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INTRODUCTION TO THE MAJOR ISLAMIC MODES OF FINANCING

MORABAHA
This is a mode of sale and purchase of commodities. The agreement is made between the Bank and a Customer, whereby Bank purchases a commodity and sells the same to Customer on a deferred payment basis. The essential features of the Morabaha are: 1. Existence of a tangible commodity/asset of which physical possession can be taken before use or consumption. 2. Such commodity or asset has to be acquired from third party (commodity/asset already in the possession of the Customer, cannot form basis of the agreement). 3. Bank sells the commodity/asset to the Customer.

LOCAL PURCHASE MORABAHA (LPO)
Bank and the client sign a Morabaha Agreement. Client submits a request for purchase of commodity/asset by specifying quality, quantity and price. Bank appoints an agent under an Agency Agreement (who could be the client) to purchase the asset/commodity on behalf of the bank. The Agent purchases the commodity under a Purchase Order from third party after obtaining disbursement from the bank through Receipt and submits a Declaration to this effect. Bank sells the commodity/asset to the Client on a cost plus profit basis and the parties agree on a Purchase Price and Due date.

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MORABAHA IMPORTS (PAD)
Bank and Client sign a Morabaha Agreement. In terms of the Morabaha Agreement, the Bank appoints the Client as its Agent through an Agency Agreement to import commodities from time to time. Client submits an application to establish letter of credit and the Bank opens it. Upon negotiation, the Bank creates an advance in the name of the Client, value payment of funds to the beneficiary. Upon receipt of documents and arrival of goods, the Bank and the Client enter into a Morabaha through a declaration submitted by the client. Such Morabaha can be spotted, where client pays immediately to retire documents or on a deferred payment basis, if the client wishes to pay later. In case of deferred payment, the Client signs a promissory note for the purchase price agreed and the Bank releases the documents.

IJARAH (LEASING):
Clients use Ijarah financing mainly for financing purchase of plant and machinery. If assets subject to lease are to be freshly acquired, Bank may appoint an agent (could be the client) to do so on its behalf. If Client has already acquired the equipment, Bank will purchase it from Client and lease it back. The process of Ijarah takes place as follows:  Bank and Client sign a Lease Finance Agreement whereby Client agrees to take on lease from the Bank for specified assets for an agreed tenor.  Bank appoints an Agent for acquisition of assets, if not already in possession of Client.

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 Bank intimates Client of acquisition of assets and delivers to place specified by Client.  Term of lease starts from date Client takes possession of assets, whether constructive or physical.

 Client pays a monthly, or quarterly rental to the Bank for the use of
the assets and by virtue of the agreement, becomes owner of asset only after paying a nominal lease end value.

MUSHARAKAH
Under Islamic jurisprudence, Musharakah means a joint enterprise formed for conducting some business in which all partners contribute financially and share the profit as per pre agreed upon ratios, while the loss is shared according to the ratios of financial contribution of each partner. The Musharakah is an ideal alternate to replace interest based lending with far reaching effects on both production and distribution of capital. Profit sharing ratios in a Musharakah depend entirely on the estimated profit the business is able to generate. The Musharakah is a relationship established, by the parties, by mutual contract and therefore all necessary ingredients of a valid contract must be present. The risk of loss inherent in this mode of financing ensures that the Bank fully satisfies itself as to the profitability and feasibility of the business venture as well as to the integrity of its Musharakah partners.

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in each case he shall invest the money in that particular business or place. If they want to have an extraordinary work which is beyond the normal routine of the traders. However. without the consent of Rabb-ul-maal. Modarib is authorized to do anything which is normally done in the course of business. This is called Al Modaraba Al Moqayyadah (restricted Modaraba). 4 .MODARABA This is a kind of partnership where one partner gives money to another for investing it in a commercial enterprise. lend money to anyone. who is called "Modarib" and the profits generated are shared in a predetermined ratio. Modarib is also not authorized to  keep another Modarib or a partner  Mix his own investment in that particular Modaraba without the consent of Rabb-ul-maal. The investment comes from the first partner who is called "Rabb-ul-maal" while the management and work is an exclusive responsibility of the other. it cannot be done without express permission from the Rabb-ul-maal. There are two types of Modaraba namely: • Al Modaraba Al Moqayyadah: Rabb-ul-maal may specify a particular business or a particular place for the Modarib. • Al Modaraba Al Mutlaqah: If Rabb-ul-maal gives full freedom to Modarib to undertake whatever business he deems fit. this is called Al Modaraba Al Mutlaqah (unrestricted Modaraba). Modarib cannot.

