1.

Introduction

In the developing country like Pakistan it is one lifes most important achievement to own a home. Because it provides the security, stability and is a great blessing in itself. Now days it is unpredictable and costly environment, saving the required money can take a life time in itself. Rising property prices, taxes, inflation, currency devaluation, it is very hard task. On the other hand owing own home by paying an easy instalments that takes the step towards complete the ownership, is so much better than paying the rent which ultimately addition in the expenses rather than the ownership of the property. By accepting the borrowing options that being a Muslim one should accept the totally Riba Free (interest free) financing option for inner satisfaction and peace of mind, because Allah prohibited the interest for believers. Islamic mortgage lending based on a diminishing Musharakah base, which means where bank provides the certain amount of finance to the customer and the borrower agree to a monthly payment to the bank of which a component is for the use of the home (rent), and another for customers equity share, as the result the monthly payment reduced regularly and customers share in the mortgage property grows. When the borrower made the full investment that had been agreed, then he becomes the sole owner of the property and bank removed its charge from the property. But here the point is this why the people of country are entering the interest based structure instead of interest free banking system. <http://www.meezanbank.com/easyhome.asp > In a home mortgage market there are no limits to the options. This has made it possible for almost anyone to buy, construct or renovate the home. Most people however rush headlong into the mortgage process without checking out the options. This could be because we are too busy to study the market, or would like to use the same company as people they know. At the time of entering the mortgage contract there should be study before choosing the mortgage options. There are numerous items like attractive rates, lock in periods, insurance benefits and other add-ons to sweeten the deal. It is always beneficial for the borrower to compare the various options available in the market. Thats why one will know that he/she is getting the best deal. Here 1

the question becomes, what source of mortgage should be used and how one can glean these information. http://www.4loanranger.com/bank-loan/index.html The Shariah prohibits interest or usury, gambling and gharar (undue risk taking), involvement in trading in such goods and services that are unlawful in themselves. As such, Islamic banking products are fundamentally and conceptually different from conventional banking products, although in order to facilitate customer ease and clarity of understanding, such products often emulate the packaging and presentation of conventional banking products. This does not mean that these products are the same as those offered by conventional banks. Islamic Banks serve the same purpose to customers and the functions of Islamic banks are and will remain essentially that of financial intermediaries. <http://www.nbp.com.pk/EcomomicBulletin/Economic%20Bulletin%20Jan-Feb %202005.pdf>

2.
2.1

Literature Review
The Islamic Perspective

The fundamental sources of Islam Quran and the Sunnah (teaching and traditions) of the Holy Prophet Muhammad (Peace Be Upon Him) provide guidelines for economic behaviour and a blueprint of how economic system should be organized. (Khan S. Mohsin & Mirakhor, Abbas 1992) Islam is not a new religion ; it is the same truth that God revealed through all His prophets. All religions are the same in essence, whether given, for example, to Noah, Abraham, Moses, or Jesus, or to the holy Prophet of Islam. For a fifth of the worlds population, Islam is both a religion and a complete code of life. Economic growth is the main transmission channel for development. Islam does not contradict growth; it promotes sustainable development and growth. The ultimate objectives of an Islamic economic system are achieving development, based on socio-economic justice, care and compassion for all, in terms of complete human personality. Tools prescribed to achieve the socio-economic objectives of the Islamic economic system are the system of Zakat, prohibition of Riba and the Islamic Law of Inheritance. Prohibition of Riba is the cornerstone of Islamic financial transactions; the basis of cooperation between capital and enterprise in Islam is sharing of the risks and gains between the two . (Hussain, Dr. Ishrat 2004) In Islam the practice of paying and receiving interest is prohibited between individuals and the state as much as between one individual to another. (Siddiqi, Muhammad Nejatullah 1983) Those interested in Islamic economics have been endeavouring to develop and crystallize economic concept and theories which confirm to the Islamic ideology and postulates. (Modeling Interest Free Economy: A Study in Macro-Economics and Development 1991)

2.2

Concept of Interest in Islam

Those who devour Riba shall rise up before Allah like men whom Shaitan has demented by his touch; for they claim that trading is like usury. But Allah has permitted trading and forbidden usury. He that receives an admonition from his Rabb and mends his ways may keep what he has already earned; his faith is in the hand of Allah. But he that pays no heed shall be among the people of fire and shall remain in it forever. (Surah Al Baqarah 275)

A very important pillar of this model is the prohibition of Interest or Riba, which is made clear by the following Quranic verse in which Allah (SWT) says: O, believers, fear Allah, and give up what is still due to you from interest (Riba), if you are true believers. If you do not do so, then take notice of war from Allah and His Messenger. But, if you repent, you can have your principal. Neither should you commit injustice nor should you be subjected to it. (Surah Al Baqra 278-279) Islam is a complete religion; it provides guidance for each and every aspect of human life. Economics is one of the most important aspects, as every human being needs involvement in some kind of economic activity for survival. Islam has provided a complete economic model for a establishing a healthy society. With the expanding focus and scope of Islamic finance worldwide, there is a rapid proliferation of feasible solutions that cater to almost all financial requirements. Ahmad, Khurshid (1981) & <http://www.nbp.com.pk/EcomomicBulletin/Economic%20Bulletin%20Jan-Feb %202005.pdf> Whenever a contract involves a guaranteed profit for one party, riba (interest) is involved (Aly, Remona 2005)

2.3

Mortgages Concept in Islamic Banking

According to documented Shariah jurisprudence opinion which is known as Fatwa, the proposed arrangement is having the following transactions: To create joint ownership in the property (Shirkat-al-Milk) Giving the share of the financier to the client on rent. Promise from the client to purchase the units of share of the financier. Actual purchase of the units at different stages. Adjustment of the rental according to the remaining share of the financier in the property. (Muhammad Taqi Usmani 1998) It's a transaction in which a buyer purchases a home through a rent-to-own agreement. A conventional mortgage, in which a buyer repays a loan with interest, violates the Quran, which forbids the payment or receipt of interest. http://www.islam-finance.com/FAQ.html The Holy Quran forbids "riba", which is interest, or usury. Yet Muslims need money and banks need to make a living. Systems are devised to get round the ban. For example, instead of a Muslim holding a mortgage for a house, the bank can own the house and make arrangements for the Muslim gradually to buy it off the bank over a period of years. (Moore, Charles 2004) & <http://www.lariba.com/knowledge-center/faqs.htm#question1>

2.4

Government steps

As the part of the Islamization of economic structure the all commercial bank convert their some work to non interest basis. But the procedure by their selves was un Islamic declared by Federal Shariat Court (FSC) in 1991, the govt. and other banks were to go appeal in Supreme Court of Pakistan. The Shariat Appellate Bench of Supreme Court of Pakistan upheld the previous decision in 1999. In the light of this order government of Pakistan form a committee to judge the strength and risks of conversion of the interest based system in to Islamic finance system. Because it was not possible to implement this in short term. The State Bank of Pakistan issued criteria for the 5

establishment of Islamic banks in private sector and it decided to promote Islamic banking parallel with the conventional banking. (Hussain, Dr. Ishrat 2004) (For further details See Appendix A) Pakistans government is to issue licences for new Islamic banks, the first time that new banking licences would be issued in a decade, according to Shaukat Aziz, finance minister. The decision appears to be a reversal of Pakistan's earlier policy of a cap on the number of private banks in the country with a view to encouraging mergers to build up national banking networks, replacing small, regional banks. However, it is driven mainly by concerns over the controversy surrounding the future of Islamic banking in Pakistan. (Bokhari, Farhan 2002) & (Bokhari, Farhan 2001) Despite annual growth of about 15 per cent, analysts say Islamic banking is being held back because Muslim scholars have yet to define how compatible the newest financial products are with Islam. David Waite from Gulf International Bank in London said market research had shown 20 per cent of people from Islamic countries would be attracted to investments compliant with Islamic Shariah law, but only if the right products and the necessary performance are there. From a marketing perspective, the sharia compliance brings the customer to you. The performance sells it to them, <http://216.109.124.98/search/cache?p=%27Islamic+Banking+in+Pakistan %27&ei=UTF8&u=pakistantimes.net/2003/11/29/business.htm&w=islamic+banking+pakistan&d= SWo47Q0DL-7h&icp=1&.intl=uk>

