Management Profile(Executive Summary)

A committed team of highly qualified, experienced professionals, financially

sound and reputed sponsors manages the Company. Through sheer dedication,
diligence and the Almighty’s Beneficence the management team at Meezan Bank
Limited have earned reputation for excellence

Bank
A bank or banker is a financial institution that acts as a payment agent for customers, and
borrows and lends money.

Banks acts as payment agents by conducting current accounts for customers, paying cheques
drawn by customers on the bank, and collecting cheques deposited to the customer's current
accounts. Banks also enable customer payments via other payment methods such as telegraphic
transfer, EFTPOS, and ATM.

Banks borrow money by accepting funds deposited on current account, accepting term deposits
and by issuing debt securities such as banknotes and bonds. Banks lend money by making
advances to customers on current account, by making installment loans, and by investing in
marketable debt securities and other forms of lending.

Banks provide almost all payment services, and a bank account is considered indispensable by
most businesses, individuals and governments. Non-banks that provide payment services such as
remittance companies are not normally considered an adequate substitute for having a bank
account.

ACCORDING TO BANKING COMPANIES ORDINANCE 1962

“Banking means the accepting, for the purpose of lending, or investment, of deposits of money
from the public, repayable on demand or otherwise, and withdraw able by checque, draft, order
or otherwise.”
“Banking companies mean companies which transact the business of banking in
Pakistan.”
Banks borrow most funds borrowed from households and non-financial businesses, and lend
most funds lent to households and non-financial businesses, but non-bank lenders provide a
significant and in many cases adequate substitute for bank loans, and money market funds, cash
management trusts and other non-bank financial institutions in many cases provide an adequate
substitute to banks for lending savings to.

Definition of a Bank
A bank is defined as a person who carries on the business of banking, which is:

• conducting current accounts for customers

• paying cheques drawn on him, and
• collecting cheques for his customers.

In most English common law jurisdictions there is a Bills of Exchange Act that codifies the law
in relation to negotiable instruments, including cheques, and this Act contains a statutory
definitions of the term banker : ' banker includes a body of persons, whether incorporated or
not, who carry on the business of banking' (Section 2, Interpretation). Although this definition
seems circular, it is actually functional, because it ensures that the legal basis for bank
transactions such as cheques do not depend on how the bank is organised or regulated

Origin of the word

There are various views about the origin of the word “bank”.

The 1st view is that

The name bank derives from the Italian word banco "desk/bench", used during the Renaissance
by Florentines bankers, who used to make their transactions above a desk covered by a green
tablecloth. However, there are traces of banking activity even in ancient times.

The other point of view is that it has originated from German word “banc” which means a joint
stock firm.

In fact, the word traces its origins back to the Ancient Roman Empire, where moneylenders
would set up their stalls in the middle of enclosed courtyards called macella on a long bench
called a bancu, from which the words banco and bank are derived. As a moneychanger, the
merchant at the bancu did not so much invest money as merely convert the foreign currency into
the only legal tender in Rome- that of the Imperial Mint.
 Islamic banking
Islamic banking refers to a system of banking or banking activity that is consistent
with Islamic law (Sharia) principles and guided by Islamic economics. In particular,
Islamic law prohibits usury, the collection and payment of interest, also commonly
called riba in Islamic discourse. In addition, Islamic law prohibits investing in
businesses that are considered unlawful, or haraam (such as businesses that sell
alcohol or pork, or businesses that produce media such as gossip columns or
pornography, which are contrary to Islamic values). In the late 20th century, a
number of Islamic banks were created, to cater to this particular banking market.

Principles
Islamic banking has the same purpose as conventional banking except that it operates in
accordance with the rules of Shariah, known as Fiqh al-Muamalat (Islamic rules on
transactions). The basic principle of Islamic banking is the sharing of profit and loss and the
prohibition of riba´ (interest). Amongst the common Islamic concepts used in Islamic banking
are profit sharing (Mudharabah), safekeeping (Wadiah), joint venture (Musharakah), cost plus
(Murabahah), and leasing (Ijarah).

In an Islamic mortgage transaction, instead of loaning the buyer money to purchase the item, a
bank might buy the item itself from the seller, and re-sell it to the buyer at a profit, while
allowing the buyer to pay the bank in installments. However, the fact that it is profit cannot be
made explicit and therefore there are no additional penalties for late payment. In order to protect
itself against default, the bank asks for strict collateral. The goods or land is registered to the
name of the buyer from the start of the transaction. This arrangement is called Murabaha.
Another approach is Ijara wa Iqtina, which is similar to real-estate leasing. Islamic banks handle
loans for vehicles in a similar way (selling the vehicle at a higher-than-market price to the debtor
and then retaining ownership of the vehicle until the loan is paid).

There are several other approaches used in business deals. Islamic banks lend their money to
companies by issuing floating rate interest loans. The floating rate of interest is pegged to the
company's individual rate of return. Thus the bank's profit on the loan is equal to a certain
percentage of the company's profits. Once the principal amount of the loan is repaid, the profit-
sharing arrangement is concluded. This practice is called Musharaka. Further, Mudaraba is
venture capital funding of an entrepreneur who provides labor while financing is provided by the
bank so that both profit and risk are shared. Such participatory arrangements between capital and
labor reflect the Islamic view that the borrower must not bear all the risk/cost of a failure,
resulting in a balanced distribution of income and not allowing lender to monopolize the
economy.
And finally, Islamic banking is restricted to Islamically acceptable deals, which exclude those
involving alcohol, pork, gambling, etc. Thus ethical investing is the only acceptable form of
investment, and moral purchasing is encouraged. Islamic banking is synonymous with full-
reserve banking, with banks achieving a 100% reserve ratio. However, in practice, this is not
always the case.

Islamic banks have grown recently in the Muslim world but are a very small share of the global
banking system. Micro-lending institutions founded by Muslims, notably Grameen Bank, use
conventional lending practices and are popular in some Muslim nations, especially Bangladesh,
but some do not consider them true Islamic banking. However, Muhammad Yunus, the founder
of Grameen Bank and microfinance banking, and other supporters of microfinance, argue that
the lack of collateral or excessive interest in micro-lending is consistent with the Islamic
prohibition of usury (riba).

History of Islamic Banking in Pakistan and the

Emergence of Meezan Bank Limited
"Seek the other world by means of what Allah has bestowed upon you"
(28:77) The Holy Quran

"We must work our destiny in our own way and present to the works an economic system based on true Islamic concept of
equality of manhood and social justice"Quaid's concept of Islamic Banking [Opening Ceremony of The State Bank of Pakistan
on July 1, 1948]

"Establish Islamic banking as banking of choice to facilitate implementation of an equitable economic system, providing a strong
foundation for establishing a fari and just society for mankind"Vision, Meezan Bank Limited.

1947
The inception of Pakistan as the first Islamic Republic created in the name of Islam.

1980
CII presents report on the elimination of Interest genuinely considered to be the first major comprehensive work in the world
undertaken on Islamic banking and finance.

1985
Commercial banks transformed their nomenclature stating all Rupee saving accounts as interest-free. However, foreign currency
deposits in Pakistan and foreign loans continued as before.

1991
Procedure adopted by banks in 1985 was declared unIslamic 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.

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. President General Pervez Musharraf inaugurates the new Islamic commercial Bank at a formal ceremony in Karachi.

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 consolidating the Bank’s position as the premier Islamic
Bank of the country

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
historic transaction.

2005
Meezan Bank becomes the first customer of Islamic Insurance (Takaful) by signing the first Memorandum of Understanding
MoU with Pak-Kuwait Takaful Company Limited (PKTCL). The signing of this MoU has ushered Pakistan into a new era of
Islamic Insurance (Takaful).