DMI is headed by H. Switzerland. Shamil Bank of Bahrain E.9 billion and equity of more than US$ 230 million. 5 . a new entity.R. (Islamic Bankers) which is controlled and managed by the Dar Al-Maal Al-Islami Trust (DMI).C.HISTORY OF THE GROUP (ISLAMIC BANKERS) Faysal Bank Limited (FBL) is a subsidiary of Shamil Bank of Bahrain E. Pakistan. Based on the pioneering experience of Islamic-banking of both. with an objective to further enhance and consolidate the financial base and to optimize the operational economies. This brought forth a dynamic institution for integrating Islamic-banking principles and systems on a global basis.C.C was formed. The amalgamation process was completed in June 2000. The Bank is fully committed to the region and continues to hold a 60 percent controlling interest in Faysal Bank Limited. particularly with regard to promoting new modes of investments compatible with Islamic Shariah. Shamil Bank continues to thrive with its Islamic-principles and a strong asset base of US$ 2. Shamil Bank of Bahrain E. through its network of over 20 financial and business companies. It has been one of the leading contributors to the development of Islamic-banking in the world. represented in 15 countries around the world. (Islamic Bankers) came into existence when the board of DMI decided to merge Faysal Islamic Bank of Bahrain and Islamic Investment Company of the Gulf.H Prince Mohamed Al Faisal Al Saud with its Head Office in Geneva.

from the time of its inception has been acknowledged as the Best Commercial Bank in Pakistan for two consecutive years by two reputable international publications. (FIBB).C. which had established its presence in Pakistan since 1987. 1994 in Pakistan as a public limited company. taking over six branches of Faysal Islamic Bank of Bahrain E. FIBB operations have been extended to Pakistan in the form of full commercial operations.e.C. 6 . Euro Money and Asia Money. FBL. The Bank is governed by strict Islamic-banking rules and is not allowed to invest in any government / institutional securities or financial investment schemes that are interest based. Sixty percent of its share capital is held by Shamil Bank of Bahrain E. (Islamic Bankers). i. FBL was the first Bank to start Islamic-banking in Pakistan under the name of FIBB.INTRODUCTION TO FBL Faysal Bank Limited (FBL) was incorporated on October 3. Its strict compliance to Shariah gives a distinctive edge over other conventional Financial Institutions. 1995. The shares of the Bank are quoted on Karachi and Lahore Stock Exchanges. and the remaining forty percent by the local public. Since 1987. FBL commenced business operations effective January 1.

The details of branches include: • 3 Branches At Karachi • 2 Branches At Lahore • 1 Branch At Faisalabad • 1 Branch At Islamabad • 1 Branch At Rawalpindi • 1 Branch At Peshawar • 1 Branch At Multan • 1 Branch At Quetta • 1 Branch At Mirpur (Azad Kashmir) 7 .BRANCH NETWORK Limited (FBL) has eleven branches spread all over the country.

8 .All these twelve Branches of Faysal Bank Limited is divided into three Regions: North Region Islamabad Branch South Region 3 Karachi Branch Central Region 2 Lahore Branch Peshawar Branch Quetta Branch Faisalabad Branch Rawalpindi Branch Mirpur Branch Multan Branch NOTE: THE MULTAN BRANCH WAS ESTABLISHED ON 1 S T NOVEMBER 2001 WITH ELEVEN STAFF MEMBERS.

