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The Bank of Khyber

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Circular # BOK/HO lIADl2Ol7/oa Date: Feb 09,2017

All Group Heads


Divisional Heads /Departmental Incharge FOR INTERNAL USB O]\LY
Area Managers / Branch Managers

Consumer Finance Policy & Manual "Raast Car Iiarah"


The Bank of Khyber Board of Directors, in their 140th meeting held on Oct 24, 2016 at
Islamabad, has approved the Credit policy on Consumer Finance Products, including the "Raast
Car Ijarah" policy. Whereas Head Office Credit Committee (HOCC) has approved "operational
Manuals" of "Raast Car Ijarah" in circulation as on Jan 20,2077, products features/details are
listed below.
Product " Raast Car liarah" Finance
Target
Customers 1. Provincial & Federal Governments
2. Public sector enterprises
3. Semi Govt. and Autonomous Bodies.
4. Multinational companies
5. BOK executive staff IVP & above] permanent & contractual
6. Blue Chip Pakistani Companies (listed on Stock Exchange)
7. Fixed Term Employees of UN agencies & Foreign Embassies
8. Public & private sector recognized Hospitals & Educational Institutions

Note: Govt. official on contract and daily wages employees wor.rld not be eligible for
facility. Eligible list of private companies / organizations / institutions will be conveyed
separately.
Eligibility
computerized National Identity Cards.

I
i
permanent cadre. Self employed and business person engaged in profession or
business for at least 3 years.
!

more than 60 years at the time of maturity of finance facility.

than 65 years at the time of maturity of finance facility.

installment. Individuals who earn less than PKR 18,000/- per month or PKR
216,0001- per annum shall not be eligible for financing.

66Yo of the net income / salary.

50% of the take home salary / income.


Facility Maximum PKR 2.5 Million.(Excluding Security Deposit)
Amount

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lslamic Banking Group 6th Floor, State Life Building,34-The Mall, Peshawar, Pakistan
Tel: (09'l) 5270992 Fax: (091) 5261623 Website: www.bok.com.pk
The Bank of Khyber
tsLAMtc BANKINa gillLrrs.I-l
Period of One year to Five years depending upon the nature & income of the client
Finance
Vehicle This facility will be for new cars (locally manufactured) as well as for un-registered
imported / reconditioned cars subject to meeting terms and conditions of SBP
Prudential Regulations on Consumer Auto Finance.
Down Minimum Security deposit for the facility will be 20Yo of the vehicle, however, bank
Payment may increase down payment on its discretion to mitigate the risk after assessing the
financial position of the client.
Rental Rate Rental rate to be charged is to be linked with "Consumer Credit Rating"(CRR System)
duly approved by HO, at the time of sanction of facility. Rental range will be as per
IBG monthly rates circular. Rates are subject to periodical review by HOCC as per
market trends.
Monthly Monthly installment deduction to be made as per Payment Schedule duly accepted by
Rentals client and his/her written standing instructions to recover the monthly installment
amount from his/her salary account. Postdated cheques with the interval of six months
from the date of disbursement for the outstanding amount as per tentative payment
schedule will be obtained at the time of disbursement. These cheques may be utilized to
recover entire outstandins amount in case customer defaults in oavment of installment.
Takaful Comprehensive Takaful of the asset at bank's cost shall be compulsory. Where Takaful
is not provided by any Takaful Company, RSBM may allow insurance with reason to
be recorded
Default An amount as per SOC (Schedule of Charges) shall be recovered on each delayed
obligation rental which shall be paid in Charity.

Early If the client intends to adjust the facility before 02 years, Bank will sale leased asset to
Adjustment the client with increase of 2.5 % of the book value of the leased asset. In case of
adjustment after 02 years leased asset will be sold to the client on book value within 01
year.
Processing Non-refundable processing fee as per schedule of charges to be recovered upfront from
Fee all applicants.

Securities 1. The vehicle will be registered in the name of BOK. Original File of vehicle
along with copy of registration book and duplicate Key to be retained by BOK,
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till full and final adjustment of facility.
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2. Personal Guarantee of the Customer along with Net worth Statement.
3. Takaful of the vehicle duly consigned in favor of BOK.