2.5

Role of State Bank of Pakistan

Since 1991 verdict by Supreme Court that initially sought a conversion of the banking and finance system along with Islamic principles. On appeal, the court's ruling was toned down but central bank officials say that rather than converting the entire financial system to an Islamic one, the authorities are now working to create either a network of new Islamic banks or "windows" offering Islamic services within conventional banks. (Bokhari, Farhan 2003)

The Governor of State Bank of Pakistan reiterated the central banks commitment to promote Islamic banking on sound footings, provide a comprehensive and secure regulatory framework to establish Islamic banks as a parallel banking system, comparable and compatible with the conventional banking system and at the same time making sure that it is Shariah compliant. (Hussain, Dr. Ishrat 2004) State Bank of Pakistan plans to license two overseas banks by mid 2006 to offer services that comply with Muslim principles, seeking to attract overseas lenders to offer service that comply with Shariah and promote Islamic finance. (Zamir, Haris & Nambiar, Shanthy 2005) Pakistans leading bankers become uncomfortable when pushed to say how they plan to cope with an Islamic system of banking. But, the central bank governor, is convinced that the change to an Islamic system would not spell disaster for the country's economy, adding that "nobody wants to see disruption". (Bokhari, Farhan 2001)

2.6

Corporate governance with reference to Islamic banking

The former Governor, State Bank of Pakistan, Dr. Ishrat Husain has pressured upon the banks to adopt best international practices in corporate governance. He said by keeping an eye on the economy that market risk is now becoming one of the major challenges faced by the financial institutions and that management boards should be vigilant in this area also. Particularly the management of Islamic institutions emphasized that sound Corporate Governance envisages setting up an environment of trust, transparency ethics, responsible behavior, checks and balances. (Hussain, Dr. Ishrat 2003)

2.7

Variation in banking procedure & risk

Islamic banking is a system of finance totally based on the sharing of risk and profit, rather than on the payment of interest or the payment of predetermined rates. While in the capitalist economy the interest is the price of money when conventional banker rents / lends it. The rate of interest is determined by

central bank as a result of the fiscal and monetary policy measures. Few Westerners take it seriously as a way for a modern economy to do business. In some ways, this is a mistake. In one view, the mistakes that have led Western banks and economies into their present financial troubles are precisely the errors that Islamic banking tries to avoid. Many Muslim countries have developed a variety of partnership agreements to allow lending without interest. Under such schemes, banks receive a contractual share of the profits generated by borrowing firms. Along with boosting the welfare of general public, this approach has many advantages, such as encouraging equity and discouraging debt. (Banking Law, Banking Industry in Pakistan.. (1992) The Economist Vol. 323, Iss. 7753) & <http://www.lariba.com/knowledgecenter/faqs.htm#question1>

2.8

Banks in Pakistan (total and Islamic)

Total financial institutions in Pakistan are 70, which include nationalized schedule banks, specialized banks, private schedule banks, foreign banks, developing financial institutions, investment banks, discount and guarantee houses, houses finance companies, venture capital companies and micro finance banks (Please see the appendix E & F). <http://www.finance.org.pk/survey/chapters/06-Money%20and%20Credit.PDF > The total number of banks having Islamic Banking Licence has increased to five. M/s. Meezan Bank Limited, Al Baraka Islamic Bank, Bank Islami Pakistan Limited and Emirates Global Islamic Bank Limited are the other four banks having Islamic Banking Licences. Meezan Bank and Al Baraka Islamic Bank are currently operating in Pakistan with 36 branches. In addition to these banks, 31 branches of nine conventional banks are also providing exclusive Islamic banking services to their customers in all the four provinces of the country. <http://www.sbp.org.pk/press/2005/Dubai_IBL.pdf Nambiar, Shanthy (2005) > & Zamir, Haris &

In Asian economy , there are signs of growth in financial sector on the retail side. Countries such as Malaysia, Indonesia and Pakistan offer opportunities because of their large populations." Yet, while there are signs of a growing demand for Asian Islamic banking products, analysts have yet to produce credible estimates of market size and growth potential in the region. The global Islamic banking market is still a grey area, with estimates ranging from Dollars 50bn to Dollars 200bn. (Bokhari, Farhan 2004) & (Mcsheehy, Will 2004)

2.9

Image of the banks

The leading financial institutions are rapidly progressing in the country. At the end of year 2004 all local and foreign financial institutions have 6581 local and overseas branches. And they are earning huge profits and also enjoy good credit rating, maintaining huge deposits and advances portfolio. Most of the top 16 financial institution (as shown in Appendix F) are dealing in home finances. (For further details please see Appendix F, G, H & J) <http://www.nbp.com.pk/EcomomicBulletin/EB%20for%20Jul-Aug %202005.pdf>

2.10 People needs for homes, their income level and how banks treat them
According to 1998 census, the total number of housing units throughout the country was 19.3 million. The annual requirements of the houses is 820,000 units annually, this huge number become due to backlog of previous years. Particularly for the low income groups. The maximum loan amount has been increased from Rs.5 million to Rs.10 million, the debt equity ratio go down for lower income group and maximum period reached from fifteen to twenty years.

After the discussion with the manager mortgages and credit initiation units heads of different banks including Islamic banks, it came into the knowledge that almost these institutions are hesitating the extension of finance to the following categories. It is surprising to come into the knowledge the one side the Islamic institutions raise the slogan for the welfare of the general public on the other hand they are not providing the facilities to below mentioned categories and treated as negative occupations. 1. Lawyers 2. Journalists (Publishers & Editors can be looked on case to case basis). 3. Agriculturists unless where agriculture income is the main source of income 4. Law enforcement personnel even if they have a business concern 5. Commission based business e.g. stockbrokers, real estate agents, commodity brokers. 6. Business involved in rental business. 7. Business involved in giving away goods on loans or instalments. 8. Businesses with pronounced cyclical trends displayed in their cash flows e.g. ice factories; cold storage & warm clothing related businesses. 9. Speculative business i.e. property buying & selling, stock purchase and selling. 10. Government contractors / suppliers dealing with or owing money to GOP. 11. Construction/Real 12. Transporters 13. Entertainment Business 14. People related to entertainment business. 15. Jewellers (smaller ones only) Estate related business where there is no permanent/proper office.

As mentioned point number three in the above category, the institutions are not granting the loans to the agriculturalist. The banks policy contravene the

10

policy of the govt. because Pakistan is a agricultural country and in such country the institutions are not giving the loan facilities to the people having the main source of income from agricultural. As mentioned in the above list number 18 the institutions are not sanctioning the finance to the members of stock exchange except the Karachi stock exchange member. It is the contradiction with the policy of the bank because the members of stock exchange located in Lahore have the same worth just like Karachi stock exchange member.

2.11 Comparison of instalments amount

The most expensive asset that any of us will generally purchase is our homes. The overall cost of this can vary radically depending on the mortgage product. Ensuring that you have selected the most competitive mortgage can result in substantially lower cost of borrowing. To add to the mainstream mortgage choices available there are a number of Shariah compliant products now on the market which are becoming more easily accessible and more competitive. (Mian, Hamza 2006) As mentioned in appendices K & L the comparison of instalment amount on the same amount of finance for the same period. For the comparison it is assumed that if a person gets finance amounting to Rs. 1,600,000/- from an Islamic financial institution for twenty years and other person gets same finance amount, for the same period from other conventional financial institution. (Please see the appendices K & L). The person took finance from an Islamic institution have to pay amounting to Rs. 3,528,000/-, on the other hand the person got finance from ordinary or conventional institution have to pay amounting to Rs. 4,248,952/-. This tendency reflects that the financing option from conventional bank is more expensive than the Islamic mode of mortgage finance. <http://www.lariba.com/knowledge-center/faqs.htm#question1>

11

2.14 Problems of Islamic Banking

As defined by the governor of State Bank of Pakistan the followings are the challenges faced by the Islamic banking structure in Pakistan. Lack of effective enforcement of contracts. Inefficiency in the system of early recovery Ineffective code of conduct for professionals Lack of public awareness about Islamic financial system and its availability. Minimum income level. Area restrictions. Negative occupation. Minimum equity requirement Corruption

In an In an article in The Economist on the subject Islam and changes of interest rate the author explained that from a bank's point of view, mark-up loans are a relatively easy way to lend without receiving interest. In other ways, however, Islamic banks are less obviously suited to modern economies. Judging whether a company will make profits in the future is harder than making a decision about its current ability to repay a loan.