9 . prudent growth and pursuit of improved efficiency. • To inculcate a culture of teamwork within the Bank by introducing staff training and development programmes. • To strive for halal profit. working on Shariah principles. providing a range of specialised services.” VALUES The mission statement translates into our objectives: • To comply with the spirit of Islamic Shariah this will govern our entire business by translating it into modern financial products and services. • To focus on serving our customers and shareholders by building relationships based on trust and mutual benefit.MISSION STATEMENT VISION “The introduction of a just and equitable financial system by being a world class multi-purpose financial institution.

MANAGEMENT HIERARCHY OF FAYSAL BANK Presi dent CEO/CGM Count r y Gene ral Manager Credit Department Operations Department Consumer Banking Corporate Banking Group Country Operations Manager Head of Consumer Banking Country Risk Manager Corporate Head Corporate Head Corporate Head Regional Operations Manager Regional Head of Consumer Banking Regional Corporate Head Branch Relationship Officer Branch Manager Branch Sales & Service Manager Branch Operations Manager Personal Services Officers Credit Officers Officers 10 .

BOARD OF DIRECTORS H. Hasan S. Mahmood A. Faruqui Mr.R. Ziad H. Farook Bengali Chairman Member Member Chairman President & CEO Director Director Director Director Director Director (NIT Nominee) 11 . Said Sa'ad Mr. Khalid A. Al-Jabari Mr. Tariq Iqbal Khan EXECUTIVE COMMITTEE: Mr. Janahi Mr. Nasir Ali Shah Bukhari Mr. Khalid A.H Prince Mohamed Al Faisal Al Saud Mr. Janahi Mr. Farook Bengali Mr. Rawasdeh Dr.

OPERATIONS DEPARTMENT Operations department of the Faysal Bank Limited is responsible for the overall operations of the bank. He is responsible for the overall functions of the Bank.MANAGEMENT HIERARCHY The highest authority in the management of Faysal Bank Limited is the President. 12 . CREDIT DEPARTMENT The main purpose of this department is to extend loans to its clients for the productive purpose. He assists the president in his work. Credit Department is also called Corporate Banking Group. • Credit Department • Operations Department • Consumer Banking. He sits at the Karachi Head Office of the Faysal Bank Limited and controls the functions of the Bank. Next authority after the president is CEO (Chief Executive Officer) or CGM (Country General Manager). Then the functioning of the bank is divided into three main categories. He is responsible for the overall functions of the bank. Customer Services Department.

CONSUMER BANKING Consumer Banking is the Marketing Department of the Faysal Bank Limited. He then communicates these plans to all the branches of the bank. 13 . He prepares the new Deposit Schemes of the Bank and makes the marketing strategies of these products. all come under it. At Faysal Bank Limited. Accounts Department. Clearing Department. consumers are treated very well. All of the Branches try to make sure that customers are satisfied with the services being provided by the Bank. They are of the opinion that customers must be satisfied with the services provided by the Bank. The Head of Consumer Banking Department is present at Head Office of Faysal Bank Limited Karachi. etc. He is being assisted by Corporate Head and Corporate Head is being assisted by Regional Head of Consumer Banking.Remittance Department.

We realize every customer’s financial needs are different. we have developed a broad range of savings and term deposit accounts. we are always looking for new ways to make banking as straightforward and friendly as possible in conjunction with Islamic principles. Above all. At FBL. Therefore. Faysal Bank endeavors to build and strengthen customer relationship and their loyalty by providing them with innovative banking products and services. We believe in dedicating ourselves towards achieving an outstanding quality in all activities.DEPOSIT SCHEMES AND OTHER FACILITIES OFFERED At FBL "full service" does not simply mean offering a range of products and services. businesses and corporate clients. each offering specific benefits to individuals. PRODUCTS • Pak Rupee Current Account – The Faysal Sahulat Account • Pak Rupee Savings Account – The Faysal Savings Account 14 . It also means we provide personalized service. As a result. we are aggressively expanding by developing new array of deposit and investment products in line with the Islamic principles as well as focusing on developing business in Consumer Finance. our strength emanates from the quality of service we provide to our customers as well as the competitive products that we offer in Consumer Banking.

