[1]

SME and Micro financing by Meezan Bank

Urooj Khursheed 7151-FMS/MBA/F15

Supervisor: Dr. Hameeda Akhtar

FACULTY OF MANAGEMENT SCIENCES

INTERNATIONAL ISLAMIC UNIVERSITY ISLAMABAD

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“SME and Micro financing by Meezan Bank”

Submitted by:

Urooj Khursheed 7151-FMS/MBA/F15

Submitted To:

Dr. Hameeda Akhtar

A report that is a partial fulfillment of the requirement for degree of Master of

Business Administration (MBA) Finance submitted to department of business
administration, Faculty of Management Sciences (FMS), International Islamic
University Islamabad (IIUI).
 [3]

Supervisor’s Certificate

This is to certify that the content and material of this research based project are
accepted for fulfilment of requirement of degree of Master of business
Administration at International Islamic University, Islamabad (IIUI) submitted by
Urooj Khursheed.

Supervisor

Dr. Hameeda Akhtar _______________

Assistant Professor

Faculty of Management Sciences

International Islamic University, Islamabad

Head Department of Accounting and Finance

Dr. Sumayya Chugtai _______________

Faculty of Management Sciences

International Islamic University, Islamabad

Chairperson (FMS)

Dr. Tasneem Fatima _______________

Faculty of Management Sciences

International Islamic University, Islamabad

 [4]

DECLARATION BY STUDENT

Myself, Urooj Khursheed hereby proclaim that the work presented in report is
original done by me and has not been published or submitted elsewhere for the
requirement of a degree programme. Any literature date or work done by other and
mentioned within the thesis has given due to acknowledgement and listed in the
reference section.
 [5]

DEDICATION

The project is dedicated to my lovely parents and whose encouragement, efforts

and prays makes me able to achieve my goal. Along with my respected and
hardworking teacher Dr. Hameeda Akhtar who supported me to achieve this goal.
 [6]

Table of Contents
S.no. Content Page no.
1 Introduction 8

2 10
Banking solutions offered by Meezan Bank for Small &
Medium Businesses

3 Small & Medium Enterprise Financing Schemes: Corporate 33

Vendor and Distributor Finance Program

4 Open doors for Pakistan’s Youth 35

6 References 38
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SME and Micro financing by Meezan Bank

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INTRODUCTION:

This is a contextual investigation with respect to Meezan bank. Meezan Bank is Pakistan's first

and biggest Islamic bank. Islamic saving money nowadays is assuming the significant job in

financing and adding to different monetary and social parts in the nation in similarity with the

standards of Islamic Shariah in Islamic managing an account rehearses. Interestingly with the

advanced Islamic keeping money, which was established only four decades back but comes up

short on that dimension of serious and broad writing, traditional saving money is old and have

been engaged both widely and seriously by the current writing. That is the reason, the focal point

of this examination is on Islamic managing an account particularly on Meezan bank and on the

shariah agreeable financing arrangements which Meezan bank is putting forth to the little and

medium ventures (SMEs) to provide food the working capital back, send out re-fund long haul

back, import back, narrative credit prerequisites and undertaking financing needs of their clients.

Another essential purpose behind choosing Meezan bank as an Islamic bank is the way that it is

the first and biggest Islamic bank that has a period of over 21 years. In addition, the point of this

investigation is to look at an arrangement of plans that Meezan bank is putting forth to give

Shariah-consistent financing offices under the Prime Minister's Youth Business Loans (PMYBL)

program.

Business banks dependably like to add to okay exercises and are impervious to back high-chance

undertakings, despite the fact that such activities present better venture openings. They are

likewise less anxious to back little firms that do not have an adequate guarantee. Interestingly, a

prime target of Islamic banks is boosting genuine monetary improvement as they seek after to

amplify social advantages and thusly, they buckle down to help the economy to advance towards
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a higher phase of self-continued advancement by overwhelming shortage and challenges, which

results in a recognizing impact on financial congruity because of equivalent pay dissemination.

