DIFFERENCE BETWEEN ISLAMIC BANKING AND CONVENTIONAL BANKING

During 6 weeks of internship started from 12th July 2018, at Meezan Bank
Limited, Phase v. DHA, Lahore, the first thing which I have learned was the basic
difference between Islamic and conventional banks. The first and basic difference
between Islamic and conventional banking is of cash lending. The conventional advances
cash loan and than receives profit on that loan in the form of interest and interest is
totally haram in Islam and is declared as an open war with Allah Almighty and his
Prophet (S.A.W). While on the other hand Islamic banks don’t lend money but instead
use financing mode. For example Bank buys the assets for its customer and than give
that asset to the customer and receives rent on that asset which is allowed in Islam.
Financing is used for fixed assets only and hence no cash lending in Islamic banking. In
conventional banking all the loss is borne by the borrower whether he earns profit or
loss. For example a person borrows loan from bank and start a business, the bank will
charge him the interest on the principle amount and if a person suffers loss in that
business he will have to pay the interest on that loan. So the lender will receive interest
whether the borrower earns or not. That is to say, one person lends out capital in the
form of a debt, and a second person puts in his labor, if there is a loss it has to be borne
by labor, but, profit or loss, interest does accrue to capital in any case. Islam has
interdicted this form of investment.

The another big difference between conventional and Islamic bank is that the
conventional banks pays fix amount of profit on the saving accounts and again fixing the
amount of profit in advance is impermissible in Islam. The customer will get the profit
whether the banks gets profit or bears loss. In Islam it is not allowed because risk of loss
should be bear by the both parties. While on the other hand in Islamic banking like
Meezan Bank, the banks put the deposits of customers in the investment of fix assets
and bank acts as a mudarib or manager of the customer’s deposits and if profit comes
from that investment it is shared by the bank and the customer at an agreed ratio and
this is totally permissible in islam.

ACCOUNT OPENING:
Before discussing about the account opening procedure let us look at liability products
which meezan bank offers
1 Running Account
2 Term Deposit Accounts

1 Running Account
These are those types of accounts in which a customer can deposit and
withdraw his money at any time. Running Accounts Include
SAVING ACCOUNT

A unique bank account that offers the opportunity to earn Halal profits, while enjoying a
range of added benefits. It can be opened with a minimum amount of only Rs.10, 000.
The profit on this account is calculated and paid on a monthly basis, and comes with a
variety of free benefits, no restrictions on transactions, priority banking and more.

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

← Riba Free COII Holders may open accounts without any minimum balance requirements

Riba Free Rupee Saving Account works under the principles of Mudarabah and is strictly
in conformity with the rules of Islamic Shariah. Profit calculation and all banking
transactions are in strict adherence to the Islamic Shariah, monitored by our Shariah
Advisor and the Shariah Supervisory Board
KEY FEATURES

Apart from first class service and personalized attention that customers get when they
bank with Meezan, it offer the following additional conveniences:

← Instant access to funds at any online branch.

← Free Online Banking services at all Meezan Bank branches nationwide

← No restriction on withdrawals or number of transactions

← Bank balance certificates & duplicate statements of account

← Stop Payment & Hold Mail instructions

← 24/7 Card your ATM & Debit Card in one

← 24/7 Call Center with complete Tele-banking services

← Personal financial consultancy services

CURRENT ACCOUNT
Meezan Bank is pleased to offer Riba-Free Current Account, a flexible Rupee based
account that is ideal for individuals and businesses looking for Shariah compliant
banking and professionalism both under one roof.
The Meezan Bank Current Account, is a comprehensive Halal method of acquiring a
secure and easily maintainable Riba Free bank account.

Bundled with 24/7 and special banking services, the Meezan Bank Current Account is an
innovative value added account which provides customers both ease of utility and
unmatched service quality.

Key features of the Riba -Free Current Account

← Free Online Banking services at all Meezan Bank branches nationwide

← Instant access to funds at any online branch

← No restriction on withdrawals or number of transactions

← Bank balance certificates & duplicate statements of account

← Stop Payment & Hold Mail instructions

← 24/7 Card your ATM & Debit Card in one

← 24/7 Call Center with complete Tele-banking services

← Personal financial consultancy services

MEEZAN BACHAT ACCOUNT

Meezan Bachat Account is a unique saving account that provides high monthly returns
with the flexibility to withdraw savings if needed. Thus Meezan Bachat Account offers a
higher expected rate of return with the convenience of a savings account.