12

3.

Methodology

For a literature review, during the search on the internet I got some valid references from the following website. http://www.islamic-finance.com/research_f.htm http://www.islamic-finance.com/resources_f.htm

I would like to mention that I got a lot of e - mails IDs of those people, who made the research on the topic of Islamic finances. Round about sixty to seventy sources are selected and email to them in the second week of December. After ten to fifteen days I got reply form some persons. And the reply tendency was only twenty percent to the mails send to them. This replies tendency raise the assumption that most of e mails IDs of that people who made research on this topic during their studentship time and now they in practical fields and now they also have another e mails IDs. So they are not checking their previous e mails IDs. It is just like that during the studentship time in University of Wolverhampton I am mostly using University e mail ID i.e. M.S.Majid@wlv.ac.uk . But prior to this, I used the ID of the bank in which I worked that was sameen.majid@mcb.com.pk . The assumption is also supported by another argument i.e. I mostly use the university ID for mailing purpose and only check hotmail or yahoo account after couples of weeks, if a person mails me on hotmail or yahoo ID it will not be possible for me to comply him within fifteen to twenty days due to non checking these accounts. The major portion of the methodology conducts through telephones in Pakistan to the different officials of the different financial institutions as mentioned acknowledgement. Some of them give the internal information verbally not on e-mail. But due to my previous experience in the field of banking and some personal contacts with the different staff member, time to time they send me the data for the purpose of review and research. But keeping in view the secrecy of internal working and key facts of the policy of

13

the banks, they bound me and got a commitment from me not to produce the internal working papers further as it is, but can high light the issues involved, which is ethically accepted by me.

3.1 Variation Development

in

Banking

Procedure

and

Level

of

Islam provides the banking system based on profit and risk sharing rather than the fixed payment of interest after a fixed interval. The Islamic financial institutions borrow and lend money on the basis of profit sharing. But in mortgages lending the Islamic banks also should have the edge over the conventional banking on account of the principle of non-interest. The Islamic banks should get the Fatwa from the renowned Shariah Scholars. In contravention financial system the rate of interest determine by the central bank. Here in Islamic banking context, it should be assumption that the welfare of general public should be kept in mind in making of loan repayment structure. In an Islamic perspective the bank should give the right to all people instead of their previous financial record. Like in case of late payment of monthly rentals of the payment of unit price the Islamic bank should charge some penalty from the borrower, and it should not be consider as the income and the cumulative amount should be spent the welfare work of the public. On the other hand the conventional banks charged the late payment charges (LPC) and treat this amount as income of the bank. (Banking Law, Banking Industry in Pakistan.. 1992 The Economist Vol. 323, Iss. 7753) The minimum income level should be less than PKR 10,000/- because the majority salary class in government, semi government and privates sector is less than PKR 10,000/-. But the minimum income level for required by the conventional banks is PKR 12,000/- to 18,000/-. But the minimum income required by the Meezan Bank Limited is PKR 20,000/- which is most higher income level than the conventional banks. One side they raise the point that they are working for all masses but on the other they are targeting the rich people, which is contravenes the teachings of Islam.

3.2

Banks in Pakistan
14

As shown in appendix E & F the more than 60 financial institutions are working in Pakistan. Being an Islamic republic the all financial institutions should deal in Islamic system. But unfortunately only four out of these are complete Islamic institutions. And out of these fours at the moment only two are functioning. A study on the growth shows that the in Asia the Islamic banks in retail market are growing tremendously and having a targeted to grow from US$ 50bn to US$ 200bn. So the other conventional institutions should take step to improve the situation.

3.3

Banks in Lahore

Lahore is the second biggest city of Pakistan after Karachi. According to populations census in 1998 the Lahores population is 5.1 million. More than 95% of the population of the country are Muslims. Upon this ground there should be more Islamic facilities for finances should be available to the public. But the only two banks are providing the mortgage facilities to people. In the Lahore region other top ten conventional banks have more than 470 branches.

3.4

Banks image publicity

In the Islamic banking context the banks image should be on account of the service or products which it offers by keeping in view the welfare of general public. But inductive aspect the image of the bank is accounted for from their deposit, advances, equity, profit ranking, number of branches they have and from the credit rating. But main source of the banks image in the general public is the advertisement of the products which they offer. According to the some staff members the Islamic financial institutions are a new in the field and they are not making a big advertising campaign. By the lack of advertising campaign the Islamic financial institutions cant create a big name as which they deserve due to the unique procedure free from interest.

3.5

Interest free banking in practice (Detail of Lending)

15

Islam permits the riba or inter free banking and believe on the profit sharing both for the depositors and as well as borrowers. Especially in case of mortgages the bank create joint ownership of the property with the buyer and convert the banks finance amount into units by dividing the contribution of finance amount over the total months. And give the opportunity to the borrower to purchase these units within a specified period of time and against this service it charges the rent on the units which are held by the financial institution. In the other words (Islamic term) Murabaha is the sale on profit, means cost plus profit. If a person has no funds to purchase a home or property it comes in financial institution and requests it then after checking his credit worthiness and credibility the bank and the borrower jointly purchase the property and financial institution gives the right to further purchase the units of the property into different part within specified period of time. On the other hand it is observed in the conventional banking the bank grant the loan to the borrower and he solely purchase the property and he paid the principal amount and the interest thereon.

3.6

Zoning (Lahore, Areas, how bank treat people)

Islam talks about the welfare of whole society not the specific group or class. But according to different bankers the all banks including Islamic and other conventional should finance the amount for home and all the city area. Hence this practice not adopted by the financial institutions they are granting the loans into the specified areas, or in other words they are targeting the rich people. They viewed in that areas the property documents are not cleared and the interest of the bank will be damaged in case of defaults of the customers.

3.7 Procedure of mortgage consumer finances, Credit Matrix, Important Elements for Credit Policy
According to different sales head of consumer department, the practice in Lahore, in consumer finances the financial institutions contact with the customer through their sales officers. The sales officer visits the customer or the customer contacts with bank. The customer fills the application and 16

provides the relevant documents to bank. The bank checks the track record of the customer from the documents to be provided and from the data check facility which is provided by the central bank. Then issue the offer and sanction letter to the customer. Prior to these the banks legal consultants check the copies of the documents and appraisal agency value the property. After fulfilling necessary requirement the bank disburse the loan. And after that the external agency management unit (EAMU) of the bank make the necessary arrangements for the completion of the transaction and mark the bank lien on the property. It is observed the some time people having less income proof the bank executive gave the deviation to that customers, it is only for business purposes. Some time banks executive gave the deviation to the customers in terms of debt burden, area, but they didnt grant deviation to that customer which directly affects the banks income.

CREDIT INITIATION STRATEGY Credit initiation checks will be built-in to ensure minimum risk acceptance criteria. These will include: Completion of documents KYC is the primary responsibility of Sales Officer and concerned RM. Conformity with eligibility criteria Bank statement/tax returns. (for estimating income) Satisfactory property valuation Satisfactory legal review

The credit initiation will be a case-by-case analysis against minimum acceptance criteria as per above.