2006
A number of new dedicated Islamic Banks, namely Bank Islami and Dubai Islamic Bank, commence operations in Pakistan.
Meezan continues its leadership position in the industry by more than doubling it branch network to a total of 62 branches in 21
cities, establishing clearly establishing itself as the largest Islamic Bank of the country. Meezan Bank, becomes the first Islamic
bank to introduce 8 am to 8 pm banking at select branches in Karachi.

2007
2007 Meezan Bank creates a significant milestone in the history of Islamic Banking by opening its 100th branch in the city of
Karachi. With 100 branches in 31 cities clearly positions the Bank as the leading Islamic Bank in Pakistan. Two new dedicated
Islamic Banks start operations in Pakistan, namely Emirates Islamic Bank and Dawood Islamic Bank.

2008
 Introduction

Private
Type KSE:
LSE:

Founded Al-Meezan Investment Bank

Headquarte
Karachi, Pakistan
rs

Industry Islamic Banking

Murabaha, Ijarah, Diminishing

Products Musharakah, ATM/Debit Card,
Savings, Consumer Banking etc.

Revenue PKR

Website http://www.meezanbank.com/

Meezan Bank Limited is a publicly listed company, first incorporated on January 27, 1997. It
started operations as an Islamic investment bank in August of the same year. In January, 2002, in
an historic initiative, Meezan Bank was granted the Nations first full-fledged commercial
banking license dedicated to Islamic Banking, by the State Bank of Pakistan.

Meezan Bank, stands today at a noteworthy point along the evolution of Islamic Banking in
Pakistan. The banking sector is showing a significant paradigm shift away from traditional
means of business, and is catering to an increasingly astute and demanding financial consumer
who is also becoming keenly aware of Islamic Banking. Meezan Bank bears the critical
responsibility of leading the way forward in establishing a stable and dynamic Islamic Banking
system replete with dynamic and cutting-edge products and services.

The Banks main shareholders are leading local and international financial institutions, including
"Pak Kuwait Investment Company", the only AAA rated financial entity in the country, the
‘Islamic Development Bank of Jeddah’, and the renown ‘Shamil Bank of Bahrain’. The
established position, reputation, strength and stability, of these institutions add significant value
to the Bank through Board representation and applied synergies.

Vision & Mission

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.

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 Service Mission

To develop a committed service culture which ensures the consistent delivery of our products and services
within the highest quality service parameters, promoting Islamic values and ensuring recognition and a quality
banking experience to our customers.

Key Corporate Values

Core Values:
Shariah Compliance, Integrity, Professionalism, Service Excellence, Social Responsibility.
Brand Personality:
A sober and established, strong, empathic, professional person; who is an extremely loyal and dependable
friend and business partner, and is committed to offering comprehensive value-based Shariah-compliant
financial solutions.
Staff:
Committed, motivated, and professionally trained employees who are empathic to their customer’s needs.
Relationships:
Is long term with Meezan Bank? We recognize and value our customers’ needs above all, and strive to
ensure their fulfillment. All customers are treated with professionalism and in a friendly manner. It is our
endeavor to ensure that they receive efficient and timely service. The Meezan Bank experience is a
unique one.

Like the movement of water in ripples, our key corporate values are concentrically interlinked. The Core
Values define the brand personality, and together they define our staff. The combination of these three
results in the relationships that we form.
Asset Management
The Asset Management business is managed through a subsidiary Al Meezan Investment
Management Limited.
The Retail Bank is organized in three Regions across Pakistan, namely South Region which has
39 branches, Central Region with 40 branches and North Region with 21 branches.
Let there be light
The light bulb arguably did more to change the face of the world than any other invention in
history. It paved the way for other advancements that have followed ever since, including all
kinds of displays such as LCDs. When we tryto imagine life without a source of light other than
the sun, it is immediately obvious why we have chosen the light bulb as the first of man's five
achievements to which we are paying a tribute.

The invention of the wheel did more than just provide a transport related solution. Although the
wheel's primary purpose is travel, one of the major subsequent uses is its industrial application,
where the wheel is indispensable.
Every day, machines around the world rely on cogs to keep production going. The millions of
wheels across the globe, from aircraft tyres to tiny cogs are deserving of our tribute as they
continue to keep the world moving.
The first word spoken on a telephone, "hello", more than tells the story of communication
through time. As the word is echoed by millions of people on phones everyday, it is a standing
ovation to the one piece of technology that has been the preface for a book whose chapters
include the fax, cellular telephones, and the internet, to name a few. Like the bulb, the telephone
was more than an independent innovation. It spawned a wave of technological advancement.

If it wasn't for the invention of papyrus, the earliest form of paper, you probably would not be
holding this annual report in your hands. It is an invention that we often take for granted, but its
applications are such that the world would be incomplete without it. From books to post-it notes
and from tissue paper to money, many of the things we are surrounded by today owe their origin
to papyrus.
As we look at our watches everyday, it is worth noting that time, like the mathematical system,
has not existed forever. The origin of the concept of time is a subject of dispute, but there can be
no dispute that the seconds, minutes and hours in which we measure our lives are absolutely
indispensable. We often hear of the increasing value of time, and its immeasurability. It is also
the concept of time which is so important, that it is hard to imagine life without it.

For us, these five achievements of man hold special significance, because we see links
between them and the five foundations that form the core of Meezan Bank.
Shariah Strength
The light bulb, and the light that it spreads, is of significance when examined in view of the
Islamic Shariah, and the light of knowledge and guidance it spreads.
Comprehensive Business Solutions
The wheel was a solution to many of mankind's needs. It was comprehensive in the same way
that our business solutions are comprehensive in providing for our customer's needs.
Largest Branch Network
The telephone, essential to all communication, is just as indispensable for our branch network,
which aims to provide seamless connectivity across Pakistan for our customers and their banking
operations.
Financial Backing
Paper is one of the most important elements in the commercial world today. Without it,
transactions, deeds, authorizations and business dealings are incomplete. The same way, our
strong financial backing is the cornerstone of Meezan's Bank strength.
Service Quality
The concept of time is specially revered in the banking industry and timeliness of our operations
determines our service quality levels. It is said that time is money – for banks, it is true in the
literal sense as well.

Corporate Information
 Board of Directors
H.E. Sheikh Ebrahim Bin Khalifa Al-Khalifa Chairman
Naser Abdul Mohsen Al-Marri Vice Chairman
Irfan Siddiqui President & CEO
Istaqbal Mehdi
Mohamed Abdul-Rehman Hussain
Ariful Islam
Rana Ahmed Humayun
Mohammed Azzaroog Rajab
Ahmed Abdul Rahim Mohamed
Shariah Supervisory Board
Justice (Retd.) Muhammad Taqi Usmani Chairman
Dr. Abdul Sattar Abu Ghuddah
Sheikh Essam M. Ishaq
Dr. Muhammad Imran Usmani
Executive Committee
Naser Abdul Mohsen Al-Marri
Mohamed Abdul-Rehman Hussain
Irfan Siddiqui
Audit Committee
Istaqbal Mehdi
Rana Ahmed Humayun
Ahmed Abdul Rahim Mohamed
Risk Management Committee
Mohamed Abdul-Rehman Hussain
Rana Ahmed Humayun
Ariful Islam
Human Resources Committee
Ahmed Abdul Rahim Mohamed
Naser Abdul Mohsen Al-Marri
Irfan Siddiqui
Company Secretary
Shabbir Hamza Khandwala