With a Meezan Bachat Account, you are entitled for a higher the profit with a higher
account balance. You receive profit even if your balance falls below Rs. 25,000/- in any
one month. Profit is credited to your CUSTOMER’S acount every month and is calculated
with reference to the minimum balance maintained in the account during the preceding
month.

The Riba-Free Meezan Bachat Account works under the principles of Mudarabah and is
strictly in conformity with the rules of Islamic Shariah. Profit calculation and all banking
transactions are in strict adherence to the Islamic Shariah, monitored by our Shariah
Advisor and the Shariah Supervisory Board.
Key Features

Enjoy a range of valuable features including:

← Highest expected rate of return

← Riba-free profit paid every month

← Minimum balance for account opening is just Rs.25,000/-

← Maximum balance limit for getting highest profit rate is Rs. 1,000,000/-

← Waiver of application fee for Car Ijarah & Easy Home for accounts with minimum balance
of Rs. 500,000

← Free Online Banking services at all Meezan Bank branches nationwide

← Free bank balance certificates.

← 24/7 Card your ATM & Debit Card in one

← 24/7 Call Center with complete Tele-banking services

← 24/7 Internet Banking – free and instant access to your account(s) anytime & anywhere

← Personal financial consultancy services.

KAROBARI MUNAFA ACCOUNT (KMA)

Karobari Munafa is a savings account specifically tailored for large Corporate entities. It
allows customers to earn higher returns on surplus cash balances. It has no preset
transaction limits and comes with a variety of free packaged benefits.

Key Features

← Profit will be calculated on a Daily Product Basis

← Minimum balance requirement for account opening is Rs. 1 Million

← No restriction on deposits and withdrawals

 ← Free facilities: chequebooks and payorders

← Dedicated account / relationship manager

The Karobari Munafa Account works under the principles of Mudarabah and is strictly in
conformity with the rules of Islamic Shariah. Profit calculation and all banking
transactions are in strict adherence to the Islamic Shariah, monitored by our Shariah
Advisor and the Shariah Supervisory Board

DOLLAR SAVING ACCOUNT

Meezan Bank is pleased to offer Riba-Free Dollar Saving Account, a foreign-currency
based investment opportunity that is set up on the principles of Shariah and as a result
is free from the element of interest.

With a minimum of only $100 you can open a Dollar Saving Account with us under a
Mudarabah arrangement that is strictly in conformity with the principles of Islamic
Shariah. The return earned on the Mudarabah pool is calculated every month and the
profit ratio for all investors is declared at the beginning of the month. If you maintain a
minimum average monthly balance of $ 500, you shall be eligible to receive profits that
shall be disbursed to you every month.
Additional Features

Apart from first class service and personalized attention that our customers get when
they bank with us, we offer the following additional conveniences to our customers :

← Personalized cheque books

← No restriction on withdrawals or number of transactions.

← 24/7 Call Center with complete Tele-banking services

← Monthly profit payment

← Taking stop payment instructions

← Taking hold mail instructions

← Issuance of duplicate statement of account

← Personal financial consultancy services

Meezan Asaan Account
You can open two types of asaan accounts, both in local currency

1- Meezan Asaan Current

The Riba-free Meezan Asaan Current Account is another addition to the offerings of
Meezan bank. Meezan Asaan Account opens the doors of banking products and services
to those customers who have limited proof of source of income. The account can be
opened with just Rs. 100/- and a valid CNIC/ SNIC / Passport / National Identity Card for
Overseas Pakistanis (NICOP) / Pakistan Origin Card (POC) / Alien Registration Card (ARC)
issued by National Aliens Registration Authority (NARA) / Pension Book.

Key Features
1. Minimum investment required to open an account is Rs. 100/-
2. Free Internet Banking facility
3. Free Online banking service at all Meezan Bank branches
4. Restriction on withdrawals amount above Rs. 500,000/-
5. Restriction on Maximum credit balance limit of Rs. 500,000/-
6. Globally accepted Meezan Visa Debit Card.