Operational Manual
1) This is the responsibility of the Branch Manager, Retail Banking Officer & Credit officer
at Branch to market the "Raast car Ijarah" finance facility to prospective customer.
They have to satisfy all queries of existing / prospective customers interested in availing
Caf finance facility and provide requisite information / guidance related to the scheme.

$b
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lslamic Banking Croup 6th Floor, State Life Building, 34-The Mall, Peshawar, Pal<istan
Tel: (091) 5270992 Fax: (091) 5261623 Website: www.bok.com.pk
The Bank of Khyber
tsLAMtc BANKTNG g;JlsLg sdldl
,G,'4 Be'ffir. Eiptrof,{ho applici*fio#;iGffiffiBi a:,
has opened or is already maintaining an operative account with any Branch of BOK to
avail "Raast Car Ijarah" finance facility. For private organization's employee; branch must
ensure that this organization / company is enlisted with Head Office for Consumer Finance
products.

3) Upon receipt of the application with prescribed processing fee as per IBG-SOC, concerned
offrcer will send an acknowledgement to the applicant and will check if all the information
/ documents have been provided by the applicant as mentioned in the application form.
Before accepting the application, if any deficiency is found in the documents, the credit
officer will inform the applicant to provide the requisite information / documents.
4) Following documents / information to be obtained from applicant.
. Application Form
o CNIC copy.
o Passport size photograph
o Annexure CF-l
o Bank Statement for last 6 months.
. Copy of NTN if available. (Optional)
o Provide two references with contact address/ phone numbers & copies of CNIC.
. Copies of Utility Bills i.e. Gas, Electricity & residential Phone (at least one utility bill)
. Valid quotation of the vehicle from authorized auto dealer.
o Employercertificate/undertaking.
- . Most recent salary slip / certificate clearly stating net take home salary.
. CopY of service card.
Additional$ffiI;HYJll::T,?1T1ffi
f #,ol,:l'"%:if,T,TJ3ll,-*,-um3years
satisfactory business I practice).
Proprietorsllxli$rT:'IJ^?,f
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limited companies).
. Proof of partner through copy of Partnership Deed / Form H (in case of
I
, partnership business).
.' o Registration certificates (in case of registered business).
'i . Board Resolution to enter into finance agreement with BOK (for limited
companies).
. Copy of last year Tax Return and copy of NTN certificate
5) The concerned branch staff shall invariably verify the contents of the application and other
information provided by the applicant through;

i. Obtain credit reports from Credit Information Bureau, (CIB), State Bank of
Pakistan as well as Consumer Credit Information Bureau (CCIB) i.e. Data
, Check, regarding applicant and co-applicant. In case any over dues are reflected
in the report(s), applicant will be asked to clarify the same.

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lslamic Banking Croup 6th Floor, State Life Building, 34-The fUuli, p"rt,ru*ur, Pakiitan
Tel: (09'l) 5270992 Fax: (091) 5261623 Website: www.bok.com.pk
The Bank of Khyber
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retephonicenquiryrromtherererencesprovideduiifl yfJri:ffi :*f iffi',f
"Annexure V-l".
Personal visits to the business / service place, and filling the "Annexure V-3"
Visit to the residence of applicant to confirm the information provided by the
applicant and record his findings on the "Annexure Y -2".
Verification / attestation of documents provided with application.
V. Prepare Consumer Risk Rating Sheet.
Upon satisfactory verification of the application Branch will forward applicant request
along with "Recommendation Sheet" [format attached] to Islamic Consumer Department
(ICD) at Head Office Peshawar"

Process at ICD:
n The Islamic Consumer Department will re-verify the contents provided by branch
through above mentioned tools, if deemed necessary.