The achievement or disappointment of customer endeavors directly affects the idea of Islamic

managing account tasks in light of the benefit and misfortune sharing (PLS) processor

"participatory" keeping the money. Additionally, the connection among investors and bankers is

based on an association, where money is focused on brokers for speculation, and returns shared

among contributors and financiers. Both the gatherings additionally share misfortunes. This

sharing guideline is very unique to conventional keeping money rehearses. Islamic back

advances business and hazard sharing and its extension to the unwealthy individuals from society

is a successful improvement device.

Additionally, due to CPAK, the web-based business exercises will get help up and on the off

chance that these exercises get vigorously, little and medium endeavors would inspire the

chances to bring their items into the remote markets. Development of exercises in little and

medium endeavors than interest extra capital.

This examination will likewise empower youth to become acquainted with about various plans

under PMYBL program. This investigation likewise gives inside about how Meezan Bank

bolsters Akhuwat through giving proficient help in territories, for example, preparing,

specialized help, achievability examination, statistical surveying and improvement of plans of

action and arrangements and in addition Shariah warning administrations

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BANKING SOLUTIONS OFFERED BY MEEZAN

BANK FOR SMALL & MEDIUM BUSINESSES

Meezan Bank offers Shariah consistent keeping money solutions like trade, financing and

deposit-related administrations to little and medium estimated endeavors. Therefore, as to give

Sharia consistent financing arrangements, they join the abilities and mastery of in-house item

pros and Shariah researchers. They meet the accompanying needs of little and medium

undertakings (SMEs):

1) Short-Term Financing Needs (Working Capital Fund).

2) Long-term Financing Needs.

3) Trade-Related Administrations.

1) Short-Term Financing Needs (Working Capital

Finance):

To meet working capital needs of its clients Meezan Bank offers finish answers for its clients.

They give back to its clients to buy crude materials, obtaining advantages for exchanging

purposes and to meet overhead costs. Finish scope of items, which Meezan Bank offers too little,

and medium endeavors to meet the said working capital prerequisites are as per the following:
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a) Murabaha

b) Tijarah

c) Istisna

d) Bai Salam

e) Musawamah

a) MURABAHA:

Definition:

Murabaha is an explicit type of offer where the merchant unmistakably demonstrates the expense

of the sold ware and pitches it to the purchaser by including some benefit afterward. Therefore,

Murabaha isn't an advance, which is given on intrigue; it is an offer of a product for hand to

hand/conceded cost.

If there should arise an occurrence of Bai' Murabaha the bank buys the item in the interest of a

client and afterward resale it to the last on expense in addition to benefiting premise. Under this

understanding, the bank uncovers its overall revenue and cost to the client. At the end of the day,

the Islamic bank purchase the product from an outsider and later on pitch it to the customer at a

pre-concurred cost, instead of offering money to a borrower as a credit that is the means by

which the framework works in a regular keeping money game plan.

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Murabaha is a strategy for financing as old as Musharakah. At present in Islamic banks around

the world, indirect 66% of all venture exchanges are through Murabaha. Differences between

Murabaha and Conventional Financing:

Conventional Financing Murabaha

1. In Customary Financing Qard based Murabaha is like a deal exchange.

contract happens.

2. Here, remuneration will be as intrigue; Here, Pay would be in the state of the cost of

however, any advantage above advance products

is intrigue.

3. Proprietorship and danger of the The bank has to bear the proprietorship and

advantages do never again assumed by danger of the advantages.

the bank.

4. If there should be an occurrence recently If there should arise an occurrence generally

installment punishments charged by the installment no punishment would be charged.

bank

Basic Rules for Murabaha:

Rules, which govern Murabaha transaction, are as follows:

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1. The subject of offer should exist on the season of the deal. In like manner, not anything

that does not exist at the season of offer can be sold and its non-presence makes the

understanding invalid.