Management
Irfan Siddiqui President & CEO
Ariful Islam Chief Operating Officer
Najmul Hassan GM-Corporate & Business Development
Mohammad Shoaib Qureshi GM-Commercial Banking
Shabbir Hamza Khandwala Chief Financial Officer
Rizwan Ata Regional Manager - Central
Abdul Ghaffar Memon Regional Manager - South
Saleem Khan Regional Manager – North
 Arshad Majeed Operations
Sohail Khan Human Resources
Faiz-ur-Rehman Information Technology
Munawar Rizvi Branch Expansion & Administration
Zafar Ali Khan Consumer Finance
Muhammad Abdullah Ahmed Treasury & Financial Institutions
Saleem Wafai Compliance
Zia-ul-Hasan Internal Audit
Mohammad Raza Liability Products & Service Quality
Ahmed Ali Siddiqui Product Development & Shariah Compliance
Syed Amir Ali Investment Banking
Omer Salimullah Alternate Distribution Channels
Javed Ahmed Shaikh Risk Management
Shariah Advisor
Dr. Muhammad Imran Usmani
Legal Advisor
Rizvi, Isa, Afridi & Angell
Auditors
KPMG Taseer Hadi & Co.
Registered Office
3rd Floor, PNSC Building, M.T.Khan Road, Karachi-74000, Pakistan
Ph : (9221)5610582, Fax: (9221)5610375
24/ 7 Call Centre 111-331-331, E-mail: info@meezanbank.com
Website
www.meezanbank.com
Shares Registrar
THK Associates (Pvt.) Ltd.
State Life Building –3, Dr. Ziauddin Ahmed Road
Karachi-75530, Pakistan. Ph: (9221)111-000-322, Fax: (9221)5655595

Meezan Team:
Meezan Bank is managed by a team of professional bankers committed to the cause of Islamic
Banking. This single unifying factor unleashes the tremendous power of a dedicated and
motivated team committed to fulfilling the Vision and Mission of the Bank.

The business segments of the Bank are:

Corporate and Investment Banking

Commercial and SME
Consumer Finance
Treasury & Financial Institutions
Product Development & Shariah Compliance (PDSC) Department

Product Development & Shariah Compliance (PDSC) is one of the important departments of the
bank that reflects strong commitment of the bank towards Islamic banking and research. PDSC
works directly under the supervision of bank’s Shariah Advisor – Dr. Muhammad Imran Usmani
and is managed by Mr. Ahmed Ali Siddiqui. The function is vital in ensuring strict Shariah
Compliance in all area of bank’s operations.

PDSC role is manifold and comprises facilitating new Product Development activities, refining
existing products & procedures, providing Islamic Banking training to new recruits and existing
staff members, conducting regular Shariah Audit & reviews of branches & departments,
coordinating with Bank’s Shariah Board and providing Islamic Banking Advisory Services to
both local and foreign financial institutions.

In the area of Product Development, the bank has initiated several new structured Islamic Sukuk
transaction, developed a new investment avenue of local Commodity Murabaha to manage
excess liquidity of the bank is a Shariah compliant manner. The bank is also conducting research
on several new Islamic products in the areas of consumer, corporate & retail banking level.

PDSC has played a vital role in imparting Islamic banking training to bank employees,
customers, Ulemas & scholars throughout Pakistan. The department regularly carries out training
sessions ranging from basic to in-depth specialized workshops. During the year 2006, a
comprehensive Islamic Banker Certification (IBC) Program was successfully introduced in
Pakistan.

The bank has also provided Product Development Advisory services to different financial
institutions interested in offering Islamic Banking products & services around the world via its
research wing. The main objective of Meezan Bank’s Advisory function is to help financial
institutions develop Islamic Banking Products by sharing the experience, research & success
stories. The bank has successfully entered into advisory arrangements with Capitas Group of
USA, Al Meezan Investment Management (AMIM), Pakistan & other Islamic banks & financial
institutions.

The bank has also executed MoUs with INCEIF, Malaysia & Utruj Foundation, UK to
collaborate in the areas of training, research and product development.

Internet banking

Meezan Bank’s Internet Banking system puts access to your accounts at your fingertips,
anywhere in the world. Using any computer with Internet connectivity the following facilities are
available by Meezan Bank;
 • Balance inquiry
• Statement viewing & download (in PDF or MS Excel format)
• Cheque status
• Cheque blocking
• Payorder request
• Funds transfers between own accounts at Meezan Bank
• Cheque book request
• Change of address request
• Complaint logging

Branches
Meezan's Branch Network

Alhamdolillah, Meezan Bank has established 100 branches in 31 cities across Pakistan. This is a milestone that is not only the success story
of Meezan Bank but also the continuing success story of Islamic Banking in Pakistan. With this extensive network, our existing and potential
customers are now closer than ever in attaining Islamic Banking at their doorstep. All branches provide real time online banking facilities to
customers.

As the first and largest dedicated Islamic Bank in Pakistan, Meezan Bank team continues to build on its Vision of establishing "Islamic
Banking the Banking of First Choice". One of the key objectives of the Bank is to have its footprint strategically placed throughout the
country enabling the public to avail the benefits of Shariah Compliant Banking in their neighborhood.

The Bank is currently segmented into three Regions of Pakistan. The cities in which the Bank presently operates are as follows:

Southern Region Central Region Northern Region

Hyderabad Bahawalpur Abbottabad
Karachi Dera Ghazi Khan Dera Ismail Khan
Nawabshah Faisalabad Gujar Khan
Quetta Gujranwala Haripur
Sukkur Jhang Islamabad
Tando-Allah-Yar Kasur Kohat
Lahore Mansehra
Mandi Bahauddin Mardan
Multan Peshawar

Okara Rawalpindi

Rahim Yar Khan Swat

Sadiqabad
Sahiwal
Sargodha
Sheikhupura
Sialkot
In 2008 Meezan Bank has planned to open an additional 40 branches in Pakistan
and uptill now it has 18 branches.Meezan Bank ,s mission is to provide its
customers dedicated and pure islamic fascilities with the greatest of convience and
personalized services.it remains the banks endeavor to establish solid foundation of
islamic banking in Pakistan.

Shariah Supervisory Board

The Bank has an internationally renowned, very high caliber and pro-active Shariah Supervisory
Board presided over by Justice (Retd.) Maulana Muhammad Taqi Usmani, a renowned figure in
the field of Shariah, particularly Islamic Finance. He holds the position of Deputy Chairman at
the Islamic Fiqh Academy, Jeddah and in his long and illustrious career has also served as a
Judge in the Shariat Appellate Bench, Supreme Court of Pakistan. The Bank also has a resident
Shariah advisor, Dr. Imran Usmani, who strictly monitors the regular transactions of the Bank.
The board also includes Sheikh Essam M. Ishaq (Bahrain), and Dr. Abdul Sattar Abu Ghuddah
(Saudi Arabia). For assistance Mr. Umer Saleem Mughal at the bank's Shadman Branch in
Lahore can be contacted.

Board of Directors
• H. E. Sheikh Ibrahim Bin Khalifa Al-Khalifa (Chairman) - Undersecretary, Ministry of
Finance & National Economy,State of Bahrain)
• Naser Abdul Mohsen Al-Marri (Vice Chairman)
• Irfan Siddiqui (President & Chief Executive Officer)
• Istaqbal Mehdi
• Mohammed Abdul-Rehman Hussain
• Ariful Islam (Chief Operating Officer)
• Rana Ahmed Humayun
• Mohammed Abdul Rahman Mohammad Bucheerei
• Ahmad Mohammad Thane
• Mohammed Azzaroog Rajab

Functions
Service

• Personal Banking and Finance

• Corporate Finance
• Commercial Finance
• Structured finance
• Treasury
• Car Ijarah - Car Financing
• Easy Home - Home Financing
 • Asset Management

GENERAL BANKING DEPARTMENT

 Account opening department
 Remittances department
 Cash department
 Clearing department

ACCOUNTS DEPARTMENT

IT- DEPARTMENT

ACCOUNT OPENING DEPARTMENT

Account Opening In-

charge

Officer Office
r

Functions of Account Opening Department

• Providing account opening form according to the customer's requirements,

• Guide the customer about the requirements of the account opening and form
filling,
 • Check the forms whether they are correctly completed or not,
• Preparing checklist,
• Stamping on the form,
• Maintaining account opening register,
• Pasting of forms in register after release from general banking in charge,
• Issuance of cheque books,
• Issuance of accounts maintenance certificate,
• Closure of account
• Verification of signature in case of cheque presented before releasing of
account opening from SS card is not yet scanned

TYPES OF ACCOUNTS

1) ACCOUNTS OF GENERAL CUSTOMERS

• Minor account
• Illiterate person account
• Joint account

2) ACCOUNT OF SPECIAL PERSONS

• Proprietorship account
• Partnership account
• Limited company’s account
• Accounts of club societies and associations
• Agent’s accounts
• Trust account
• Liquidator’s account executer’s and administrator’s account
REMITTANCE DEPARTMENT

Functions of remittances department

The functions of remittance departments are to handle with the following

instruments:

• Pay Order
• Demand Draft
• Pay slip
• Telegraphic Transfer
• Payment of Remittances
• Cancellation of pay order & demand draft
The remittance department deals with the transfer of money from one place to
another.