3.8 Context of Staff and Procedure adopted by different financial institutions

17

The prime duty of the staff should be to provide the best services to the people. It is observed during the discussion that the hierarchy level in the staff and procedure of the advancing is same in all institutions but the procedure in the Islamic bank in terms of contract between customer and banks are different. Because the Islamic bank made the contract with the customer for the purchase of different units of the mortgage property. As reported by the staff members of a commercial bank the charged documents prepared by the financial institutions are the followings: AGREEMENT FOR LONG-TERM FINANCING ON MARK-UP BASIS AGREEMENT TO CREATE REGISTERED MORTGAGE PROMISSORY NOTE UNDERTAKING FROM SELLER UNDERTAING FROM BUYER AUTHORIZATION TO TAKE THE POSSESSION OF TITLE DOCUMENTS IN CASE OF BALANCE TRANSFER FACILITY In the banks dealing in Islamic operations are preparing the Sale Agreement instead of agreement of long term finance on markup basis. But in other charged they never use the word of interest and remaining charged documents are same.

18

4.

Problem Differentiation

The following are the problems with the mortgage lending in Pakistan and as well as in Lahore. MAJOR RISK ISSUES Based on market analysis and in the light of discussion with the different banks staff, basically through the study of competition, and on the past experiences certain product related risks have been identified. Following are the major issues which should be mitigate. Interest rate margin & liquidity risk prospects the Islamic banks has less liquidity surplus and a higher cost of funds. Consumer assets business is a high turnover business, which requires expertise in the bank to deal with lending to a large customer base. Additionally, absence of technology based collection system will further aggravate the situation. This is mitigated by the following factors: Gradual build-up of the portfolio both numbers and geographic spread. Clearly defined product structures / variables with strong application filtering process. Hiring of experienced staff. Segregation of functional duties process cross checks in the system. Improper/ inadequate documentation review leading into problems with reference to security enforcement.

19

 Sale of Mortgaged Property by the borrower, letter of Intimation is used to advise the concerned housing authority about the property that is mortgaged with us and therefore, unavailable for sale/ purchase/ encumbrance. The property valuation risk involves: Valuation of Choice: Applicant influencing valuators Improper valuation Valuation done without conducting proper site visit In view of the target market being businessmen and self-employed professionals with the fact of undeclared / under income reporting, we have an income estimation system. The process requires a Bank designated Chartered Accounting Firm to establish applicants income by reviewing the informal documentation. Security Enforcement Issue means lack of focus on housing finance from financial institutions was mainly due to cumbersome legal process in relation to the security enforcement. A new legislation under Financial Institutions (Recovery of Finances) requires some amendments. With competition offering higher loan amounts both to fresh and BTF customers, some business will be diverted to competition. Regulatory bodies like LDA, and societies procedural requirements Increased documentary requirements before property transaction resulting into costs/hassle for the purchaser/ borrower.

20

 The above also resulted in increased TAT, thus making the borrower continue to pay instalments even before the actual transaction takes place. Large local banks (UBL & HBL) have capitalized on high marketing budgets to advertise their mortgage products. Competitive Banks have been engaging in price wars and enhanced product features and expanded geographical offerings to build portfolios

21

5.

Recommendations

The following are the recommendations for the further research on this topic: Literature point of view keeps an eye on the news papers and economic bulletin published by available on the site of National Bank of Pakistan. Keep an eye on the news papers especially The News etc. If one have an access with the staff member of Islamic banks Researcher if he / she is in that country (Pakistan) can do internship as a part of his / her graduation degree in commerce, can physically observe or investigate the actual practice. Contact with the people who made the research on Islamic finances prior to that. By attending the annual general meeting of Islamic banks. Special interviews of the managers of Islamic institutions. The following are the recommendations for the promotion of Islamic banking in the country:

22

 Advertising campaign on outdoor and print media with the same tag line but enhanced features given in this product program Hiring of separate sales managers to manage Real Estate Channel & Branches Loyalty programs for current customer base to generate positive word of mouth. (Discounted/free home decorations/ paint facilities by making alliances with paint manufacturers etc). Owner occupied residential property only. In case of HP also the status is to be verified and if tenancy declared the seller to give undertaking that it would be vacated before the transaction. However, in case the existing tenant is the new buyer of the property, the undertaking for vacation will not be required. Purchase of the property is allowed if a customer is temporarily residing in non approved city and is purchasing the property in an approved city where verification is possible, provided the applicant is purchasing the property for his family/ self residence after the purchase. Bank has to appointed and is using reputable legal council to counter this risk The central bank should use its legitimate powers to compel the banks to start the Islamic banking operations or can establish a subsidiary for these purposes. The government of Pakistan is privatizing the nationalized banks and also welcoming the foreign investors in the country. It is the opportunity for the international Islamic financial institutions to enter in the market.

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6.

Conclusion

The financial services sector in Pakistan has been going through a major reform process for the last several years. For the successful Islamic banking operations, it will be beneficial for the institution to provide minimal credit amounts to different people and target more people instead of the volume of bookings. When a customer manages a good credit history with them the institutions should give another opportunity for entering a further contract for new property. These stepping loans minimise risk to the borrower (particularly start-ups or early stage expansions) and to the lender. Further, the outreach of services to the underserved segments of population has increased. By minimizing the factor of risk the financial institutions can diversified their lending portfolios and have opened access to credit for a large number of people across the country.

24

Reference:
Al Quran (Surah Al Baqarah 275, 278 & 279) Bank of Punjab [online], [cited 03 January 2006], Accessed via http://www.bop.com.pk/brn_lahore.aspx Banking Law, Banking Industry in Pakistan.. (1992) The Economist London (UK) Vol. 323, Iss. 7753; [online]. 4 April, p.49 [cited 16 December 2005], Accessed via Proquest at: < http://proquest.umi.com/pqdlink? did=362921&sid=3&Fmt=3&clientId=53702&RQT=309&VName=PQD> Banking Industry, Islam and Changes.. (2001) The Economist London (UK) Vol. 358, Iss. 8209; [online]. 17 Feb, Section: Finance and Economics p.76 [cited 16 December 2005], Accessed via Proquest at: < http://proquest.umi.com/pqdlink? did=69315402&sid=2&Fmt=3&clientId=53702&RQT=309&VName=PQD> Bokhari, Farhan (2002) Financial Times London (UK) [online]. 25 July, p. 3 [cited 16 December 2005], Accessed via Proquest at: < http://proquest.umi.com/pqdlink? did=128349471&sid=3&Fmt=3&clientId=53702&RQT=309&VName=PQD> Bokhari, Farhan (2001) Financial Times London (UK) [online]. 11 Sept, Section: Asia Pacific p. 12 [cited 16 December 2005], Accessed via Proquest at: < http://proquest.umi.com/pqdlink? did=80149084&sid=3&Fmt=3&clientId=53702&RQT=309&VName=PQD> Bokhari, Farhan (2003) Financial Times London (UK) [online]. 6 Oct, Section: Global Investing p. 25 [cited 16 December 2005], Accessed via Proquest at: < http://proquest.umi.com/pqdlink? did=419453131&sid=3&Fmt=3&clientId=53702&RQT=309&VName=PQD>