2. At the season of an offer, the subject of offering ought to be in the responsibility for. On

the off chance that the merchant moves something that he himself has never again obtained, the

deal transforms into the void.

3. The subject issue should be in physical or positive responsibility for merchant while he

pitches it to another person. Positive ownership implies a situation wherein the holder has not

taken substantial delivery of the item, yet it has come into his possession and all rights and

liabilities of the ware are surpassed on to him, together with the peril of its obliteration.

4. The deal must be on the spot and total. In this way, a deal, which is associated with a

future date or a deal subject to a future occasion is invalid.

5. The subject of the offer must have some esteem. Subsequently, a good that has no worth

cannot be purchased or sold.

6. The topic ought not to be a segment utilized for a un-Islamic purpose.

7. The subject of the offer must be especially perceived and distinguished to the buyer.

8. The delivery of the offered item to the client should make certain and ought not to rely

upon a possibility or contingency.

9. For the legitimacy of the sale price sureness is an imperative condition. In the event that

the cost of the ware is uncertain, the deal winds up the void.
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10. The deal should be genuine. A contingent deal is not substantial aside from the condition

is recognized as a piece of the exchange as per the utilization of the exchange.

Comprehensively Murabaha Financing Five steps need to be followed in

Murabaha Financing:

1. A, generally speaking, assertion must be marked by the customer and the organization

through which the establishment or bank guarantees to move the product and the customer

assurances to look for it now and again at a concurred rate of benefit added to the expense. This

assertion may likewise determine the limit up-to, which the office can be benefited.

2. Both gatherings should consent to an office arrangement where the establishment

delegates the customer as his operator for acquiring the item for its benefit.

3. The customer would buy the item in the interest of the organization and will accept

ownership as the specialist of the establishment.

4. The customer conveys the organization that the commodity is bought by him and at the

same moment makes an offer to get it from the establishment.

5. At the last stage, the bank acknowledges the offer and the deal reaches an end whereby

proprietorship and additionally chance is moved towards the customer.

All the above conditions are important to have an effect on a substantial Murabaha. On the off

chance that the establishment buys the item specifically from the provider, it does not require any

office understanding.

The most essential purpose of the exchange is that the item needs to remain in the danger of the

organization amid the period between the third and the fifth stage. The above advance or
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exchange is the most viable manner by which this exchange is recognized from an ordinary

intrigue based exchange.

b) TIJARAH:

Definition:

Meezan Tijarah is a Deal and Organization based financing office for Clients who move

Completed Products Using a credit card premise".

Under this methodology, the bank buys the completed products of the customer on money

premise and after that selects the customer as its operator to pitch similar merchandise in the

market to outsiders largely using a credit card premise. This office will empower the customer to

move its Completed Merchandise stock, meet its working capital prerequisites and appreciate the

advantages of Money deals.

To guarantee the legitimacy of Completed Merchandise exchange the cost of completed products

must be settled with the assent of the gatherings and the important detail of the required things

must be completely settled between them. The cost of Completed Products is generally paid on

the spot with moment conveyance of Merchandise.

SALIENT FEATURES OF MEEZAN TIJARAH

Salient Features of Meezan Tijarah under the Finished Goods Financing

Agreement:

The Completed Merchandise assertion would be material just for Finished/Completed Products

that have been changed from their common state through the assembling process.
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1. The price of the Completed Products assertion is typically paid on the spot with moment

flight of merchandise.

2. The conveyance of the subject of the offer may happen through physical or productive

ownership. At this stage, the risk of the customer regarding topic arrives at an end and the

obligation of the monetary establishment begins until its deal to a definitive purchase.

3. The bank and the customer may concur on a period within which the customer would be

in charge of any deformities.

The Bank in can sell the Goods through Finished Goods Agreement in One of

the following manners:

1. The Completed Merchandise assertion would be material just for Finished/Completed

Products that have been changed from their common state through the assembling

process.