This department deals with the local currency transfer only. ACBL provides these
services to both customers & non-customers

Remittance can be made through:

1) Instrument transfer
2) Electronic transfer
3) Mail transfer

Instruments of the Remittances Departments

PAY ORDER

Pay order issued from one branch only be payable from the same branch. It is
normally issued for payment in the same city. It is normally referred as banker's
cheque

 Get the application form.

 Issue pay order after recovering cheques.
 Do necessary vouchering.
 Make entry in PO issue register.
 All pay order shall be crossed" payees account only".

Charges on issue of Pay Order

Amount (Rs) Charges (Rs)

Less then 100,000 50

Above 100,000 Nil

Duplicate Pay Order:

 Check the record to insure that payment has not been effected.
 Get application for issuing of duplicate PO.
 Recover charges.
 Issue duplicate pay order.

DEMAND DRAFT

It is an instrument on demand for which value has been received, issued by the
branch of the bank drawn i.e. payable at some other place(branch) of the same
bank. In case of agency arrangement- demand draft can also be issued by one
branch of the bank payable to other branch of the other bank e.g. DD issued by
ACBL payable by MCB.

Charges on issue of Demand Draft

Amount (Rs) Charges (Rs)

1 - 10,000 25

10,000 – 100,000 50 or .1%

100,000 - 1000,000 200 or .07%

Over 1000,00 1000 or .05%

PAY SLIP

The bank for settlement of it own payment issue pay slip.

• No excise duty
• No commission

CASH DEPARTMENT

All physical movement of cash in the bank is made through the cash department.
Normally cash department performs following functions

 Receipt
 Payments
  Act according to any standing instructions
 Transfer of funds from one account to another
 Handling of ATM
 Verification of signatures
 Posting
 Handling of prize bond

Cash receipt section

In this section the cashier in following manner receives cash:

Process of
deposits
Deposited on
Fill- up Receipt
deposit slip Customer

Cashier counts the Cashier counts

amounts and fulfills the amount and
Cash payment
other requirement
section fulfills other
requirements
In this section honoring the cheque through following process makes payment.

Process of
payment
Cheque is presented Cheque is recorded
at token counter & token # is allotted
 Cancellation officer
Cashier counts
cancels cheque
the amount &
payment is made

Two signatures on
Posting is made
back of the cheque
by customer

Products and Services

• Personal Banking and Finance
• Rupee Current Account
• Rupee Saving Account
• Dollar Savings Account
•
Rupee Current Account

Minimum amount required to open account= Rs. 10,000.

Riba Free. Holders may open accounts without any minimum balance requirements

Just fill in the Account Opening Form, bring in your original Identity Card, and get
introduced by an existing banker. This is all that you need to open a Current
Account with us and enjoy our personalized banking services.

Rupee Saving Account

A unique bank account that offers the opportunity to earn Halal profits, while
enjoying a range of added benefits. It can be opened with a minimum amount of
only Rs.10, 000. The profit on this account is calculated and paid on a monthly
basis, and comes with a variety of free benefits including personalized check books,
no restrictions on transactions, priority banking and so on. Minimum amount
required to open account Rs. 10,000. Riba Free. Holders may open accounts without
any minimum balance
requirements.

• Corporate Finance

Karobari Munafa Account

Karobari Munafa Account

Karobari Munafa is a savings account specifically tailored for large Corporate or GOP
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.

Free facilities: chequebooks and payorders.

Riba Free Certificate of Islamic

Investment

The Riba Free is a Shariah compatible Islamic Investment Certificate. The minimum
investment is Rs. 50,000, with tenures of 3 months, 6 months, 1 year, 2 years, 3
years and 5 years. Profit on investment may be earned on the following basis:

Monthly profit on 1, 2, 3 and 5 years. Quarterly profit on 1, 2, 3 and 5 years.

At maturity profit payment for all tenures. Minimum Investment Rs. 200,000. _

Dollar Savings Account

Meezan Bank is pleased to offer Riba-Free Dollar Saving Account, a foreign-currency
based investment opportunity that is set up on the principles of Shariah and as a
result is free from the element of interest. Riba-Free Dollar Saving Account works
under the principles of Mudarabah and is strictly in conformity with the rules of
Islamic Shariah. On agreeing to become an account holder, the customer enters into
a relationship based on Mudarabah with Meezan Bank. Under this relationship, the
customer is an Investor (Rab ul Mal), and the bank is the Manager (Mudarib) of the
funds deposited by the customers.
Meezan Amdan Certificate

The Riba-Free Meezan Aamdan Certificate (MAC) is a long-term deposit certificate with an
exceptionally high monthly profit designed especially for those individuals and corporations who
are in need of regular stream of monthly income. MAC is a monthly income (mahana aamdani)
certificate with a variety of free packaged benefits. The Riba-Free Meezan Aamdan Certificate
(MAC) works under the principles of Mudarabah and is strictly in conformity with the rules of
Islamic Shariah. On agreeing to become a MAC holder, the customer enters into a relationship
based on Mudarabah with Meezan Bank. Under this relationship, the customer is an Investor
(Rab ul Maal), and the Bank is the Manager (Mudarib) of the funds deposited by the customers.

Meezan Providence
A long-term investment product specially designed to cater to the needs of
corporate and business concerns for purposes of investing their Provident, Pension
and Gratuity Funds.

As any prudent investor, your main concerns would be total security along with the
best returns possible, especially as these funds are a trust from your employees and
one that bears an important responsibility.

Meezan Providence rests on the well known and solid financial strength of Meezan
Bank, which has a strong and credible balance sheet with excellent operating
profitability, including a capital adequacy ratio that has placed the Bank at the top
of the industry, a long-term entity rating of A+, and a short-term entity rating of A1.

TREASURY

Responsible for managing Bank’s liquidity and foreign exchange transactions, our
Treasury in one of the most active in the market. Through reported transactions,
purchase of Government paper and foreign exchange trading, the Division adds
substantially to the Bank's sustained earnings

Easy Home
With Easy Home you participate with Meezan Bank in a joint ownership of your property, where
the Bank will provide a certain amount of financing (usually up to 85%). You agree to a monthly
payment to the bank of which a component is for the use of the home, and another for your
equity share. In fact, the total monthly payment is reduced regularly as your share in the property
grows. When you have made the full investment, which had been agreed upon, you become the
sole owner with a free and clear title to the property.

What specifically makes Easy Home Shariah compliant?

As a Diminishing Musharakah it conforms to Shariah laws specifically related to financing,
ownership and trade. Taking ownership through a partnership and then transferring complete
ownership to the consumer instead of simply lending money is the major factor that makes our
product Shariah compliant. The nature of the contract is a co-ownership and not a loan because
the transaction is not based on the lending and borrowing of money but on the joint ownership of
an asset. Meezan Bank shares in the cost of the asset being purchased, for example in the case of
buying a home. In conventional mortgages the interest charged is a mark-up on the money lent.
The profit charged by Meezan Bank is the utilization payment for your use of our share
throughout the life of the contract. Your payments to Meezan Bank are hence completely.