• Pak Rupee Rozana Munafa Account • Pak Rupee Rozana Munafa Plus Account • Pak Rupee Faysal Izafa Account • Pak Rupee Faysal Premium Account • Other Products SERVICES • Global Transaction Service • Safe Deposit Locker Service • Travelers Cheque – Pak Rupee and Foreign Currency • Evening Banking Service • Fast Telebanking Service • ATMs 15 .

We may avail all banking facilities with the current account if we maintain the minimum balance requirement. local network • Small Locker (where available) • ATM Card (when available) 365 withdrawals per year Unlimited Unlimited Unlimited 365 365 365 per year 01 01 *Subject to change as per Bank's policy SAVINGS ACCOUNT We may open a Faysal Savings Account with only Rs. With a monthly average balance of only Rs.100. 000/-.Minimum transactional amount • Countrywide cash deposit facility .20.10.only.000/-* we can enjoy the following valuable banking services absolutely free: • Countrywide cash withdrawal facility . Profit will be subject to deduction of Withholding Tax at rates 16 .Minimum transactional amount • Payorders per year • Cheque leaves per year • Demand Drafts drawn on FBL. There is no restriction on the number of transactions in this account and we get our profit every six months. The account offers unlimited transaction facilities. Profit is calculated each day at the day's closing balance.000/.DEPOSIT SCHEMES CONSUMER PRODUCTS CURRENT ACCOUNT We may open a Faysal Sahulat Account with a minimum balance of Rs.

a. The higher our deposits.a.000.001/to to to to to Rs. 07.000.1.000/Expected rate of profit 07.00 %p.70 %p. 07. We can open this account with an average daily balance of Rs.000/Rs.001/Rs.001/Rs.50 %p.a.1.a. where applicable.30 %p.50 %p.10.000/Rs. 000/-. Faysal Bank’s Rozana Munafa offers the perfect combination of a savings account matched with the flexibility of a current account.000.a.000.000. the higher the profit.100.000/Expected rate of profit 00. 07. 17 .25.000/Rs.000/Rs. ROZANA MUNAFA ACCOUNT For Individual / Corporate Customers To provide specialized solutions for corporations and individuals.80 %p.000/Rs.00 %p.50.a.000/Rs.00 %p.a. 03. Current expected rate of profit are as follows: Tier Limit UPTO Rs.25.3.10.25.001/Rs. 07. Current expected rate of profit are as follows: Tier Limit UPTO Rs.100. 08.200.000/to Rs.200.a.001/Rs.001/OVER Rs.levied by the Government of Pakistan and Zakat.50. 04. Zakat will be deducted where applicable.90 %p.a.000.000.000.a. their profits are calculated each day at the day’s closing balance as long as our monthly average balance remains above the minimum required balance.001/Rs.000/to Rs.25. Profits will be disbursed every six months and will be subject to Withholding Tax at rates levied by the Government of Pakistan.3.50.000. 07.00 %p. "A saving account that thinks like a current account".200.

In fact. If monthly average balance falls below the minimum requirement.10. Profit will be calculated daily on the closing balance at the interim rate of return as long as our monthly average balance is above the minimum balance required.001/Rs.75 %p. then normal PLS savings account rate will apply but each day at the day's closing balance.00 %p. 07. corporates and personal businesses.000/and ABOVE Expected rate of profit 06. For Investment Banks only: Tier Limit UPTO Rs.000. Rozana Munafa Plus does not keep us waiting. offers us the opportunity to earn profit every day of the year. profit is disbursed to our account each and 18 . they offer us a tiered profit structure.500.000/and ABOVE 08. Faysal Bank’s Rozana Munafa Plus. We can open this account with an average daily balance of Rs. Zakat will be deducted where applicable. To avail a high profit on this account.a.000.a. the higher the profit.100. The higher our deposit.a. 08.001/Rs.000.000.a. "Get the advantage of a term deposit with the convenience of a savings account and the flexibility of a current account".Rs.001/- to Rs.000. ROZANA MUNAFA PLUS ACCOUNT For Individual / Corporate Customers To provide the best possible returns for individuals.25 %p.500. Profits will be disbursed every month and will be subject to Withholding Tax at rates levied by the Government of Pakistan.000/-. Unlike other savings accounts.50.500.50 %p.