2. The price of the Completed Products assertion is typically paid on the spot with

moment flight of merchandise.

3. The conveyance of the subject of the offer may happen through physical or

productive ownership. At this stage, the risk of the customer regarding topic arrives at

an end and the obligation of the monetary establishment begins until its deal to a

definitive purchase. The bank and the customer may concur on a period within which

the customer would be in charge of any deformities.

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c) ISTISNA:

Introduction:

Istisna' is especially a deal exchange where an item is transacted earlier than it comes into reality.

It is a request to a manufacturer to create a chose ware for the client. The maker makes

utilization of his own material to produce the required items.

In Istisna', the cost of the product ought to be settled with the endorsement of the considerable

number of gatherings engaged with the exchange. All other critical attributions of the ware ought

to likewise be completely settled.

Cancellation of the contract:

Subsequent to giving fundamental insinuation, any gathering can drop the understanding sooner

than the assembling party has all begun its work. When the work starts, the agreement could not

be severing singularly.

Working Capital Financing Using Istisna:

Islamic budgetary foundation likewise can meet the Working Capital requirements of the SMEs

through the methods for Istisna in an accompanying way:

1. When a client needs assets to meet its working Capital necessities, around then Islamic

Bank places an order to produce to the customer to provide finished products of clear

details.
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2. The bank may make the installment of Istisna Cost at the singular amount or in fragments

in the wake of putting the request.

3. When the completed merchandise is prepared for conveyance, after that the bank will get

the products from the client.

4. After getting the merchandise, the bank would move the products in the market, either

specifically or through some specialist, which may be the customer, to recoup its cost and

gain some benefit subsequently.

Risk Mitigation in Istisna:

A number of the risks, which can be found in Istisna Financing for Banks, are as follows:

RISKS DETAILS MITIGANTS

1. Delivery Risk. It is conceivable that bank may To handle this hazard, the bank

confront delay in the can decrease the Istisna cost every

conveyance of products from day to force a punishment on the

the manufacturer. producer.

2. Nonperformance The maker may not be Bank can drop the Istisna

equipped for fabricating the assertion and guarantee the cost

merchandise amid designated over from the producer. Then

time and declines to hold at the again, the cost can be paid by the

commitment similarly. Bank in portions in the wake of

being very much satisfied with the

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execution

3. Quality Risk The Producer may convey Bank has the privilege to dismiss

absconded or low-quality the products and it can request

commodities. that maker restore the cost back.

4. Price Risk. The market cost of the Parallel Istisna or guarantee to

substance decreases after bank purchase from an outsider can

embraces the Istisna reduce the danger

settlement.

5. Storage Risk Once the merchandise This can be secured through

conveyed by Producer will be Takaful of the products and by a

at Bank's hazard before these method for decreasing the time

are sold to a definitive buyer. term among acknowledgment of

conveyance beneath Istisna and

conveyance to the last client.

d) BAI SALAM

Introduction:

It is Shariah-consistent choice to bill or receipt limiting wherein instead of exhibiting credit

against the fare arrange, Meezan Bank holds the fare bill as insurance and presents a crisp

Murabaha subsidizing office to the customer or buys Outside currency against Pak rupees from
 [20]

the customer on Salam premise at spot rates (spot cost) to meet the financing needs of the

customer.

Salam Agreement:

Salam can be utilized to purchase outside bills. The way of the Salam exchange is as per the

following:

1. Exporter acquaints the fare qualifications with the money related foundation.

2. The Bank goes into a Salam exchange with the exporter whereby the Bank Purchases

Foreign Cash (FCY) from the customer (to be expedited an exact future date) in

resistance to Pak rupees (PKR)on the prepared cost of day to be paid finished before.

3. The Bank at that point makes the installment in Neighborhood Money (LCY) by

changing over the assumed worth (FV) in Outside Cash of the credentials at characterized

advertise rate.