Car Ijarah

Meezan Bank’s Car Ijarah unit provides a car financing, based on the principles of
Ijarah and is free of the element of interest.

Car Ijarah is Pakistan’s first Interest Free car financing based on the Islamic
financing mode of Ijarah (Islamic leasing). This product is ideal for individuals
looking for car financing while avoiding an interest-based transaction.
Meezan Bank’ Car Ijarah is a car rental agreement, under which the Bank purchases
the car and rents it out to the customer for a period of 3 to 5 years, agreed at the
time of the contract. Upon completion of the lease period the customer gets
ownership of the car against his initial security deposit.

Car Ijarah is approved by Meezan Banks Shariah Board

Car Ijarah, designed under the supervision of Meezan Banks Shariah Supervisory
Board, is unique to car leasing facilities provided by other banks.

INTRODUCTION
As a step towards Meezan Bank’s mission to provide a one-stop shop for innovative value
added Shariah compliant products, Meezan Bank’s ‘Car Ijarah’ provides financing, based on
the principles of Ijarah and is free of the element of interest.
Meezan Bank’s Car Ijarah is a car rental agreement, under which the Bank purchases the
car and rents it out to the customer for a period of 3 to 5 years, agreed at the time of the
contract. Upon completion of the lease period the customer gets ownership of the car
against his initial security deposit.
CAR IJARAH - BASIC PRODUCT PROCESS

Car Ijarah is structured under the concept of Ijarah, which works on the following lines:
a) The Customer will approach Meezan Bank with a request for Car financing.
b) After required credit checks & approval of the case, the Bank will take Security Deposit
from the Customer.
c) The Customer will also sign a Letter of Undertaking to Lease to ensure that the
Customer will lease the Car upon its delivery. At this stage tentative Ijarah rentals &
tentative delivery period is communicated to the Customer.
d) Based on customer’s requirement, Meezan Bank directly purchases the car from the
authorized dealer and pays the purchase price directly to the supplier.
e) Upon delivery of the Car, Meezan Bank as an owner of the asset get the asset insured
and registered in its name. As per the rules of Ijarah, the cost of registration and insurance
will be borne by the bank. However, the bank has the right to recover these costs in future
monthly rentals.
f) At this stage, Meezan Bank will enter into an Ijarah (leasing) Agreement with the
Customer and monthly Ijarah rentals are finalized.
g) Monthly rentals will begin one month after the delivery of the Car. These monthly rentals
are charged for the use of Bank’s vehicle.
h) The Customer will also give a unilateral Undertaking to Purchase to purchase the
asset in case the customer wants to purchase the car earlier (early termination) or in case
of default.
i) All risk & rewards of ownership of the asset will be borne by the Bank.
j) All expenses of normal wear and tear will be borne by the Customer.
k) Upon completion of the Ijarah tenor, the customer can purchase the Car from Meezan
Bank via separate Sale Deed or can return the car to the bank and take back his Security
Deposit.
CAR IJARAH FAQ’s- Product Concept
What is Ijarah?
"Ijarah" is a term of Islamic fiqh. Lexically, it means 'to give something on rent'. The term
'Ijarah' is used for two different situations.

In the first place, it means 'to employ the services of a person on wages (Ujrat) given to
him as a consideration for his hired services."

The second type of Ijarah relates to the usufructs of assets and properties, 'Ijarah' in this
sense means 'to transfer the usufruct of a particular property or fixed asset to another
person in exchange for a rent claimed from him.' In this case, the term 'Ijarah' is analogous
to the English term 'leasing'.
Ijarah is basically a transfer of usage rights of a fixed asset to another person for an agreed
period of time at an agreed consideration.
In Islamic banking this is an arrangement under in which the Lessor (bank) leases the
asset (CAR/Motorcycle) to a client at an agreed rental amount as agreed by both parties.

What is the difference between Ijarah & Sale?

The basic difference between Ijarah and sale is that in case of a Sale transaction the
ownership of the asset is transferred to the purchaser, while in the case of Ijarah, the asset
remains in the ownership of the transferor (Lessor), but only its usufruct i.e. the right to use
it, is transferred to the lessee.

Secondly, the concept of Ijarah is only applicable for non-consumable assets like car, plant
or machinery and is not related to consumable items like cotton, rice etc.

How is ‘Ijarah’ different from conventional leasing scheme available in the

market?
In principle Ijarah or leasing is a permissible transaction, if it is done as per the Shariah
guidelines. However, certain financial institutions have adopted leasing, as a mode of
financing, for long term lending and it is generally known as the 'financial lease' and has
certain tax benefits. But many essential features of a valid Ijarah/lease transaction have
been removed making the transaction invalid.

Therefore, the question of whether or not the transaction of leasing is Shariah compliant can
be judged on the basis of the terms and conditions of the Lease Contract.
For Example: If A gives a Car on rent to B for a rent of 10,000 for a period of 3 years – it is
permissible. However if A (the owner/Lessor) puts a condition that even if the car is stolen B
has to pay the rent – it will be an invalid lease transaction and not Shariah complaint.

Following are the key features of a valid Ijarah/lease contract.

• Risk and rewards of ownership lies with the owner i.e. any loss to the asset beyond the
control of the lessee should be borne by the Lessor. This condition is normally not complied
in conventional lease transactions and all risks are parked with the lessee or customer.

• In Ijarah, the Lessor (bank) cannot unilaterally increase rental. However, generally under
conventional lease arrangements the Lessor can increase the rental at its sole discretion.

• In Ijarah, the Lessor cannot terminate the lease unilaterally, while in conventional lease
transaction the Lessor has the right to terminate the lease contract at its sole discretion.

CAR IJARAH FAQ’s- Product Features

What is Car Ijarah?
Meezan Bank’s Car Ijarah is simply a rental agreement under which the car is given to the
customer on rent for a period agreed at the time of the contract. Customer is required to
deposit an initial amount (Security Deposit) with the Bank. Upon completion of the lease
period the customer has two options either to return the car and take away the Security
Deposit or take ownership of the car against his security deposit via separate sale
transaction.

Key USPs

• Pakistan’s first truly Shariah-compliant Car Financing Scheme.

• Available in tenures of 3, 4 and 5 years.
• Available for locally assembled as well as imported cars.
• Also available for Used Cars
• No application Fee
• Availability of Takaful
• First rent after delivery of vehicle

How is ‘Car Ijarah’ Interest Free?

‘Car Ijarah’ works on the principles of Ijarah and complies the requirement of a valid Ijarah
transaction. In Car Ijarah, the asset remains in the ownership and risk of the Bank and the
Customer only pays rent for the use of the asset; just like house rent.

The product features and agreements are carefully designed as per the rules of Ijarah and
have been reviewed and approved by Meezan Bank’s Shariah Supervisory Board. Product
Fatwa can be obtained from MBL website at www.meezanbank.cim or from MBL branches.

The transaction works on following lines:

�The customer approaches the Bank with the request for Ijarah for Car and enters into a
promise to lease.
� Meezan Bank purchases Car/Motorcycle from vendor and make the payment.
� Meezan Bank rents out the vehicle to the customer for a specified period and against a
known rent and execute the Ijarah agreement.
� The customer pays periodic rental for the use of vehicle.
� At the end of the Ijarah tenure, the customer can purchases the Car from the bank via
separate Sale agreement.

How Car Ijarah differs from other Car Financing and Leasing Schemes?