25

Bokhari, Farhan (2004) Financial Times London (UK) [online]. 4 Oct, Section: Global Investing p. 27 [cited 16 December 2005], Accessed via Proquest at: < http://proquest.umi.com/pqdlink? did=706372501&sid=3&Fmt=3&clientId=53702&RQT=309&VName=PQD> Bokhari, Farhan (2004) FT.com London (UK) [online]. 16 April, p. 1 [cited 16 December 2005], Accessed via Proquest at: < http://proquest.umi.com/pqdlink? did=618910401&sid=3&Fmt=3&clientId=53702&RQT=309&VName=PQD> Evans, Kathy (1992) The Guardian Manchester (UK) [online]. 19 Jan, p. 6 [cited 16 December 2005], Accessed via Proquest at: < http://proquest.umi.com/pqdlink? did=3242449&sid=3&Fmt=2&clientId=53702&RQT=309&VName=PQD> Habib Bank Ltd. [online], [cited 03 January 2006], Accessed via http://www.habibbankltd.com/html/branch_lst.cfm? sub_region_id=28&region_id=11 Hussain, Dr. Ishrat (2003) The banks to adopt best international practices in corporate governance.13 Oct., Accessed on 22 Dec., 2005 Available from <http://www.sbp.org.pk/press/2003/Corporate-Governance-13102003.pdf > Hussain, Dr. Ishrat (2004) State Bank issues Islamic banking Accessed on 22 Dec., 2005 Available from <http://www.sbp.org.pk/press/2005/Dubai_IBL.pdf > Khan, Masood Waqar (1991) Interest Free Islamic Economic System, Review of Islamic EconomicsJournal of the International Association for Islamic Economics Volume 1 No 1 Cromwell Press Ltd., Broughton Gifford, Wiltshire (Page 67) Khan S. Mohsin & Mirakhor, Abbas (1992) Islam and the Economic System, Review of Islamic EconomicsJournal of the International Association for Islamic Economics Volume 2 No 1 Cromwell Press Ltd., Broughton Gifford, Wiltshire (Page 1) Mcsheehy, Will (2004) FT.com London (UK) [online]. 22 July, p. 1 [cited 16 December 2005], Accessed via Proquest at: < http://proquest.umi.com/pqdlink? did=668402621&sid=3&Fmt=3&clientId=53702&RQT=309&VName=PQD> Meezan Bank Ltd. [online], [cited 19 December 2005], Accessed via <http://www.meezanbank.com/knowledge-glossary.asp? action=show&alpha=M>

26

Meezan Bank Limited [online], [cited 24 December 2005], Accessed via <http://www.meezanbank.com/easyhome.asp > Meezan Bank Ltd. [online], [cited 03 January 2005], Accessed via http://www.meezanbank.com/network.asp Meezan Bank Ltd. [online], [cited 03 January 2005], Accessed via <http://www.meezanbank.com/newsdetails.asp?nid=9 > Mian, Hamza (2006) Debt the scourge of the modern era. Final Warning, The Muslim Lifestyle Magazine January Edition, London: EMEL Media Ltd. (Page 89) Modeling Interest Free Economy: A Study in Macro-Economics and Development (1991) Review of Islamic EconomicsJournal of the International Association for Islamic Economics Volume 1 No 2 Cromwell Press Ltd., Broughton Gifford, Wiltshire (Page 47) National Bank of Pakistan [online], [cited 24 December 2005], Accessed via <http://www.nbp.com.pk/EcomomicBulletin/Economic%20Bulletin%20Jan-Feb %202005.pdf> National Bank of Pakistan [online], [cited 03 January 2006], Accessed via http://www.nbp.com.pk/BranchNetwork/Lahore.htm National Bank of Pakistan [online], [cited 03 January 2006], Accessed via http://www.nbp.com.pk/BranchNetwork/BranchNBP2005.htm National Bank of Pakistan [online], [cited 03 January 2005], Accessed via http://www.nbp.com.pk/EcomomicBulletin/EB%20for%20Jul-Aug%202005.pdf Saunders, M., Lewis, P., Thonrhill, A. (2003), Using Secondary Data Research Methods for Business Students Lodnon: Prentice Hall Financial Times (Page 188-219) Siddiqi, Muhammad Nejatullah (1983) Interest Free Banking, Banking Without Interest Leicester (UK): The Islamic Foundation (Page 175) State Bank of Pakistan [online], [cited 19 December 2005], Accessed via http://www.sbp.org.pk/ibd/2006/Ten_Year_Master_plan.pdf

United Bank Ltd. [online], [cited 03 January 2006], Accessed via http://www.ubl.com.pk/locations/search.asp

27

Zamir, Haris & Nambiar, Shanthy (2005) Pakistan pushes Islamic Banking Bloomberg News Tuesday, September 06, 2005 & Pakistan daily, The News, reported Aug. 30, 2005 Accessed on 29 Dec., 2005 Available from <http://216.109.124.98/search/cache?p=%27Islamic+Banking+in+Pakistan %27&ei=UTF8&u=www.iht.com/articles/2005/09/05/bloomberg/sxislamic.php&w=islamic+b anking+pakistan&d=IHN4Zw0DL__J&icp=1&.intl=uk> [cited 19 Decembver 2005], Accessed via <http://www.lariba.com/knowledge-center/faqs.htm#question1> [cited 19 December 2005], Accessed via <http://www.lariba.com/knowledge-center/faqs.htm#question1> [cited 19 December 2005], Accessed via <http://www.lariba.com/knowledge-center/faqs.htm#question1> [cited 22 December 2005], Accessed via <http://www.finance.org.pk/survey/chapters/06-Money%20and%20Credit.PDF > [cited 22 Decembver 2005], Accessed via Accessed on 22 Dec., 2005 Available <http://www.finance.org.pk/survey/chapters/16-Environment.PDF > from

[cited 22 Decembver 2005], Accessed via <http://www.finance.org.pk/survey/chapters/06-Money%20and%20Credit.PDF > [cited 22 Decembver 2005], Accessed via http://www.islamic-finance.com/research_f.htm http://www.islamic-finance.com/resources_f.htm [cited 10 January 2005], Accessed via http://www.statpak.gov.pk/depts/pco/statistics/pop_major_cities/pop_major_cit ies.html [cited 22 December 2005], Accessed via <http://www.finance.org.pk/survey/chapters/06-Money%20and%20Credit.PDF

28

Appendix A
Category: Islamic Banking Attached File: No attached File

EVOLUTION OF ISLAMIC BANKING

Date Posted: 2/12/2004 Reference: SBP

The Governor of the State Bank of Pakistan, Dr. Ishrat Husain gave a comprehensive outline on the evolution of Islamic Banking in Pakistan. He presented his paper at a seminar on Islamic Banking held recently at the Islamic Chamber of Commerce & Industry building, Karachi sponsored by Meezan Bank Limited. Meezan Banks senior management had also participated in the occasion, highlighting the vision as the first Islamic bank in Pakistan and key challenges faced. Dr. Ishrat commended the innovative and dedicated professionals involved in Islamic Banking at Meezan Bank and emphasized the further need of amelioration in the sector. The following is complete speech of Dr. Ishrat Husain delivered in the seminar. EVOLUTION OF ISLAMIC BANKING Dr. Ishrat Husain, Governor SBP THE ISLAMIC PERSPECTIVE Islam is not a new religion; it is the same truth that God revealed through all His prophets. All religions are the same in essence, whether given, for example, to Noah, Abraham, Moses, or Jesus, or to the holy Prophet of Islam. For a fifth of the worlds population, Islam is both a religion and a complete code of life. Economic growth is the main transmission channel for development. Islam does not contradict growth; it promotes sustainable development and growth. Socio-economic (distributive) justice: The ultimate objective of an Islamic economy. Achieving development, based on socio-economic justice, care and compassion for all, in terms of complete human personality. Tools prescribed to achieve the socio-economic objectives of the Islamic economic system are the system of Zakat, prohibition of Riba and the Islamic Law of Inheritance. Prohibition of Riba is the cornerstone of Islamic financial transactions; the basis of cooperation between capital and enterprise in Islam is sharing of the risks and gains between the two.