4. The Outside Cash will be hand over by the client at an exact future date and should not be

dependent upon the appearance of the letter of credit (LC) receipts.

5. The Bank may request that the exporter distribute its receivable, secured by Letter of

credit, to the Bank.

6. The money related foundation may furthermore request that the exporter vow different

securities to shield itself in the event that the exporter neglects to satisfy a commitment.

7. The Bank will make a guarantee to sell Foreign Currency at a future date with a money-

related organization.

8. The bank's benefit will be founded absolutely on the qualification between the spot rate

and the forward rate.

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e) MUSAWAMAH:

Definition:

Musawamah is a customary and ordinary sort of offer wherein the cost of the product to be

exchanged is negotiated between the merchant and the purchaser. It resembles Murabaha, in any

case, in this Bank won't reveal the expense and benefit to the customer. All different conditions

identified with Murabaha are pertinent for Musawamah too.

Practical Terms and Conditions for Musawamah:

So one can conform to Shariah, there are numerous directions to a Musawamah, including:

1. The subject of the offer must be in the presence and in the vendors' possession at the

season of the deal.

2. The deal must be instant; sale subject to a future date is void.

3. The resource must have some esteem and it ought to be usable.

Musawamah can likewise be permitted under Islamic Export Refinance Part I&II.

Part-I: Financing under Part I of the Scheme is an exchange based office. The fund is allowed by

the bank to the exporter based on a Firm Export Order/Export Letter of Credit, for the greatest

time of 180 days. The financing office can be benefited at the pre-shipment arrange for getting

information sources and assembling the products to be sent out. Financing at Post Shipment
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organize is likewise conceded against merchandise previously sent to the shipper abroad, for the

period up-to acknowledgment of fare continues or 180 days, whichever is prior.

Part-II: Under Part-II of the Scheme, a rotating money limit is authorized to the exporter

proportionate to half of his fare execution amid the earlier year on July - June premise. Exporters

can profit this financing office for a time of 180 days. The office once benefited should be

reimbursed in totality. Exporters having benefited Part-II offices need to send out/deliver

qualified products and acknowledge trade continues and present the proof of execution on the

endorsed articulation inside two months from the end of each monetary year.
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2) Long-term Financing Needs:

Long pull financing needs of the SMEs can be in the method of obtainment of benefits like

property, hardware, types of gear or vehicles and so on. Following are the two noteworthy items

offered by the Meezan banks to cook the accompanying needs of clients.

a) Diminishing Musharakah.

b) Ijarah.

a) DIMINISHING MUSHARAKAH:

The concept of Diminishing Musharakah:

Extra type of Musharakah, which is progressed in the close past, is the 'Lessening Musharakah'.

As indicated by this thought, a bank furthermore, his customer share either in the joint duty

regarding property or equipment or in a joint business undertaking. The offer of the bank is

furthermore part into different units and it is grasped that the customer would purchase the units

of the offer of the bank one by one at ordinary interims, therefore expanding his very own offer

until every one of the units of the bank being acquired by the client which will make him the sole

proprietor of the property, or the business endeavor, all things considered.

Components of Diminishing Musharakah:

There are three segments of Reducing Musharakah, which are as per the following:

1. In Lessening Musharakah Joint ownership, exist between the Bank and client.
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2. The offer of the bank is utilized by the Client as a resident.

3. Acquisition of the offer of the Bank by the client.

Comprehensively Diminishing Musharakah Financing:

1. The client bids the money related organization with the demand for

Undertaking/Hardware/gear or vehicle financing.

2. Then the Bank will go into a Musharakah (Joint Proprietorship) contract with the

customer and the two gatherings will pay their individual offers to the vendor of the

advantage.

3. Customer will make the guarantee to buy Bank's offer (units) over the residency of

concurrence with the assistance of undertaking to Buy.