MBL’s Car Ijarah Conventional Car Financing

Meezan Bank’s Car Ijarah works on the
principle of Ijarah and complies the
requirement of a valid Ijarah transaction as
per Shariah. Hence it permissible.
In Conventional Car Financing scheme,
banks give a loan to the customer for
purchase of car and charge interest on it.
Therefore, although the purpose of
purchasing a car is permissible but using
interest/riba based loan for such purpose is
not allowed Hence, these schemes are not
permissible.

Features MBL’s Car Ijarah Conventional Leasing

Ownership & Risk
In Car Ijarah, the asset
remains in the ownership of
the Bank through out
transaction tenor. Risks and
rewards of ownership lie with
the owner i.e. any loss to the
asset beyond the control of
the lessee should be borne
by the Lessor.
Under Conventional leasing,
although ownership remains
with the lessor but all risk of
ownership are parked with
the customer (lessee) as
well. This is not permissible
as per the rules of Ijarah.

Rentals The rental amount decided at Generally in conventional

the time of the agreement
cannot fluctuate unilaterally
at the sole discretion of the
bank
leasing the financial institute
can at its sole discretion can
increase transaction Rates &
rental. A clause for above is
explicitly mentioned in the
conventional leasing
contracts.

Expenses Bank/Lessee All expenses In conventional leasing all

relating to the ownership of expenses relating to the
 the asset i.e. insurance,
accidental damage (without
negligence of lessee) etc. will
be borne by the lessor/bank.
Lessor All actual
operating/overhead
expenses related to running
the asset will be borne by
the lessee. Moreover,
expenses for damage to the
asset by lessee’s negligence
are also borne by the
customer
Late Payment Charges In Car Ijarah, lessee may be
asked to promise that, if he
fails to pay rent on its due
date, he will pay certain
amount to a charity account.
This amount cannot be taken
in Bank’s income and its
nature is of charity not of
Riba. Charity is charged only
to discipline the Customers.
Asset Theft/ Damage In case of Car/Motorcycle
theft or severe damage (that
it becomes unusable),
Rentals are stopped because
rentals are obtained for the
use of assets.
Rentals / Monthly Rentals start after one
Payments month of the delivery of an
asset.
Upfront payments In Car Ijarah, customer is
only required to pay a
Security Deposit in a range
of 15 to 50% along with
actual documentation & year’s insurance premium. -
processing cost. There are
no other upfront payments.
At the end Upon completion of the
Ijarah tenor, the customer
can purchase the Car from
Meezan Bank via separate
Sale Deed or can return the
corpus of the asset i.e.
insurance, accidental repairs,
actual operating / overhead
etc. are borne by the lessee.
This is against the rules of
Ijarah.
In most contemporary
financial leases, an extra
monetary amount is charged
if rent payment is not paid
on time and is taken in the
income of the institute. This
extra amount is the
considered as riba and is
haram.
Monthly payments are not
stopped in any case of theft
or sever damage to the
asset. This condition is also
not permissible in Ijarah.
Monthly payments start from
the booking of an asset
irrespective asset is delivered
to the customer or not.
Upfront payments generally
consist of: - Down payment
ranging from 15%-20% min.
- Registration charges - 1st
1st monthly rental
installment. - 1st installment
of 2nd year insurance.
Under conventional leasing
the vehicle is automatically
transferred in the name of
the customer as part of the
contract. This is against the
 car to the bank and take rules of Ijarah.
back his Security Deposit.

How much financing can I get?

“Car Ijarah” gives you the flexibility of acquiring new locally assembled, used and imported
vehicles. The break-up is as follows*;
New & Imported vehicles Up to Rs. 1.5 million
Used vehicle between 250,000 to 1.5 million

How long can I avail Car Ijarah?

You can avail Car Ijarah in flexible, easy rentals over a period of 3, 4 or 5 years.
How much time does Meezan Bank take in processing a Car Ijarah case?
After receiving the completed application form along with the required documents your
application will be processed within 3-4 business days.
What if after booking a vehicle, I opt not to lease it? Will the Bank charge any
penalty for this?
In case the Vehicle is on booking and you opt to cancel the facility after disbursement, you
will have to pay Rs. 10,000/- as Cancellation Charge upon demand and discretion of the
Bank. This amount will be used by the Bank for Charitable purposes as per the directives of
the Shariah Advisor of the Bank.
Is there a requirement of Security Deposit?
Yes, like a normal rent agreement Meezan Bank takes a Security Deposit ranging from a
minimum of 15 % to a max of 50%. The actual requirement of Security deposit varies for
different type of vehicle (i.e. New, old or imported etc.).
Please contact our Call Center or Car Ijarah department for applicable security deposit
requirements.
What is the purpose of Security Deposit?
The security deposit is an amount taken by the Bank (Lessor) as a pledge to recover any
unpaid rentals or any loss to the asset due to the negligence of the Customer.
Will the Security Deposit be returned at the maturity of the term?
You will have two options at the maturity of the transaction. Either you can return the car
and take away your Security Deposit or you can keep the car against your Security Deposit
with the Bank.
Can I buy the Car prior to the termination of rental agreement?
Yes, Customers can buy the car prior to the maturity of an Ijarah agreement. Under the
Ijarah agreement, the bank reserves the right to sell the asset to the customer prior to the
maturity of the asset.
To facilitate this process “Early Purchase Price Schedule” is attached with the Undertaking
to Purchase Vehicles given by the customer. Anytime during the tenure of Ijarah,
customer can request/offer to buy the Car from the Bank at the applicable purchase price.

On accepting the offer, the Bank will terminate the Ijarah contract and will sell the asset to
the customer via a separate Sale Deed.

What if I want to discontinue the facility? What will be the treatment of Security
Deposit?
Ijarah agreement is a fixed tenure agreement and cannot be terminated unilaterally. In
case you want to discontinue the facility, this will be treated as an “Event of Default and
Termination” under the Car Ijarah Agreement and the “Undertaking to Purchase
Vehicle” will come into force.
Customer will be required to purchase the vehicle at the applicable price mentioned in the
Early Purchase Price Schedule. If the customer also does not fulfill his promise to purchase
the car, the car will be sold out in the market by the bank. If the sale in the market resulted
in a lower price then the promised price of customer the difference will be recovered from
the Customer’s Security Deposit. (Because this loss is due to non-fulfillment of the promise
by the customer.).
In case there is no difference in the Sale price & promised price, Meezan Bank will return
the Security Deposit to the customer.
What are the processing charges in Car Ijarah?
Please contact our Call Center or Car Ijarah department or refer to bank’s Schedule of
Charges for latest processing charges.
What are the eligibility criteria?

Basic Eligibility criteria are as follows:

• Salaried individual/ self-employed professional/businessman
• Net takes home income exceeding three times your monthly installment
• In case of other loans and cards, all monthly payments combined not to exceed 50% of
net income.
• 3 years working/professional /business experience
• Working with your present employer for at least 6 months (for salaried individuals)
• Address verification
• Complete documentation

Which documents are required in Car Ijarah?

General documents requirement is a follows:
• Copy of CNIC
• Two recent passport sized photographs
• Recent Utility Bill (Electric/Gas/Water) received at the residential address
• Last Six Month Bank Statement
• Last Six Month Bank Statement of Business (for Businessmen)
• Certified/Original copy of Recent Pay slip (for Salaried Individuals)
• Copy of Rent Agreement (if applicable)

Can I club my salary with my brother’ salary to be eligible for Car Ijarah?

At present the clubbing facility is not available in Car Ijarah.

Can I take the Bank’s car out of city?
You will have to take prior approval from the Bank before taking the car out station.
Can I rent out the car leased by the Bank?

The Ijarah facility is for personal use of cars only and the leased car cannot be used
commercially.
When will my first installment come due?
Your Ijarah rentals will start one month after the delivery of the Car.
Can I delay my monthly installment?
We do not encourage any late payments. Customer is responsible to ensure timely payment
of Ijarah rentals.
Can you tell me what rate have you charged on this car?

