Renovate
 Easy Replacement
Meezan Personal Finance:
Meezan Bank is not dealing in personal
fiancé at this time for salaried person
and non-salaried persons.
Meezan Agri-Finance:
Meezan Bank is not dealing in Agri-
fiancé at this time for farmers, for
developing or productive purposes in
agricultural sector.
Features:
 High financing amounts.
 Maximum financing against
property value.
 Flexibility to make partial
prepayments.
 Minimal processing charges.
 Very affordable and competitive
monthly payment plan with a Faysal Khushaal Kisan
regularly reducing rental amount. Scheme:
Page 20 of 22
Eligibility:
 Aged between 25 to 60 years if
you are a salaried person and of
65 years if you are in business.
 In continuous employment for 3
years and at least 1 year with the
existing employer.
 In business with at least 3 years
of business or professional
experience
 Earning a net monthly income of
Rs.30, 000/- or more *spouse’s
income can also be combined
with yours].
Faysal Personal Finance:
Personal loan is unsecured for bank
because no security is pledged in this
situation. Only take 6 security Cheques.
Range is from 1 lack to 5 lack .It is only
for salaried and business persons. This
department is much sensitive because
recovery of loan is difficult. The target
of this department is 1.5 million if they
fulfill this target than employees get
salary + bonus. In personal loan two
types of loan are included
 Secured loan
 Un-secured loan
The range of unsecured loan is from
one lack to 5 lack .In this loan no
security is pledged so unsecured. Mark-
up is also high. Mark –up varies
according to situation.
While in secured loan security is
necessary and loan limit is above to 5
lacks.
 Page 21 of 22

Faysal Bank offers specialized products

for the agricultural sector. Its branches
located in agricultural areas of Pakistan
are all equipped to help the local
farmers improve their yield and
methods of farming by offering timely
and affordable modes of financing to
suit their needs.
Faysal Bank provide two types of Agri.
Loan
 Developing loan
 Production loan

Developing loan:
Developing loan is for long term for the
purpose of development of land, for
example loan for tractors, treasures and
machinery use in land for the purpose
of development of land. Developing
loan further classified into
 Form Loan
 Non- Form loan
Form loan is for forms for example
tractor and machines use in fields.
While Non-form loan is for dairy,
poultry form, fishing, and shading and
for buying animals.

Production Loan:
Production loan is issued for the inputs
of fields. For example for seeds,
fertilizers and labors etc. It also has two
types
 Form Loan
 Non- Form Loan
Form loan is used from the inputs used
in fields for example seeds, fertilizers,
water expenses etc .While Non-form
loan is used for the feed of animals for
example Oil cakes ,green food etc
 Page 22 of 22

Mark-up is 18.5%, 14.5% is charged by

KIBER and remaining 4% is charged by
FBL. The 4% markup can be changed by
FBL according to its requirements but
KIBER markup remains same for all
banks. As a security bank accept the
land, gold, heavy and valuable
machinery and tractor etc The down
payment of tube well is 10% For Dairy
and Poultry form is 20%. For seeds,
fertilizers etc are no down payment.

Features:
 Flexible repayment options
 Option to partially or fully
terminate the facility.
 Financing tenor up to 20 years!!!
 Fast processing.
 Minimum processing charges
 Enhancement option available
 Financing available up to 80% of
the market value of the property.

Conclusion:
After a complete analysis of both banks we conclude that both banks are doing
well in their respective fields. Moreover, Faysal Bank also have Islamic banking
unit but still it has to improve enough to represent Pakistan over the world in
Islamic banking.

Meezan bank should also enhance its market share nationally and internationally
by launching awareness programs for society to create better understanding
regarding Islamic banking.