4. The client will pay the lease for the utilization of bank's offer in the property.

5. The customer might purchase the units or offer of the bank each month through a

different offer and acknowledgment consistently and will at last turn into the proprietor

of the advantage.

6. Ownership of the benefit will be exchanged at last to the customer at an installment of

advantage cost. (with the assistance of a Deal exchange between bank and customer

toward the finish of

 [25]

b) IJARAH:

Ijarah, for the most part, intends to give something on the lease. The monetary establishment

makes utilization of this item for medium and long-haul financing capacities where the bank

acquires the advantage required by the customer and afterward rentals it to the client for a settled

span. This item is normally utilized for the financing of advantages like a plant, hardware,

generators, gear, vehicles, etc.

Basic Rules for Ijarah:

Rules, which govern Ijarah are as follows:

1. Transferring of usufruct (a legal right to use and derive profit from property

belonging to someone else), not ownership:

In renting, the proprietor (bank) exchanges its usufruct to someone else (client) for a predefined

era, at settled prerequisite.

The subject matter of lease:

The subject matter of lease must be having some value, identified and quantified.

2. All consumable things cannot be leased out:

The corpus of the rented property will stay inside the responsibility for the merchant, and just its

usufruct will be exchanged to the renter. In this manner, something, which could not be utilized

without devouring, could not be given on lease. For instance, money, wheat, etc.

3. All liabilities of ownership are borne by lessor:

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As the corpus of the rented property ought to stay in the responsibility for lessor (bank), so every

one of the commitments ascending from the proprietorship to be borne by the lessor.

4. Period of lease:

 The period of the lease should be identified in clear terms.

 It is compulsory for an authentic lease that the leased asset is fully recognized by the parties.

5. Lease for a specific purpose:

The resident cannot utilize the rented resource for any reason other than the one characterized in

the rent settlement. In any case, in the event that the explicit intention is not expressed in the

understanding, the resident can utilize it for whatever target it is utilized in the typical course.

6. Lessee as Ameen:

 The lessee should be responsible to compensate the lessor for every harm to the leased

property caused by his misuse or carelessness.

 The leased asset will remain in the risk of the lessor throughout the lease period in the

manner that any harm or loss caused by the elements beyond the control of the lessee will

be borne by the lessor.

7. Lease of jointly owned property:

 A property which is jointly owned by two or more parties can be leased out and the rent

will be divided among all joint owners according to the fraction of their respective shares

in the asset.
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 A joint owner of a property may rent out his proportionate share only to his co-sharer and

not to any other person.

8. Determination of Rental:

 The rental must be distinguished on the season of assertion for the entire time of

settlement.

 It is passable that diverse measures of the lease can be settled for unmistakable stages

amid the rent period, gave the measure of the lease to each stage ought to be explicitly

settled upon at the season of influencing the rent. On the off chance that the lease for a

succeeding period of the rent period is not chosen or has been left at the decision of the

lessor, the rent is not credible.

 The affirmation of rental based on the whole expense acquired in the procurement of the

advantage by the lessor, as by and large done in money related leases, isn't against the

guidelines of Shariah if the two gatherings consent to it, given all other conditions of a

bona fide rent approved by the Shariah are absolutely clung to.

 The lessor could not raise the lease singularly and any consent to this impact is invalid.

 The lease or any part thereof can be collectible ahead of time before the conveyance of

the advantage for the tenant, however, the sum which the lessor has gathered will stay

with him as 'on record' installment and will be balanced in connection to the lease after its

being expected.

 The lease period will begin from the date on which the leased asset has been delivered to

the lessee.
 [28]

 If the leased asset has completely lost the function for which it was leased, the contract

will be canceled.

Differences between Conventional Leasing and Ijarah:

To be more precise, a few fundamental variations between the modern-day financial leasing and

the actual leasing allowed by the Shariah are as follows:

Conventional Leasing Ijarah

1. The benefit given on rent is not always The resource given on rent is possessed by

claimed by the bank. the bank.