* After going through the proposal and documents, if the ICD finds any ambiguity then
it can ask the branch for the required documents and verification.
a In case proposal is complete in all respects, ICD will prepare "Credit Proposal". After
getting Shariah Clearance from RSBM the proposal duly recornmended will be
forwarded to competent authority for getting decision.
, In case the proposal is approved, ICD will issue "sanction advice" signed by in-charge
ICD and advise the branch to initiate offer letter at branch end for taking customer
acceptance with the counter sign of Credit officer & concerned BM.

* In case of decline, the ICD will intimate in writing the concerned branch with or
without mentioning the reasons of decline.

Disbursement:

* Upon completion of documentation and clearance of custorner's cheque Branch shall


prepare and send the disbursement sheet to the Operations Department for preparation
I of pay-order. Before disbursement branch must ensure that;
I Required documents have been executed by the applicant as per Shariah Procedure of
, the case.
{. Takaful of the vehicle has been arranged and the contribution has been paid by the
Bank.
n Receipt of security deposit and placed in respective GL.
* A pay-order /DD shall be issued under a covering letter (Purchase Order) to the car
dealer mentioning that the vehicle is BOK's asset and should not be handed over to the
customer without expressing written permission of BoK.
* All the original control documents along with application, accepted Offer Letter to be
placed in safe custody at Branch.
.I.'The delivery of car to client is to be made only after rece ipt of vehicle Takaful
coverage note from Takaful Company. (S-
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lslamic Banking Croup 6th Floor, State Life Building,34-The Mall, Peshawar, Pakistan
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Tel: (091) 5270992 Fax: (091) 5261623 Welosite: www.bok.com.pk


The Bank of Khyber
tsLAMtc BANKINa glltr.;r sdldl

Accounting Entries

The following accounting entries shall be passed to record the transactions given below.

U-Bank PIus

Sr Transaction Detail Debit GL A/c Credit Gl A/c


1 PROCESSING FEE Customer's Account

Processing Fee

FED on processing Fee

SECURITY Customer's Account


2
DEPOSIT
Security Deposit

STAMP / Customer's Account


ADHESIVE
J
STAMP Adhesive Stamps (Charge
CHARGES Documents)

Revenue Stamps (Charge


Documents)

DISBURSEMENT Advance Payment for Ijarah -


Consumer
4

Customer A/c

Customer A"/c

Issue P.O/D.D in favour of Supplier

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lslamic Banking Group 6th Floor, State Life Building, 34-The Mall, Peshawar Pelri+,-
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tsLAM,c BANKTNG g'.r15+f s'tld'

Takaful coverage Advance against Ijarah


upon arrival of Insurance
Asset

Issue P.O/D.D in favour of Takaful


Co.

Registration of the
Vehicle
Advance Payment for Ijarah - Issue P.OiD.D in favor of ETO for
Consumer registration or customer A/c

Car Ijarah- Consumer

Booking of Ijarah Advance Payment for Ijarah -


Consumer

Unearned Income Car Ijarah -


Consumer

Advance against Ijarah Insurance

Unearned Income Car Ijarah


Consumer

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34.The Mall, Peshawar, Pakistan


lslamic Banking Group 6th Floor, State Life Building,
Tel: (091 ) 527}gg2 fax' (Ogt) 5261623 Website: www'bok'com'pk
. * .q--:ryffiY4.qeilFtBtFry -
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The Bank of
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Khyber
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Recovery of
Monthly rentals
Car Ijarah- Consumer

Default Obligation

Charity Accounl

Income on Ijarah Car Ijarah -


NPL Treatment Consumer

Income Reserve Car ljarah-


Consumer

Income Reserve Car Ijarah-


NPL Reversal
Consumer

Income on Car Ijarah -Consumer

NIPL Provisioning Profit & Loss

Provision for NPL

Reversal of
Provision for NPL
Provisioning

Profit & Loss

I
I

b-k Page 7 of 10

lslamic Banking Croup 6th Floor, State Life Building, 34-The Mall, Peshawar, Pakistan
Tel: (09.1\ 5270992 tax: (091 ) 5261 623 Website: www.bok.com.pk
The Bank of Khyber
tsLAMtc BANKTNG g;.r5+l s.U-l