2- Asaan Savings Account

The Riba-free Meezan Asaan Savings Account is another addition to the offerings of
Meezan bank. Meezan Asaan Account opens the doors of banking products and services
to those customers who have limited proof of source of income. The account can be
opened with just Rs. 100/- and a valid CNIC/ SNIC / Passport / National Identity Card for
Overseas Pakistanis (NICOP) / Pakistan Origin Card (POC) / Alien Registration Card (ARC)
issued by National Aliens / Registration Authority (NARA) / Pension Book.
Key features
1. Minimum investment required to open an account is Rs. 100/-
2. Free Internet Banking facility
3. Profit will be paid on monthly basis and calculated on daily basis
4. Restriction on withdrawals amount above Rs. 500,000/-
5. Restriction on Maximum credit balance limit of Rs. 500,000/-
6. Globally accepted Meezan Visa Debit Card.
7. Free Online banking service at all Meezan Bank branches
2 TERM DEPOSITS ACCOUNTS
These are those types of accounts in which the deposits from customers are fixed for the
certain period of time and customers get profit on their investments. These accounts
include

CERTIFICATE OF ISLAMIC INVESTMENT ( COII)

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

← Monthly profit on 1, 2, 3 and 5 years (Minimum Investment Rs. 200,000)

← Quarterly profit on 1, 2, 3 and 5 years

← At maturity profit payment for all tenures

← Withdraw your investment any time during your investment.

(Profit shall be paid only after completion of one month of investment)

Riba-Free Certificate of Islamic Investment (COII) works under the principles of

Mudarabah and is strictly in conformity with the rules of Islamic Shariah. Profit
calculation and all banking transactions are in strict adherence to the Islamic Shariah,
monitored by our Shariah Advisor and the Shariah Supervisory Board.

Invest in Certificate of Islamic Investment

Riba-Free COII is available at all branches of Meezan Bank Ltd. We invite you to visit any
of our branches to experience the comfort of our personalized service. To make an
investment the bank requires customers to maintain either a current or a saving account
with Meezan Bank. In order to open an account, fill in the Account Opening Form, bring
in the required documents, and get introduced by an existing banker.

Additional Features

Enjoy a range of valuable features including:

← High and very competitive returns

 ← Long-term security ensured

← Pre-mature withdrawal options available

← Free Online Banking services at any of our branches

← 24/7 Call Center with complete Tele-banking services

MAHANA AMDAN CERTIFICATE (MAC)

The Riba-Free Meezan Aamdan Certificate (MAC) is a long-term deposit certificate with
an exceptionally high monthly profit designed especially for those individuals and
corporations who are in need of regular stream of monthly income. MAC is a monthly
income (mahana aamdani) certificate with a variety of free packaged benefits.

Working under the principles of Mudarabah, the Meezan Aamdan Certificate and is
strictly in conformity with the rules of Islamic Shariah. Profit calculation and all banking
transactions are in strict adherence to the Islamic Shariah, monitored by our Shariah
Advisor and the Shariah Supervisory Board.
Key Features

Enjoy a range of valuable features including:

← High and very competitive returns

← Ensured Long-term security

← Minimum investment amount: Rs. 100,000/-

← Available tenures of 5½ years and 7 years

← Profit payment on monthly basis.

← Pre-mature withdrawal options available.

← Free cheque book

← Free Online Banking services at all Meezan Bank branches nationwide

← Free Internet banking facility

← 24/7 Call Center with complete Tele-banking services

MONTHLY MUDARBAH CERTIFICATE (MMC)
Riba Free Monthly Mudarabah Certificates is a flexible rupee based investment which
has been designed to give you a monthly return. The minimum investment required is
only Rs. 100,000 and you receive profit for each complete month of investment with the
Bank.