An account can be opened with an investment of Rs. 19 . 07.a.000. they have developed Faysal Izafa Account. This account gives us the option of one month to five years deposits.85 %p.70 %p. 07. 07.000. 07.40 %p.25 %p.000. they realize every customer’s financial needs are different.10. FAYSAL IZAFA ACCOUNT At Faysal Bank.a.000.000/-. Current expected rate of profit is between 07.000/Rs.000.001/Rs.001/Rs. which provides an option of growth or a monthly income plan. giving us the advantage of a monthly income certificate (term deposit).a.000/and ABOVE Expected rate of profit 07.500.a.3.1.000.000. Profit on the Izafa Account will be subject to deduction of Withholding Tax at rates levied by the Government of Pakistan and Zakat.001/Rs.3. On six month deposit profit is paid monthly.000.10.000/Rs.000.1.100.Current expected rate of profit are as follows: Tier Limit UPTO Rs.75% p.a.10 %p.000.001/Rs. 08.a.00 %p.100.000/Rs.001/Rs.25.000/Rs. where applicable. Faysal Izafa Account is a term deposit account for corporate and individual customers designed to help our money grow securely and swiftly.a.000. 07.000.55 %p.50.a.80% to 10.every month.25. 07.a.000/Rs.50.00 %p.001/Rs.000/Rs. As a result.500.25.001/to to to to to to Rs.

SERVICES OFFERED Inter-Branch Transfer of Funds We can both deposit and withdraw cash from any of our branches. Current expected rate of profit on notice deposits is between 05. Locker facility is available to all customers maintaining minimum balance requirements in their respective account categories. in a variety of sizes at very competitive rentals.OTHER PRODUCTS: In addition to the special savings and investment schemes. We need only to carry our cheque book. And Zakat. Faysal Bank branches also issue American Express. we can choose from a host of our regular notice deposit schemes with maturities of 7 and 30 days. Travelers Cheques We may purchase Muslim Commercial Bank (MCB) Rupee Travelers Cheques at any of our branches. 20 .a. Profit will be subject to deduction of Withholding Tax at rates levied by the Government of Pakistan. Safe Deposit Locker Facility All our branches offer lockers for lease. regardless of which branch in which we have the account in. US Dollar and Pound Sterling Travelers Cheques to provide maximum convenience and ease to our customers.50% p. where applicable.00% to 05.

Faysal Bank has recently tied in with MCB to use their network of over 100 ATMS countrywide. This means that we can be in any location where MCB ATM is located and still have access to our Faysal Bank account 24 hours every day. We may deposit cash and cheques. We are assigned a unique PIN with which we can access information pertaining to our account over the telephone. All we have to do is carry our ATM card with us. transfer funds into pre-designated accounts. amongst many other services. Automatic Teller Machines In order to give its customers maximum convenience.m. Fast Telebanking Service When banking with them we need not come to the bank for routine work. Faysal Bank offers telebanking facility (currently at selected branches).Evening Banking In addition to the regular morning banking hours. all our branches are open for business from 3 p. We can also open related accounts. to 5 p. request for statement by instant fax through a phone call. 21 . use our locker. open accounts and conduct a host of other banking transactions during these hours.m.

Faysal Bank Limited uses the following modes to transfer the funds. Every customer is first received by this department and is assisted here as well. • Remittance Department A major function of any bank is to transfer the funds from one place to another. This department performs a variety of functions. The functions which are performed by Customer Services Department include: • Account Opening • Account Closure • Balance Confirmation • Statement of Accounts • DD/TT/PO application • Stop Payment Request • Information about Deposit Schemes • Cheque Book Requests etc. 22 .DEPARTMENTS OF FAYSAL BANK LIMITED 1. CUSTOMER SERVICES DEPARTMENT Customer Services Department is one of the important departments in the bank. Faysal Bank Limited also has a full fledge Customer Service Department.