STATE BANK GOVERNOR, DR. ISHRAT HUSAIN INAUGURATES CIB ON-LINE FACILITIES
The Governor, State Bank of Pakistan, Dr. Ishrat Husain today inaugurated the

29

online facilities of SBPs Credit information Bureau (CIB) for banks/Development Finance Institutions (DFIs) and Non- Bank Finance Companies (NBFCs). With the launching of this facility, the State Bank has become the first Central Bank in South Asia to offer online credit information service to its stakeholders. CIB online service, which has been developed in collaboration with Pakistan Banks Association, is an important step towards provision of best international practices to financial institutions and State Banks transformation into a modern and dynamic central bank. Through Online facility financial institutions can now obtain credit reports from SBP electronically via dial up. Besides credit reports, financial institutions will also submit monthly credit data required by the SBP, online. Under this facility the authorized persons of the financial institutions listed with SBP, will be allowed on-line access to the CIB servers. State Bank, through CIB, collects credit data in respect of borrowers of Rs 500,000 and above from all banks, DFIs and NBFCs. It is already mandatory for the banks/NBFCs to seek credit report from CIB before extending any financial facility of Rs 500,000/- and above to the borrowers. Data contained in the credit reports issued by the credit bureaus improves the financial institutions ability to assess credit risk, loan processing cost and their credit appraisal administration & monitoring processes. A good credit history is considered as Reputation Collateral which can build confidence into banker- customer relationship. Credit bureaus also encourage greater competition among financial institutions for chasing creditworthy customers. They reduce the information advantage that financial institutions have over their existing clients, which leads to lower prices and greater access to credit. Reference: Accessed on 22 Dec., 2005 Available from <http://www.sbp.org.pk/press/2003/25apr-03.pdf >

Appendix C
Corporate governance with reference to Islamic Banking The Governor, State Bank of Pakistan, Dr. Ishrat Husain has stressed upon the banks to adopt best international practices in corporate governance. He was speaking at the concluding session of the Conference on Corporate Governance organized by the State Bank in Karachi today. Mr. Zakir Mahmood, President, Habib Bank was of the view that market risk is now becoming one of the major challenges faced by the banks and that boards should be vigilant in this area also. Mr. Aftab Manzoor President MCB and Mr. Naveed A Khan, Country Manager, ABN AMRO Bank, also participated in a panel discussion on the subject of corporate governance. The conference was organized to increase awareness about the corporate governance and the responsibilities of all stakeholders, particularly the Board of Directors and emphasized that sound Corporate Governance envisages setting up an

30

environment of trust, transparency ethics, responsible behaviour, checks and balances.

Appendix D
Procedure of house finance
Applying is simple! Simply download the application form and follow the 10 easy steps given below to make your dream of owning a Home, in a truly Halal way, come true. Step 1: Application Form & Initial Payment Submit the filled & signed application form to Meezan Bank. Submit the required cheque for Processing Fee & External Agency costs. Step 2: Required Documents Kindly attach all the required documents with your Application Form as mentioned below: Personal Information Copy of NIC Copy of Co-Applicant's NIC (if applicable) 2 passport-sized colored Photographs of Applicant / Co-Applicant Copy of Rental Documents (if applicable) Copy of last paid Utility Bills (Electricity/Gas/Telephone) Borrower's Basic Fact Sheet Bank Statement - last 6 months Copy of recent Credit Card Bills Income Information Original or certified copy of recent Pay Slip Employer's Certificate including Tenor/Designation/Salary Bank Statement of Business - last 6 months (if applicable) Copy of Management Accounts (if applicable) Business/Professional Information 3 years proof of business (e.g. Tax Return / Bank Certificate) Partnership Deed (in case of Partnership) Professional Degree / Certificate Professional Association Membership Certificate / Practice License If you have selected the property to buy or want financing for construction / re-placement / renovation Property Title Documents (copies at initial stage & original before disbursement)

31

"In the case of a Co-Applicant, all income related documents will also be required." Step 3: Address Verification Meezan Bank will verify your residential & office addresses and the addresses of references submitted. Step 4: Income Estimation For Businessman / Self Employed professionals Meezan Bank's External Consultant will contact you to determine your monthly income to help you in obtaining the maximum possible financing from the Bank. Kindly provide them all the required details. For Salaried Individuals Meezan Bank will verify the income with your employer Step 5: Legal opinion Meezan Bank will obtain a legal opinion on the property documents provided by you. Step 6: Property Valuation Meezan Bank's appointed Valuation Agency will evaluate the property to determine its market value Step 7: Credit Approval & Sanction Letter After you have satisfactorily fulfilled all Meezan Bank's credit requirements, we will give you a conditional sanction letter. Step 8: Account Opening After approval of the case, you are required to open an account at Meezan Bank and submit a filled Account Opening Form. Step 9: Signing of House Finance Agreement After completion of the above steps and approval of your case, you are required to come to Meezan Bank for signing of the Islamic House Finance Agreement and other legal documents In Home Construction / Renovation / Replacement Cases Original property documents will be handed over to the Bank at this stage. Step 10 Transfer of Property & Disbursement In Home Buying / Renovation Cases A Meezan Bank officer & our authorized lawyer will accompany you & the seller of the property to the appropriate Bank or Registrar's Office for Property Transfer. Original Property Documents will be handed over to the Lawyer who, after verification of the documents, will hand over the Pay Order to the Banker orSeller and will then complete the legal formalities on Meezan Bank's behalf.

Reference: Accessed on 24 Dec., 2005 Available from <http://www.meezanbank.com/easydownload.asp >

32

Appendix E

33

Reference: Accessed on 22 Dec., 2005 Available from <http://www.finance.org.pk/survey/chapters/06-Money%20and%20Credit.PDF >

Appendix F
34

Assessed on January 03, 2006 Available from http://www.nbp.com.pk/EcomomicBulletin/EB%20for%20Jul-Aug%202005.pdf

Appendix G

35

Assessed on January 03, 2006 Available from http://www.nbp.com.pk/EcomomicBulletin/EB%20for%20Jul-Aug%202005.pdf

36

Appendix H

Assessed on January 03, 2006 Available from http://www.nbp.com.pk/EcomomicBulletin/EB%20for%20Jul-Aug%202005.pdf

37

Appendix J

Assessed on January 03, 2006 Available from http://www.nbp.com.pk/EcomomicBulletin/EB%20for%20Jul-Aug%202005.pdf

38

Appendix K

39

Easy Home Payment Plan Summary Cost Price: (PKR) Customer Share: (PKR) Bank Share: (PKR) Profit Rate: Tenure in Years: Segment:

2,000,000/400,000/1,600,000/12% 20 Salaried

Total Units Unit Sale Price: (PKR) Monthly Rent Per Unit: (PKR) Total Starting Rent: (PKR) Starting Month Payment: (PKR) Easy Home Category:

240 6,667/67/16,000/22,667/Buyer

Tentative Payment Schedule Months 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 16,000 15,933 15,867 15,800 15,733 15,667 15,600 15,533 15,467 15,400 15,333 15,267 15,200 15,133 15,067 15,000 14,933 14,867 14,800 14,733 14,667 14,600 14,533 14,467 14,400 14,333 14,267 14,200 14,133 14,067 14,000 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 6,667 22,667 22,600 22,533 22,467 22,400 22,333 22,267 22,200 22,133 22,067 22,000 21,933 21,867 21,800 21,733 21,667 21,600 21,533 21,467 21,400 21,333 21,267 21,200 21,133 21,067 21,000 20,933 20,867 20,800 20,733 20,667 Rent (PKR) Unit Price (PKR) Monthly Payment (PKR) Balance Unit Value (PKR) 1,600,000 1,593,333 1,586,667 1,580,000 1,573,333 1,566,667 1,560,000 1,553,333 1,546,667 1,540,000 1,533,333 1,526,667 1,520,000 1,513,333 1,506,667 1,500,000 1,493,333 1,486,667 1,480,000 1,473,333 1,466,667 1,460,000 1,453,333 1,446,667 1,440,000 1,433,333 1,426,667 1,420,000 1,413,333 1,406,667 1,400,000 1,393,333 Balance Units 240 239 238 237 236 235 234 233 232 231 230 229 228 227 226 225 224 223 222 221 220 219 218 217 216 215 214 213 212 211 210 209

40

Appendix L
MCB PYARA GHAR SCHEME Repayment Schedule
Mr. ABC
Number of Installment Principal at Beginning Loan Instalment Interest Income Principal Payment Property Insurance Premium 1,600 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 16,000 15,984 15,967 15,951 15,934 15,917 15,900 15,883 1,617 1,634 1,650 1,666 1,683 1,700 1,717 1,734 132 132 132 132 132 132 132 132 132 17,749 17,749 17,749 17,749 17,749 17,749 17,749 17,749 17,749 Total Installment