Our Car Ijarah scheme is based on the concept of monthly rentals. These rentals are taken
for the use of asset and rental amounts are agreed with the customer at the time of Ijarah
agreement.
(Important Note: In all communications from the Bank related to Car Ijarah, the officials
should quote monthly rentals instead of Profit rate or IRR. These rentals have built in costs
like cost of car, insurance provision, registration charges etc. Therefore it is not possible to
quote an exact rate tothe customer, we only have an approximate rate. The rate available
to Car Ijarah is our target profit rate to be used in our financial model and calculations. This
is the reason that our Ijarah agreement does not mention any profit rate).

However, if the Customer persists then the team can inform that approximate Bank IRR is
___%.

Is this profit rate variable or fixed?

In Car Ijarah the rentals are fixed over the Ijarah period. The scheme does not work on
rate basis it works on rental basis.

What if I fail to pay monthly installment on due date?

As far as Islamic point of view is concerned, we cannot charge any penalty on late payment
as charging an additional amount on debt for non-payment is RIBA.

But to avoid late payments and instill the necessary culture of financial discipline, In Car
Ijarah, Customer is asked to promise that, if he fails to pay rent on its due date, he will pay
certain amount to a charity account. The nature of this amount is Charity (sadqa) and it is
not riba.

This provision is included in our Car Ijarah scheme after require approval from our Shariah
Board. However, the Bank cannot book this amount in its pool of Income rather it is then
transferred to a charity account. The Charity account is supervised by the Shariah Advisor of
the Bank and is used only for charitable purposes.

In case of Car Ijarah this charity comprises of 24% per annum on the outstanding
installment payment. However, the Bank has the discretion to waive this charity in genuine
cases.

Can I pay the late payment charges on my own and submit the receipt to the
Bank?
At present this option is not available. All late payment charges are credited to a Charity
account maintained at the Head Office and is directly supervised by the Shariah Advisor of
the Bank so you can be assured that your charity is used for the right cause.
Can I make Balloon payments?
Balloons payments are not allowed.
Do I have to pay the Registration charges upfront?
Registration is an ownership related expense and hence MBL is responsible for it. Like other
costs these will be recovered in rentals. However, as per the rule of Ijarah Bank has the
right to recover this expense in the monthly rentals over the life of the transaction or even
in the first rental due after delivery of the car provided these rentals are clearly agreed in
the Ijarah agreement.
CAR IJARAH FAQ’s- Tafakul/Insurance Related

What is the Insurance/Takaful arrangement in Car Ijarah?

Meezan Bank being the owner of the Car is responsible for Insurance of the car and for
payment of insurance premium. In this regard, Meezan Bank insures Car/Motorcycle from
Pak Kuwait Takaful Co. (PKTC) using Islamic mode of Insurance (takaful) and pays takaful
premium as part of its ownership expense.
What is Takaful or Islamic Insurance?
The word Takaful is derived from the Arabic verb Kafala, which means to guarantee; to
help; to take care of one’s needs.
Takaful is a system of Islamic insurance based on the principle of Ta’awun (mutual
assistance) and Tabarru (voluntary contribution), where the risk is shared collectively by the
group voluntarily. It is a pact among a group of members who agree to jointly guarantee
themselves against loss or damage to any one of them as defined in the pact.
Takaful is operated on the basis of shared responsibility, brotherhood, solidarity and mutual
cooperation or assistance, which provides for mutual financial security and assistance to
safeguard participants against a defined risk.

What Takaful rate is charged by MBL?

Takaful is the responsibility of Meezan Bank and customer is only required to pay the agreed
rentals.
Important Note: As per the guideline of Car Ijarah, we do not quote any insurance or
takaful rate to our customer as its ownership expense, however if the customer insist to
know the takaful rate the correct response is as follows:
The current Takaful Provision for our Car Ijarah scheme is 4.5% (rem: It is not the rate
but provision or cushion – actual rate may differ every year and could increase or decrease
then the provision but it is not customer’s concern).

In whose name will the car be insured and registered?

Since the car belongs to MBL it will be registered and Insured in favor of Meezan Bank at
MBL’s cost and an authority letter will be given to the Customer for the usage of the Car.

Will I be required to pay my rentals in case of theft/ total loss of Car?

In Ijarah transactions, the Customer pays the rent for the use of the asset and in cases of
theft or total loss the rentals will be stopped immediately. The Bank (Lessor) in such cases
can only take the proportionate rent for the actual number of days for which the asset was
used; unlike the conventional leasing practice were the rental payments continue even after
theft or total loss. The Customer is required to immediately (or as soon as possible) inform
the Bank about the incident.

Will the Bank make any deductions from my Security Deposit in case of
theft/total loss scenario?
If it is proved that the incident occurred due to the negligence of the Customer, the Bank
has the right to make deductions from the Security Deposit. However if the theft/total loss
incident was beyond the control of the Customer and without his negligence, then the Bank
cannot make any deductions from the Security Deposit. (Even if the takaful or insurance
claim in lower)
However, the Bank can also deduct from the Security Deposit any outstanding Ijarah
rental(s) & any charity amount due from the Customer.
What are the possible options for the customer in case of theft or total loss?
In case of theft or total loss, the Ijarah agreement is terminated and generally following two
options are available.
• If the customer wishes to discontinue the facility, the Security Deposit will be refunded to
the customer. (after any valid applicable deduction from the security deposit like
outstanding rentals, charity etc)
• Secondly, customer can enter into a new Ijarah agreement with the bank for the
remaining /same /fresh tenure for another car.
What will be the treatment of Insurance claim received from the Insurance
Company?
Insurance is an ownership related expense and is a concern of the Bank. As such the Bank
cannot claim any amount from the Customer if the incident was beyond the control and
negligence of the Customer and takaful/insurance claim was lower. Likewise in case of
excess Takaful claim amount, Meezan Bank is not under any obligation to share it with the
Customer.

Can I replace my conventional auto loan with Car Ijarah?

Currently this option is not available in Car Ijarah.

CAR IJARAH FAQ’S – NEW READILY AVAILABLE CAR

What is a new readily available Car?
A car that is ready for delivery at a dealer (i.e. in this case the seller of the car is not the
manufacturer) and instead of paying the manufacturer; payment is to be made to the dealer
or to the person selling the Car to Meezan Bank.
Is this a Sale & Lease back arrangement? No, in Car Ijarah there is no Sale & lease
back arrangement. It is a direct lease transaction in which the bank has appointed the
customer as its Agent under Agency Agreement for purchase of car.
What set of documents are to be submitted to the Bank?
After selecting the vehicle on Bank’s behalf, the Customer will provide the bank copies of
vehicle documents like Manufacturer’s Sales Invoice, Sales Certificate, Estimated
Registration Bill.
Does MBL finance the premium i.e. the ‘on’ amount?
As per the rule of SBP, Banks cannot finance the ‘premium’ amount. The customer, acting
as MBL’s agent, is responsible to purchase the car at the manufacturer’s Invoice Price and
any amount paid over and above the Invoice price will not be recognized by MBL.
CAR IJARAH FAQ’S – USED & IMPORTED CAR
Does Meezan Bank lease Used/Second hand Cars as well?
Yes, we also provide the facility of leasing second hand locally assembled vehicles under
Islamic mode. It is a specifically designed feature and a very economical option for our
customer.
What are the Used Car selection criteria?
Selecting a used car is very simple, all you need to ensure is:
• The second hand car selected should be from its first owner.
• The vehicle should not be older than 5 years.
• Min Security Deposit for a vehicle upto 2 years of age is 20%, while minimum security
deposit for a vehicle over 2 years of age is 30%.
• At the time of maturity of Ijarah agreement, the vehicle should not be more than 8 years
old. This means that if a car is 5 years old, the Car Ijarah tenure is not more than 3 years
and if its 4 years old, the tenure may be set for a maximum 4-year term.
• This facility is for locally manufactured cars of Suzuki, Toyota, Honda & the new model of
centro only.
• Cost of vehicle between Rs. 250,000/- min and Rs. One million max

Moreover, the used cars will also be valuated by the approved valuator of the Bank.
What is the amount criterion for used cars?
The approved valuator of the Bank will also valuate all used cars to verify its value.