Working under the principles of Mudarabah and in strict conformity with the rules of
Islamic Shariah, the Profit calculation of Monthly Mudarabah Certificates and all other
banking transactions are in strict adherence to the Islamic Shariah, monitored by our
Shariah Advisor and the Shariah Supervisory Board.
The weightages used for profit calculation of the Monthly Mudarabah Certificate are in the
following tiers:

← Rs. 100K up to Rs. 4.99 Mn

← Rs. 5.00 Mn up to Rs. 9.99 Mn

← Rs. 10 Mn up to Rs. 49.99 Mn

← Rs. 50 Mn up to Rs. 99.99 Mn

← Rs. 100 Mn up to Rs. 499.99 Mn

← Rs. 500 Mn & above

Additional Features

During your relationship with us, you would be entitled to receive the following
additional benefits.

← A 100% halal investment in strict compliance with Shariah

← Monthly profit payment to your current or saving account with us

← Pre-mature withdrawal options available

← Bank balance certificates

← Free Online Banking services at all Meezan Bank branches

← 24/7 Call Center with complete Tele-banking services

← Personal financial consultancy services

After looking on the different types of accounts which meezan offers now let us look
upon the ACCOUNT OPENING PROCEDURE

Before opening the account following documents are required

Following are the documents required for opening an Account:

Individual Account

1. CNIC / NICOP / POC

2. Any job / Business proof (As applicable)

← Minor

1. Attested copy of Birth Certificate

2. Attested copy of B Form

3. CNIC copy of Guardian

← Limited Company

1. Attested copy of Certificate of Incorporation

2. List of Directors

3. Attested copy of Memorandum & Articles of Association

4. Board Resolution

5. Attested copy of Certificate of Commencement of Business (For Public

Ltd. Co.)

6. Attested copies of CNICs of all Directors / Signatories

7. Latest copy of certified Form-29 issued by SECP

← Proprietorship

1. CNIC of Proprietor

2. Attested copy of NTN Certificate

3. Account Opening Request & Proprietorship Letter on Firm's Letter Head

← Partnership

1. Registered Partnership Deed (certified copy)

 2. Letter of Authority & Mandate

3. Attested copies of CNICs of all Partners

4. Account Opening Request Letter on Firm's Letter Head

After looking upon the essential documents required opening an account let us throw
light on the account opening procedure. First of all the customer provides the detail on
the account opening form that which type of account he or she wants to open. Whether
current or saving, MBA or KMA etc. in next step customer specify whether he or she
want to open account in pak rupee or in foreign currency. Than customer specify that he
wants to open single or joint account. There is also option of photo account which is for
illiterate people. Customers of photo account provides their photographs which are
scanned on SS card and they should come themselves for any cash withdrawal. After
getting all these details than customer provides his or her personal information. His or
her name, father or husbands name, mother’s name, CNIC number, Old NIC Number if
applicable, correspondence address, permanent address, mobile and land line numbers.
If there is joint account than same details of other applicant is obtained. In the next step
details are acquired regarding the next of kin. It means that if customer god forbids die
or some sort of situation arise that customer cannot operate the account than in that
situation person specified by the customer in the next of kin will continue all the
transaction. Person specified in the next of kin should be the blood relative of customer
that any be father, mother, wife, or children only. In the next step step customer specify
that the chances or remittances in his account , how many transactions will he perform
in a month and volume of transactions. Than the customer provide specific details in the
atm card and telephone banking form and the customer will sign the account opening
form and SS card form and for future transactions signatures specified in the ss card will
be used. If the signatures of customer differs from CNIC than a Signature Difference
Form will be signed by the customer which will include both the signatures that are on
CNIC and actual signatures which customers uses. Than the particulars of introducer are
entered in the form. It means which employ brought the customer to bank for account
opening. Employee’s number, address, etc are entered in the account opening form.

After taking all the details on the account opening form and relevant documents which
are essential for account opening and which are mentioned above are required than the
customer is assigned the account number and than the customer deposits the cash in his
account to operationalize his or her account. Now when the account is opened and
whole information is entered in the system and than LETTER OF THANKS duly signed by
the OM or Authority Holder is send to the correspondence and permanent address of
the customer as an acknowledgement
CHEQUE BOOK ISSUANCE
FIRST TIME ISSUANCE
Now when the accounts gets open the customer needs cheque book for further
transactions. For issuance of cheque book customer should bring the letter of thank
which is send to his permanent and correspondence address. When the customer brings
that letter the officer gets photocopy of that letter and signed that letter as an
acknowledgement. And then Cheque book is issued.