At the time of disbursement

May 1, 2005 June 1, 2005 July 1, 2005 August 1, 2005 September 1, 2005 October 1, 2005 November 1, 2005 December 1, 2005 January 1, 2006

1,600,000 1,598,383 1,596,749 1,595,099 1,593,433 1,591,750 1,590,050 1,588,333

41

1,586,599
February 1, 2006 March 1, 2006 April 1, 2006 May 1, 2006 June 1, 2006 July 1, 2006 August 1, 2006 September 1, 2006 October 1, 2006 November 1, 2006 December 1, 2006 January 1, 2007 February 1, 2007 March 1, 2007 April 1, 2007 May 1, 2007 June 1, 2007 July 1, 2007 August 1, 2007 September 1, 2007 October 1, 2007 November 1, 2007 December 1, 2007 January 1, 2008 February 1, 2008 March 1, 2008 April 1, 2008 May 1, 2008 June 1, 2008

17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617

15,866 15,848 15,831 15,813 15,795 15,777 15,758 15,740 15,721 15,702 15,683 15,663 15,644 15,624 15,604 15,584 15,564 15,543 15,522 15,502 15,480 15,459 15,437 15,416 15,394 15,371 15,349 15,326 15,303 15,280

1,751 1,769 1,787 1,804 1,823 1,841 1,859 1,878 1,897 1,915 1,935 1,954 1,974 1,993 2,013 2,033 2,054 2,074 2,095 2,116 2,137 2,158 2,180 2,202 2,224 2,246 2,268 2,291 2,314 2,337 132 132 132 130 130 130 130 130 130 130 130 130 130 130 130 128 128 128 128 128 128 128 128 128 128 128 128 125 125 17,749 17,749 17,749 17,747 17,747 17,747 17,747 17,747 17,747 17,747 17,747 17,747 17,747 17,747 17,747 17,745 17,745 17,745 17,745 17,745 17,745 17,745 17,745 17,745 17,745 17,745 17,745 17,742 17,742

1,584,848 1,583,079 1,581,292 1,579,488 1,577,665 1,575,824 1,573,965 1,572,088 1,570,191 1,568,276 1,566,341 1,564,387 1,562,413 1,560,420 1,558,407 1,556,374 1,554,320 1,552,246 1,550,151 1,548,035 1,545,898 1,543,740 1,541,560 1,539,358 1,537,134 1,534,888 1,532,620 1,530,328 1,528,014

42

July 1, 2008 August 1, 2008 September 1, 2008 October 1, 2008 November 1, 2008 December 1, 2008 January 1, 2009 February 1, 2009 March 1, 2009 April 1, 2009 May 1, 2009 June 1, 2009 July 1, 2009 August 1, 2009 September 1, 2009 October 1, 2009 November 1, 2009 December 1, 2009 January 1, 2010 February 1, 2010 March 1, 2010 April 1, 2010 May 1, 2010 June 1, 2010 July 1, 2010 August 1, 2010 September 1, 2010 October 1, 2010 November 1, 2010 December 1,

1,525,677 1,523,316 1,520,932 1,518,524 1,516,092 1,513,636 1,511,155 1,508,649 1,506,118 1,503,562 1,500,980 1,498,372 1,495,739 1,493,079 1,490,392 1,487,679 1,484,938 1,482,170 1,479,374 1,476,551 1,473,699 1,470,818 1,467,909 1,464,971 1,462,003 1,459,006 1,455,979 1,452,921 1,449,833

17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617

15,257 15,233 15,209 15,185 15,161 15,136 15,112 15,086 15,061 15,036 15,010 14,984 14,957 14,931 14,904 14,877 14,849 14,822 14,794 14,766 14,737 14,708 14,679 14,650 14,620 14,590 14,560 14,529 14,498

2,361 2,384 2,408 2,432 2,456 2,481 2,506 2,531 2,556 2,582 2,608 2,634 2,660 2,687 2,713 2,741 2,768 2,796 2,824 2,852 2,880 2,909 2,938 2,968 2,997 3,027 3,058 3,088 3,119

125 125 125 125 125 125 125 125 125 125 122 122 122 122 122 122 122 122 122 122 122 122 119 119 119 119 119 119 119 119

17,742 17,742 17,742 17,742 17,742 17,742 17,742 17,742 17,742 17,742 17,740 17,740 17,740 17,740 17,740 17,740 17,740 17,740 17,740 17,740 17,740 17,740 17,737 17,737 17,737 17,737 17,737 17,737 17,737 17,737

43

2010 January 1, 2011 February 1, 2011 March 1, 2011 April 1, 2011 May 1, 2011 June 1, 2011 July 1, 2011 August 1, 2011 September 1, 2011 October 1, 2011 November 1, 2011 December 1, 2011 January 1, 2012 February 1, 2012 March 1, 2012 April 1, 2012 May 1, 2012 June 1, 2012 July 1, 2012 August 1, 2012 September 1, 2012 October 1, 2012 November 1, 2012 December 1, 2012 January 1, 2013 February 1, 2013 March 1, 2013 April 1, 2013 May 1, 2013

1,446,714 1,443,564 1,440,382 1,437,168 1,433,923 1,430,644 1,427,334 1,423,989 1,420,612 1,417,201 1,413,755 1,410,276 1,406,761 1,403,211 1,399,626 1,396,005 1,392,347 1,388,654 1,384,923 1,381,155 1,377,349 1,373,505 1,369,622 1,365,701 1,361,741 1,357,741 1,353,701 1,349,621 1,345,499 1,341,337

17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617

14,467 14,436 14,404 14,372 14,339 14,306 14,273 14,240 14,206 14,172 14,138 14,103 14,068 14,032 13,996 13,960 13,923 13,887 13,849 13,812 13,773 13,735 13,696 13,657 13,617 13,577 13,537 13,496 13,455 13,413

3,150 3,182 3,214 3,246 3,278 3,311 3,344 3,377 3,411 3,445 3,480 3,515 3,550 3,585 3,621 3,657 3,694 3,731 3,768 3,806 3,844 3,882 3,921 3,960 4,000 4,040 4,080 4,121 4,162 4,204 119 119 119 119 116 116 116 116 116 116 116 116 116 116 116 116 112 112 112 112 112 112 112 112 112 112 112 112 107 17,737 17,737 17,737 17,737 17,733 17,733 17,733 17,733 17,733 17,733 17,733 17,733 17,733 17,733 17,733 17,733 17,729 17,729 17,729 17,729 17,729 17,729 17,729 17,729 17,729 17,729 17,729 17,729 17,725

44

June 1, 2013 July 1, 2013 August 1, 2013 September 1, 2013 October 1, 2013 November 1, 2013 December 1, 2013 January 1, 2014 February 1, 2014 March 1, 2014 April 1, 2014 May 1, 2014 June 1, 2014 July 1, 2014 August 1, 2014 September 1, 2014 October 1, 2014 November 1, 2014 December 1, 2014 January 1, 2015 February 1, 2015 March 1, 2015 April 1, 2015 May 1, 2015 June 1, 2015 July 1, 2015 August 1, 2015 September 1, 2015 October 1, 2015 November 1,

1,337,133 1,332,887 1,328,599 1,324,267 1,319,892 1,315,474 1,311,011 1,306,504 1,301,952 1,297,354 1,292,710 1,288,020 1,283,283 1,278,498 1,273,666 1,268,785 1,263,855 1,258,877 1,253,848 1,248,769 1,243,639 1,238,458 1,233,226 1,227,940 1,222,602 1,217,211 1,211,766 1,206,266 1,200,711

17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617

13,371 13,329 13,286 13,243 13,199 13,155 13,110 13,065 13,020 12,974 12,927 12,880 12,833 12,785 12,737 12,688 12,639 12,589 12,538 12,488 12,436 12,385 12,332 12,279 12,226 12,172 12,118 12,063 12,007