Upto Rs. DD applications form contains columns requiring information for the preparations of DD e.000 0.g. 10. Client who wants to transfer his funds from one city to another fills a form requesting the bank to prepare a DD.minimum Rs. • Beneficiary Name • Applicant’s Name • Address • Amount to be sent. 20 minimum Rs. etc. Bank deducts some charges against DD.0750/. These charges include: Commission a.001 to 1.150/- 100.000 0. 15 23 .200/minimum Rs.Demand Draft Telegraphic Transfer Payment Order DEMAND DRAFT (DD) Demand Draft is used to transfer funds from one city to another. 40 b.000.000 0. 10.001 to 100.

0500/- 24 . 35 = Rs.200/0.000 0.2% If a client is a tax payer then advance tax is exempted provided that he submits the tax exemption certificate. TELEGRAPHIC TRANSFER Telegraphic Transfer is another mode of transfer of funds.0750/over 1.000 0.001 to 100.Over 1. 10. The changes against the issuance of TT charged by Faysal Bank include: Commission Upto Rs. 2 Advance Tax = .0500/. 20 minimum Rs.000.150/minimum Rs.000. 750 100.000 10. 150 minimum Rs.001 to 1.000 0.minimum Rs. It is the quickest mode of transfer of funds from one city to another. 40 minimum Rs. Client can deposit money into the bank or can request the bank to deduct the amount against the TT along with the charges against the issuance of TT from his account.000 0.000. For TT’s clients have to submit the application on a prescribed form of the bank. 750 Postage Excise = Rs.

The corresponding bank after proper verification i..Telex charges = Advance Tax = Rs. ID number and Bank Account Number is used.2% If a client is a tax payer then advance tax is exempted provided that he submits the tax exemption certificate duly signed and stamped. 2 Advance Tax = . test agreement. PAYMENT ORDER (PO) Payment order normally called pay order is another instrument of transferring fund. bank immediately issues the receipt to the customer and immediately fills the TT issuing form which is duly signed and test number is the corresponding bank by fax to whom TT is issued. If any party wants to make payment to another party within the city. etc.e. For the identification of proper person. Commission Excise duty = Rs.2% If a client is a taxpayer then advance tax is exempted provided exemption certificate is duly signed and stamped. pays the amount to the beneficiary. 50 (flat) = Rs. Bank deducts certain charges against the issuance of Pay Order. Name. 50 (flat) . it can make payment through Pay Order. It is an instrument which is used to transfer funds within the city. A client who is willing to get a Pay Order from Faysal Bank Limited will have to fill an application form which contains the following information: • Beneficiary Name 25 . After receiving the application for the TT.

Payment Order is handed over to the client in the typed form and duly signed by the bank.  Account Opening  Account Closing  FC IN/Outward Remittances 26 .• Amount of Pay Order • Applicant’s Name • Charges deducted by the bank etc. FOREIGN EXCHANGE DEPARTMENT In this department the dealing is made in foreign currency. • US Dollar • Pound Sterling • Japanese Yen • Dutch Mark FUNCTIONS OF FOREIGN EXCHANGE DEPARTMENT This department performs the following functions. In Faysal Bank Limited four types of foreign currency accounts are available. 2.

The representative of all banks in Pakistan attend the State Bank session which is performing the duties of clearing house on each business 27 .  Cash Receipts  Encashment of Cheques. CASH DEALING DEPARTMENT Cash dealing department of Faysal Bank Limited is given the full responsibility of handling all receipts and disbursement of cash. The following are the major functions of the Cash Dealing Department. as a result of transaction in both local and foreign currencies. The bank accepts these cheques and collects the amount from the bank on which cheques are drawn through clearing house. The customer can get the money in his account at Faysal Bank Limited from the cheques drawn on another bank. Issuance of Travellers Cheques 3. It is also responsible for the book – keeping of these transactions and the safe custody of cash. Bank charges some commission for this function. The major function of clearing department is to receive the cheques which are drawn on some other bank. A clearing house facility is provided by the State Bank of Pakistan for offsetting of cross obligations between the different banks.  Clearing Department Clearing is a system in which banks exchanges cheques and other negotiable instruments drawn on each other.