Car Ijarah- Consumer

Income on Car Ijarah -Consumer

Loss on Car Ijarah -Consumer

Pre mature Security Deposit


Termination of
Ijarah (Normal)
Customer A/c

Unearned Income Car Ijarah


Consumer

Car Ijarah- Consumer

Income on Car Ijarah -Consumer

Loss on Car ljaruh -Consumer

Write Off- Principal


(Expense)- Car Ijarah Cons

Car Ijarah- Consumer

Income Reserve Car Ijarah-


Consumer

lncome on Car Ijarah -Consumer

Provision for NPLs - Ijarah

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tclemir Rrnlrino (lrnrrn 6fh Flnnr qt2to lifp Rrrildinrr 14-The Mall Peshawar. Pakistan
The Bank of Khvber
\SLAM\C BANKTNG g;1191r 6)trl

Collection and Monitoring:


a) On 1tt day of the month, designated officer at branch will check balances in respective
accounts of the clients at concerned branches through on-line facility. In case sufficient
balance is available, amount of monthly installment shall be recovered. In case sufficient
balance is not available immediately a telephonic contact will be made with the client to
deposit sufficient balance in his/her account for the payment of monthly installment.
b) In case the client fails to deposit the required amount by l5th day of that month, a letter
will be sent to the client by courier with a copy to guarantor(s).(if applicable), advising
him/her to make the payment within seven days, followed by 2nd rerninder on 25tn day.
Branch will send Form M-6 to the client to record reason of delay and will submit the
reply of the client with branch recommendation to Group Head IBG for recovery of
default obligation amount. (This reminder should contain the intimating clause that in
case of non-payment of overdue amount with in stipulated time period, the case will be
reported to Credit Information Bureau.) The copies of these reminders will be placed in
client's file.
c) A computer generated report of all overdue installments will be placed before the
Branch Manager with remarks of action taken at each day end, for review. The Branch
Manager will issue necessary instructions for further course of action.

d) Once the installment is overdue by 30-days, a Notice signed by the Manager will be sent
to the client as well as to the guarantor(s) (if applicable) by courier. This notice will
contain a slightly strong language, advising the client of his/her obligation to pay the
overdue installment(s).
e) This will be followed up by personal visits of the designated officer to client's residence
as well as office/business address.

D $,t the end of each month a review of Car Ijarah portfolio shall be carried out at branch
level, highlighting the overdue and the same will be placed before the manager. A copy
of this review will also be sent to Collection Coordinator ICD, Head Office.
I

g) During this period constant follow-up through telephonic contacts and personal visits
to residence and work place of the client should continue to persuade him/her to
pay the overdue installments.
h) Another reminder will be sent to the client as well as to the guarantor (if applicable)
after 60-days mark has been passed.
i) Once the 9O-days mark has been passed, the final reminder will be sent to the client as
wellas to the guarantor (if applicable) and the case will be referred to the Bank's SAM
Division for initiating recovery proceedings under "The Financial Institutions,

't.p
(Recovery of Finance) Ordinance, 2001 "

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lslamic BankingCroup 6th Floor, State Life Building,34-The Mall, Peshawar, Pakistan
Tel: (091) 527Tgg2 Fax: (091) 5261623 Website: www'bok'com'pk
EIIIUililtr, 5q'-?r---

j) The portfolio will be closely monitored on different indicators by ICD through


Centralized MIS system. The reports will be generated on daily basis (after core banking
automation) / monthly basis and will be shared with the Management.

For further clarification and guidance contact Islamic Consumer Department Head Office
Peshawar [Ph: 091-5608461 & 091-5276418 (Ext, 104)].

Muhammad Asif Arbab Irfr


lslamic Consumer Department-IBc Incharge Islamic SME

Assets Division
b
Qazi Abdul Samad
BOK-Resident Shariah Board Member

Atif Ilanif
Islamic -IBG

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Islamic Banking Croup 6th Floor, State Life Building, 34-The Mall, Peshawar, Pakistan
Tel: (091) 5270992 Fax: (09'l) 5261623 Website: www.bok.com.pk

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www.bok.com.pk