Based on the result of the valuation following options are possible:

1. If the transaction value is less than or equal to the assessed value, transaction will be
executed at the reported transaction value (i.e. Actual Sale price as quoted by the Seller).
2. If the reported transaction value is greater than the assessed value and the differential is
not more than of 5.0% of the transaction value, then the customer shall increase the
security deposit by the differential amount and the transaction will be executed at the
reported transaction value (i.e. Actual Sale price as quoted by the Seller).
3. MBL will not lease a Locally assembled / Manufactured vehicle if its transaction value
exceeds the manufacturer’s Sales Invoice amount by 5%.

Imp Note: Being the owner of Car, Meezan Bank is responsible to pay the actual
market price for the used car irrespective of its market value by our valuator.
(Both for imported & Used car cases)

For example:
if a customer is purchasing a car at PKR 400,000/- and our valuator valued the car

Option 1:
Transaction Value PKR 400,000/-
Assessed value: PKR 400,000/- or above
MBL Lease Value: PKR 400,000/-
Transaction is allowed

Option 2:
Transaction Value: PKR 400,000/- (2.5% greater than assessed
value).
Assessed value: PKR 390,000/-
MBL Lease Value: PKR 400,000/-
(i.e. MBL will do the transaction at transaction value and will ask the customer to increase
security deposit by Rs 10,000/-)
Transaction is allowed

Option 3a:
Transaction Value: PKR 400,000/- (6.25% greater than assessed
value).
Assessed value: PKR 375,000/-
MBL Lease Value: No transaction

(i.e. Due to the risk, MBL will not do the transaction, but if the Bank agrees to take a view
then the transaction will be executed on the transaction value and the customer will be
asked to increase security deposit by Rs. 25,000)
Option 3b:
Transaction Value: PKR 375,000/- (6.25% lower than assessed
value).
Assessed value: PKR 400,000/-
MBL Lease Value: PKR 375,000/-
(i.e. If the bank agrees to take a view the transaction must be done at transaction value
and MBL will ask the customer to increase its security deposit by Rs 25,000/-)
Transaction is allowed
Option 3c:
Transaction Value: PKR 400,000/- (6.25% greater than assessed
value).
Assessed value: PKR 375,000/-
MBL Lease Value: PKR 375,000/-
(i.e. The bank ask customer to pay 25,000/- on its own to the seller and the bank will lease
the asset at assessed value)

This Transaction is wrong and is in violation of the rule of Ijarah and not
permissible for Meezan Bank.
Who bears the transfer changes of used cars?
The car is transferred in MBL’s name at the seller’s expense. In these case MBL has directed
the customer under Agency Agreement to purchase the car from the seller on the terms
that Seller will transfer the in favor of MBL name. However, in this case Seller can build the
cost of this transfer in the Sale price of the car.

CAR IJARAH FAQ’S – LEGAL DOCUMENTS

What Legal Documents are involved in Car Ijarah transactions?

Car Ijarah legal documents comprises of 5 main documents:
1. Letter of Undertaking to Lease
Purpose: This is an undertaking by the Customer that they will Lease the Car upon
delivery. This undertaking is taken only if the car is on booking and there is a time
lag in the delivery of the car.
Component:
a. Description of car
b. Tentative rental amount & tentative delivery date
2. Agency Agreement
Purpose: Under this agreement the Bank appoints the Customer as its agent to
select the Car. This is used in Imported & Used car cases.
3. Lease Agreement for Car Ijarah (Ijarah)
Purpose: This agreement is signed before delivery of the Car. Under this agreement
the Bank gives Customer the right to use of its Car.
Components:
a. Copy of Application form
b. Asset Description
c. Rental Schedule (amount & due dates)
d. Receipt of Vehicle (delivery date) e. Demand Promissory Note
4. Letter of Undertaking to Purchase
Purpose: This is an undertaking by the customer to purchase the Car from the Bank
cases of Default & early termination.
Components:
a. Early Purchase Price Schedule
5. Sale Deed
Purpose: This document records the formal sale of the Car by the Bank to the
Customer.

Ladies Banking
The Bank is the first in the country to introduce 'Ladies Banking' a dedicated
banking section only for ladies. This new service provides an exclusive banking area
as per the set Shariah principles for our lady customers in a more comfortable
environment.

The dedicated Customer Services Officer in our ladies only banking area will provide
consultancy for a full range of our Halal banking services including, 9am to 5pm
Online Banking, Term Certificates, Current & Saving Accounts, Consumer Financing
and 24/7 banking services. ladies banking service is a part of Meezan Banks mission
to focus on customer convenience and service quality and make Islamic Banking the
banking of First Choice.

This service is presently being offered at our DHA Phase II Extention and Barkat-e-
Hyderi branches in Karachi, and will be offered at some of our other branches very
soon. Insha'Allah.

Discussion and suggestions

People have needs -- food, clothes, houses, machinery, services; the list is endless.
Entrepreneurs perceive these needs and develop ways and means of catering to them.
They advertise their products and services, peoples expectations are raised and people
become customers of the entrepreneur. If the customers’ needs are fulfilled according to
their expectations they continue to patronise the entrepreneur and his enterprise
flourishes. Otherwise his enterprise fails and people take to other entrepreneurs.

Banks too are enterprises; they cater to peoples’ needs connected with money -- safe-
keeping, acquiring capital, transferring funds etc. The fact that they existed for centuries
and continue to exist and prosper is proof that their methods are good and they fulfill the
customers’ needs and expectations. Conventional commercial banking system as it
operates today is accepted in all countries except the Islamic world where it is received
with some reservation. The reservation is on account of the fact that the banking
operations involve dealing in interest which is prohibited in Islam. Conventional banks
have ignored this concern on the part of their Muslim clientele. Muslims patronized the
conventional banks out of necessity and, when another entrepreneur -- the Islamic banker
-- offered to address their concern many Muslims turned to him. The question is: has the
new entrepreneur successfully met their concerns, needs and expectations? If not he may
have to put up his shutters!

Broadly speaking, banks have three types of different customers: depositors, borrowers
and seekers of bank’s other services such as money transfer. Since services do not
generally involve dealing in interest Muslims have no problem transacting such
businesses with conventional banks; neither do Islamic banks experience any problems in
providing these services. Among the depositors there are current account holders who
too, similarly, have no problems. It is the savings account holders and the borrowers who
have reservations in dealing with the conventional banks. In the following paragraphs we
will see how well the Islamic banks have succeeded in addressing their customers’
special concern.

Conclusions

Islamic banking is a very young concept. Yet it has already been implemented as the only
system in two Muslim countries; there are Islamic banks in many Muslim countries, and
a few in non-Muslim countries as well. Despite the successful acceptance there are
problems. These problems are mainly in the area of financing.

With only minor changes in their practices, Islamic banks can get rid of all their
cumbersome, burdensome and sometimes doubtful forms of financing and offer a clean
and efficient interest-free banking. All the necessary ingredients are already there. The
modified system will make use of only two forms of financing -- loans with a service
charge and Mudaraba participatory financing -- both of which are fully accepted by all
Muslim writers on the subject.

Such a system will offer an effective banking system where Islamic banking is obligatory
and a powerful alternative to conventional banking where both co-exist. Additionally,
such a system will have no problem in obtaining authorisation to operate in non-Muslim
countries.

Participatory financing is a unique feature of Islamic banking, and can offer responsible
financing to socially and economically relevant development projects. This is an
additional service Islamic banks offer over and above the traditional services provided by
conventional commercial banks.