the loans are advanced by the bank to its customers.day at some fixed time. rate of profit being shared by the bank and the client. In Islam interest is 28 . For extending loans there is an agreement signed between the bank and the client in which purpose of loan. Loans are given in lump sum amount to the customers to meet the capital requirements of customers. are agreed. The responsibility of smooth operation of the clearing function lies with the State Bank of Pakistan. There are short term. A clearing house is a place where these cheques are brought and mutual claims of each bank on each other are offset and a settlement is made by the payment of a difference. amount of loan. When customers want loan to finance a large project. bank asks them to provide feasibility report of that project in order to ensure safe return of loan. Maximum period of loans given to client is 180 days. CREDIT OPERATIONS DEPARTMENT In this department of Faysal Bank Limited. Difference between Faysal Bank Limited and other commercial banks is that Faysal Bank Limited believes on Islamic banking. etc. They deliver cheques that their bank may have negotiated by other banks. each will receive a number of cheques drawn on each other and deposited for collection. When there are many banks in the country. 4. intermediate term. and long term loans offered to its customers. Faysal Bank Limited extends loan for different maturity period.

void therefore Faysal Bank Limited believes on Islamic values. Faysal Bank Limited does not charge interest on loans. If the client is unable to submit profit to the bank then there is no compounding charged from him and his outstanding profit remains there without any charge. 29 . A current account is opened for the client when his/her loan is sanctioned. It makes an agreement with the client and charges its share of profit.

the basic requirement for the extension of loan is that the person who wants to get credit from Faysal Bank Limited must be an account holder of the bank. The profit margin charged by Faysal Bank Limited against the foreign currency loan is 12% to 14%.g. If a customer is an account holder of any other branch then his credit worthiness can be checked from that particular branch. if the client has $10.BASIC REQUIREMENTS FOR EXTENDING LOANS In Faysal Bank Limited.000 in his account then he can get maximum of $7. It is not required that the customer should be an account holder of that particular branch in which credit application is submitted.  Loan Against Foreign Currency Faysal Bank Limited extends loan against the security of foreign currency. TYPES OF LOAN OFFERED BY FAYSAL BANK LTD Faysal Bank Limited offers different categories of loans to its clients.  Loan against shares.500 as a loan amount.  Loan against foreign currency.  Loan against property. Following is done against: • Foreign currency account mainly in dollars 30 . The maximum limit for the extension of loans is 75% and 25% is margin retained by the bank e.

The profit charged by the bank against the property ranges from 14% to 16%.• Fixed deposit receipt in dollars. If the property is located in good place and documents of the property are complete then bank will charge a profit rate of 14%. The rate of profit depends upon the value of property. The bank charges minimum commission from its valued clients. LOAN AGAINST PROPERTY A customer of Faysal Bank Limited can get loan against the collateral of property. LOAN AGAINST SHARES Faysal Bank Limited also extends loan against the security of shares. 31 . But now a days due to the economic instability the loans against the security of shares is not given.

32 . Faysal Bank Limited is the only bank which is following the real concept of Islamic Banking. etc. many people invest their money in the Faysal Bank Limited and bank’s deposits are increasing year by year. Faysal Bank Limited invests its funds in only Islamic modes of finance e.COMPETITORS OF FAYSAL BANK LIMITED Mainly all the banks in the Private Sector are the competitors of Faysal Bank Limited. Due to this factor. Ijara. This competitive edge is that Faysal Bank Limited is the only bank in Pakistan who is truly adopting the concept of Islamic Banking. Musharaka business.g. Modaraba business.Other commercial bank also claiming that they are doing the Islamic banking but in actual sense. Faysal Bank Limited has a competitive edge over other commercial banks.

Fast Service The Faysal Bank Limited is one of the leading banks in the private sector. The advantages of computerization are:   That it reduces manual work. The act which makes them capable to achieve this position is the quality and speed of services which they provide to their customers. Staff The second strength of Faysal Bank Limited is that it has staff which is well qualified and capable of performing the task which is assigned to them. It provides good customer services. 33 . opportunities and threats which we have identified are as follows.SWOT ANALYSIS After viewing Faysal Bank Limited the strengths. STRENGTHS Computerization The main strength of Faysal Bank Limited is that all of its branches are fully computerized and they have latest software’s available to keep the records of their customer’s accounts and other important information. weaknesses.