4,246 4,289 4,331 4,375 4,418 4,463 4,507 4,552 4,598 4,644 4,690 4,737 4,785 4,832 4,881 4,930 4,979 5,029 5,079 5,130 5,181 5,233 5,285 5,338 5,391 5,445 5,500 5,555 5,610

107 107 107 107 107 107 107 107 107 107 107 102 102 102 102 102 102 102 102 102 102 102 102 97 97 97 97 97 97 97

17,725 17,725 17,725 17,725 17,725 17,725 17,725 17,725 17,725 17,725 17,725 17,720 17,720 17,720 17,720 17,720 17,720 17,720 17,720 17,720 17,720 17,720 17,720 17,714 17,714 17,714 17,714 17,714 17,714 17,714

45

2015 December 1, 2015 January 1, 2016 February 1, 2016 March 1, 2016 April 1, 2016 May 1, 2016 June 1, 2016 July 1, 2016 August 1, 2016 September 1, 2016 October 1, 2016 November 1, 2016 December 1, 2016 January 1, 2017 February 1, 2017 March 1, 2017 April 1, 2017 May 1, 2017 June 1, 2017 July 1, 2017 August 1, 2017 September 1, 2017 October 1, 2017 November 1, 2017 December 1, 2017 January 1, 2018 February 1, 2018 March 1, 2018 April 1, 2018

1,195,101 1,189,435 1,183,712 1,177,932 1,172,093 1,166,197 1,160,242 1,154,227 1,148,152 1,142,016 1,135,818 1,129,559 1,123,237 1,116,852 1,110,404 1,103,890 1,097,312 1,090,668 1,083,957 1,077,179 1,070,333 1,063,419 1,056,436 1,049,383 1,042,260 1,035,065 1,027,798 1,020,459 1,013,046 1,005,559

17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617

11,951 11,894 11,837 11,779 11,721 11,662 11,602 11,542 11,482 11,420 11,358 11,296 11,232 11,169 11,104 11,039 10,973 10,907 10,840 10,772 10,703 10,634 10,564 10,494 10,423 10,351 10,278 10,205 10,130 10,056

5,666 5,723 5,780 5,838 5,896 5,955 6,015 6,075 6,136 6,197 6,259 6,322 6,385 6,449 6,513 6,578 6,644 6,711 6,778 6,846 6,914 6,983 7,053 7,124 7,195 7,267 7,339 7,413 7,487 7,562 97 97 97 97 97 90 90 90 90 90 90 90 90 90 90 90 90 83 83 83 83 83 83 83 83 83 83 83 83 17,714 17,714 17,714 17,714 17,714 17,708 17,708 17,708 17,708 17,708 17,708 17,708 17,708 17,708 17,708 17,708 17,708 17,701 17,701 17,701 17,701 17,701 17,701 17,701 17,701 17,701 17,701 17,701 17,701

46

May 1, 2018 June 1, 2018 July 1, 2018 August 1, 2018 September 1, 2018 October 1, 2018 November 1, 2018 December 1, 2018 January 1, 2019 February 1, 2019 March 1, 2019 April 1, 2019 May 1, 2019 June 1, 2019 July 1, 2019 August 1, 2019 September 1, 2019 October 1, 2019 November 1, 2019 December 1, 2019 January 1, 2020 February 1, 2020 March 1, 2020 April 1, 2020 May 1, 2020 June 1, 2020 July 1, 2020 August 1, 2020 September 1, 2020 October 1, 2020

997,997 990,360 982,646 974,855 966,986 959,039 951,012 942,905 934,716 926,446 918,093 909,657 901,136 892,530 883,838 875,059 866,192 857,236 848,191 839,056 829,829 820,510 811,098 801,591 791,990 782,292 772,498 762,606 752,614

17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617

9,980 9,904 9,826 9,749 9,670 9,590 9,510 9,429 9,347 9,264 9,181 9,097 9,011 8,925 8,838 8,751 8,662 8,572 8,482 8,391 8,298 8,205 8,111 8,016 7,920 7,823 7,725 7,626 7,526

7,637 7,714 7,791 7,869 7,948 8,027 8,107 8,188 8,270 8,353 8,436 8,521 8,606 8,692 8,779 8,867 8,955 9,045 9,135 9,227 9,319 9,412 9,506 9,601 9,697 9,794 9,892 9,991 10,091

75 75 75 75 75 75 75 75 75 75 75 75 65 65 65 65 65 65 65 65 65 65 65 65 54 54 54 54 54 54

17,692 17,692 17,692 17,692 17,692 17,692 17,692 17,692 17,692 17,692 17,692 17,692 17,683 17,683 17,683 17,683 17,683 17,683 17,683 17,683 17,683 17,683 17,683 17,683 17,671 17,671 17,671 17,671 17,671 17,671

47

742,523
November 1, 2020 December 1, 2020 January 1, 2021 February 1, 2021 March 1, 2021 April 1, 2021 May 1, 2021 June 1, 2021 July 1, 2021 August 1, 2021 September 1, 2021 October 1, 2021 November 1, 2021 December 1, 2021 January 1, 2022 February 1, 2022 March 1, 2022 April 1, 2022 May 1, 2022 June 1, 2022 July 1, 2022 August 1, 2022 September 1, 2022 October 1, 2022 November 1, 2022 December 1, 2022 January 1, 2023 February 1, 2023 March 1, 2023

17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617

7,425 7,323 7,220 7,116 7,011 6,905 6,798 6,690 6,581 6,470 6,359 6,246 6,133 6,018 5,902 5,785 5,666 5,547 5,426 5,304 5,181 5,057 4,931 4,804 4,676 4,547 4,416 4,284 4,151 4,016

10,192 10,294 10,397 10,501 10,606 10,712 10,819 10,927 11,037 11,147 11,258 11,371 11,485 11,600 11,716 11,833 11,951 12,071 12,191 12,313 12,436 12,561 12,686 12,813 12,941 13,071 13,201 13,333 13,467 13,601 54 54 54 54 54 54 41 41 41 41 41 41 41 41 41 41 41 41 28 28 28 28 28 28 28 28 28 28 28 17,671 17,671 17,671 17,671 17,671 17,671 17,658 17,658 17,658 17,658 17,658 17,658 17,658 17,658 17,658 17,658 17,658 17,658 17,645 17,645 17,645 17,645 17,645 17,645 17,645 17,645 17,645 17,645 17,645

732,331 722,037 711,640 701,139 690,533 679,821 669,002 658,074 647,038 635,891 624,632 613,261 601,776 590,177 578,461 566,628 554,677 542,607 530,415 518,102 505,666 493,105 480,419 467,605 454,664 441,593 428,392 415,059 401,592

48

April 1, 2023 May 1, 2023 June 1, 2023 July 1, 2023 August 1, 2023 September 1, 2023 October 1, 2023 November 1, 2023 December 1, 2023 January 1, 2024 February 1, 2024 March 1, 2024 April 1, 2024 May 1, 2024 June 1, 2024 July 1, 2024 August 1, 2024 September 1, 2024 October 1, 2024 November 1, 2024 December 1, 2024 January 1, 2025 February 1, 2025 March 1, 2025 April 1, 2025

387,990 374,253 360,378 346,364 332,211 317,915 303,477 288,894 274,166 259,290 244,266 229,091 213,765 198,285 182,650 166,860 150,911 134,803 118,533 102,101 85,505 68,742 51,812 34,713 17,443

17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617

3,880 3,743 3,604 3,464 3,322 3,179 3,035 2,889 2,742 2,593 2,443 2,291 2,138 1,983 1,827 1,669 1,509 1,348 1,185 1,021 855 687 518 347 174

13,737 13,875 14,014 14,154 14,295 14,438 14,583 14,728 14,876 15,024 15,175 15,326 15,480 15,635 15,791 15,949 16,108 16,269 16,432 16,596 16,762 16,930 17,099 17,270 17,443 1,600,000

28 6 6 6 6 6 6 6 6 6 6 6 6

17,645 17,623 17,623 17,623 17,623 17,623 17,623 17,623 17,623 17,623 17,623 17,623 17,623 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 17,617 4,248,952

49

50