First Cheque book cannot be received by third party. It always received customer
himself.

Issuance of Cheque book for more than one time

Customer gives the requisition for Cheque book issuance and specifies that whether he
requires Cheque book of 25, 50 or 100 leaves. A page which is already attached in first
cheque book.

RATE OR CHEQUE BOOK PER LEAF

Cheque book of current account is charged as RS. 10 Per leaf.

ISSUANCE OF CHEQUE BOOK FOR STAFF MEMBERS

Cheque books are issued to all staff members free of cost

FILING DIFFERENT DOCUMENTS

During my internship period I learned there are certain documents which should be filed
daily and these includes

TGL REPORT
This document includes opening and closing balance and includes the details like total
deposits, cash in safe. Foreign currency, assets, expenses and income e.t.c

COMPLIANCE REPORT
This document includes all the business transactions greater than 250 k. the officer
mentions the nature of these transactions and is signed by the branch manager

SQC

The main things which I learned about the work of sqc are as
SQC CHECKLISTS
The first task that sqc performs early in the morning is to monitor sqc checklist. This
checklist includes different things like signage is clean or not, all staff was present at 8:45
or not. Banking hall and teller area is clean or not. Rate sheet and brochures are
displayed or not. Sitting area is clean or not. Atm machine is working or not. Lighting and
air conditioning is proper or not. Server room is neat and clean. Generator is properly
fuel or not. Janitorial staff is present well in time or not. So, these were the main things
which sqc checks and mentions in the checklists

FT SHEETS
Another task which sqc performs is to prepare floor time sheets and assign the duties of
staff for floor time. Each staff member performs ft duty for an hour in which he or she
greets the customer, guide them to proper desk and ensures the branch is in order. 1 st
and last hour of floor time is performed by the lead floor manager who should be
present by 8:15

FTM
During my internship period is also performed the floor time duty. In FTM I performed
different tasks like greeting the customers, filling the deposit slips for the customers who
don’t know to fill it properly. Guiding the customer to the right desk. Noting at least two
transactions and time taken by a each transaction. During FTM I learned that branch
should be clean, reading material is available or not etc

CLEARING
In clearing I learned that there are two types of clearing

INWARD CLEARING

Inward clearing is that type of clearing in which MBL customers gives Cheque to others
and that other people presents in MBL for clearing via NIFT

OUTWARD CLEARING

Customers of other banks give Cheque to MBL customers and MBL customers present
that Cheque in MEEZAN. MBL than send that Cheque to the parent branch which clears
that Cheque if balance is in the account of the person or otherwise dishonors it
METHOD OF CLEARING.

For inward clearing the officer first of all examines that whether the date mentioned is
correct. A Cheque can be valid for 6 months from the date of issuance. Cheque should
be not post dated or presented before the date. For example date mentioned on the
Cheque is 6 June, 2018 and customer is presenting it on 4 June than that Cheque is not
acceptable before 6 June. Than the officer examine that sufficient balance is lying in the
account or not. If required amount of balance is present than officer examines the
signatures of customer specified on the SS card. In the next step the officer examines
that bank stamp in which Cheque was present or not and also checks the stamp of Credit
Payee Account only.

If all these conditions are fulfilled than the MBL clears that Cheque or vice versa

For outward clearing the customer deposits that Cheque of another bank with deposit
slip and than that Cheque is presented to the parent branch. Within city clearing takes 1
one day while clearing from outside city takes two to three days and when that Cheque
gets clear and comes back specified amount is credited to the customers account.

EXPENSES
All expenses branch use according to their nature under their limit, if any exceed from
their limit than branch take approval from area manager. To avoid any audit objection.
 CONCLUSION

So these were the main assignments which I completed during my internship with
Mezan Bank Limited, Phase v. DHA, Lahore. In the end I would like to thanks all the staff
members who were kind and supporting to me and treated me like their colleague and
not just an internee. They give me the practical task to perform and not asked me to just
file the documents and photocopy the documents as most of other institution does to
the internee. So, it was a great experience for me at MBL.