Disbelief in Advertising The other weakness of Faysal Bank Limited is its disbelief in advertising. Only then they would be able to attract more customers and the market. The rules and regulations of the banks are briefly described in the policy manual and it is a sort of a guidance for employees to know what is right and what is wrong. bank than this proportion is very small. It has only 12 branches all over the country and if we compare this proportion with any Govt. So management should consider this and should realize the importance of advertising. We can hardly find any advertisement of the bank in print media or in electronic media.Employee Service The Faysal Bank Limited is the one of few banks in the private sector which provide the employees written policy which helps them to know the opportunities present ahead. WEAKNESSES Small Network The Weakness Of Faysal Bank Limited is that it has small network of branches all over Pakistan. 34 .

Impact of Privatization Now Days the Govt. Policies The economic and industrial reforms brought into country by the present Military Govt.OPPORTUNITIES Govt. There are many private banks now a days operating in the country and every bank is trying to improve its functioning and try to give more facilities to customers because in return they will get more deposits from the clients. seems promising. THREATS Greater Competition The major threat for Faysal Bank Limited is the intensified competition among the private banks in the country. So if Faysal Bank Limited want to have an edge from its competitors than it has to improve its functioning and try to give more facilities and services to its customers. This is because when someone comes in the country and deposit funds in the banks then the balances of the deposit in the bank increases and the banks invest those funds to earn returns and in that case the bank flourishes. So now this is the time to avail this opportunity and attract those investors to come in Pakistan and invest funds. is in an attempt to privatize the national banks so that the banks improve their functioning and customers have better service 35 . This has not only increased the confidence of people within the country but also people outside the country are now more interested to have funds invested in Pakistan.

So this has increased the competition among the private banks. 36 . MCB and Allied Bank have been privatized. Like recently.options. If Faysal Bank Limited wants to compete with other banks and wants to increase its shares in the market then they have to improve their services and also have to spend on advertisement.

They planned to open three more branches for which they have gained approval from the state bank and they hope to have all the three branches operating by the end of 2002.FUTURE PLANS Going forward. Musharakah (Mutual Paticipation Financing). the Bank is poised for growth of its financing base through selective Morabaha (Financing Resale of Goods). CONSUMER FINANCING INTRODUCING SOON 37 . FBL's equity base is extremely strong and it plans to aggressively expand its business by introducing Islamic deposit and investment products as well as focusing towards developing business in the consumer finance segment. Modarabah (Certificate of Investment) and Ijarah (Leasing) transactions.

But due to the present economic slump. We found the rules and regulation of the bank very good and strict e. The bank is also opening its branches in near future in Sialkot. This will help the customer of Sialkot to get better services from such a good bank in the private sector. Now the bank is concentrating on its Rupee Business and in this regard bank has recently introduced a new scheme called Faysal Izafa. a limited staff is allowed to enter cash department and Security system is very good and modern.g. Its profits are increasing year by year. the business of the bank is reduced. 38 . its staff is very good and sincere with the bank. Foreign currency business of the bank is almost stopped.OBSERVATIONS AND CONCLUSION We observed Faysal Bank Limited as a financially sound bank.

Multan. Marketing practices should be done in a best possible manner and marketing strategy started at any of the Faysal Bank Limited branch should be adopted by each branch of Faysal Bank Limited. Credit cards should be started and marketing practices should be increased. We suggest that Faysal Bank Limited should open new branches so that burden of work should be shifted. we have suggested some recommendations for the bank which will help the bank to improve its service and the bank would be able to compete with other banks in the private sector.SUGGESTIONS AND RECOMMENDATIONS After making this term report on Faysal Bank Limited. Bank should also start ATM Card in the near future and the Bank should also spend on advertising and promotion. There is a great need of online banking. 39 . It should be introduced in the bank at its earliest.Abdali Road. There is a great burden of customers on each branch of Faysal Bank Limited.