2. The bank will not be responsible for any The bank will bear all the risk of loss of

loss to the asset. asset if such loss is not caused due to the

carelessness of the customer.

3. Rent will be charged and requested Lease can't be charged and requested

preceding conveyance of the benefit. preceding the conveyance of the asset.

4. The customary rent assertion gives one- Since Ijarah is an authoritative

sided ideal to the lessor to end the Lease understanding along these lines, neither one

Agreement with no reason. of the parties can drop it without common

assent of both the gatherings except if there

is a rupture of the agreement by any

gathering.

5. Punishment on late installment will be No punishment on late installment will be

charged by the bank. charged.

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3) Trade-Related Service:

Notwithstanding the working capital financing and long - term financing, Meezan bank likewise

gives financing to Small and Medium Enterprises (SMEs) that are associated with the residential

and global exchange, for example, import and fare or neighborhood buys of items, materials,

apparatus or vehicles. A portion of the general exchange financing offices offered by Meezan

bank are as per the following:

a) Sight Letter of Credit (under Master Musawamah Financing Agreement).

b) Usance Letter of Credit.

c) Letter of Guarantee.

a) SIGHT LETTER OF CREDIT:

Bank issues Sight Letter of Credit to encourage customer for import of crude material and

resources, for example, machinery, vehicles etc. The customer imports raw material and assets

on the behalf of the bank because they act as Bank's operator from the outside purchaser.

The transaction takes place under Master Musawamah Financing Agreement.

b) USANCE LETTER OF CREDIT

To encourage client for import of crude material and resources in client's very own name.
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c) LETTER OF GUARANTEE:

A Bank offers confirmation to repay an outsider on the off chance that a client defaults, past due

or non-execution of the agreement by Bank's client. Certifications can include a development

installment ensure, execution bonds or offer bonds.

Qualification criteria for little and medium endeavors

(SMEs):

State Bank of Pakistan (SBP) split up Small and Medium Enterprise (SMEs) into Small

Enterprises and Medium Enterprises to permit them decisive advantages:

Small Enterprises (SE):

1. Small undertakings are the ones with Annual Sales Turnover up to Rs.150 Million.

2. A little Enterprise (SE) is a business substance which does not utilize (counting contract

workers) in excess of 50 people.

3. Little Enterprises can be stretched out funds up to Rs.25 Million.

Medium Enterprise (ME):

1. Medium Enterprise is a business element, in a perfect world not an open restricted

organization which utilizes (counting contract workers) in excess of 50 representatives

and under 100 workers in the event of exchanging foundations. On account of assembling
 [31]

and administration foundations, utilizes in excess of 50 workers (counting contract

representatives) and under 250 workers.

2. For all MEs yearly deals turnover is over Rs.150 million and up to Rs.800 million.

3. Medium Enterprises can be stretched out accounts over Rs.25 Million to Rs.200 Million.

Documents required by Meezan bank for Small and Medium

Enterprises (SMEs):

Documents Required for Small Documents Required for Medium

Enterprises Enterprises

1. Organization Profile Organization Profile

2. Demand for Financing Demand for Financing

3. Most recent three years accounts marked Audited Accounts of last three records.

by Proprietor/Partners/Directors of the

firm.

4. Projections with suspicions (on account of Projections with suspicions (on account of

a long haul back) a long haul back)

5. Memorandum and Article of Association Memorandum and Article of Association

(if there should arise an occurrence of (in the event of Private Limited Company).
 [32]

Private Limited Company)

6. Fundamental Borrower Fact Sheet Basic Borrower Fact Sheet appropriately

properly marked and stepped by marked and stepped by

Proprietor/Partners/Directors Proprietor/Partners/Directors.

7. Individual total assets proclamation of Personal total assets explanation of

Proprietor/Partners/Directors Proprietor/Partners/Directors.

8. Stock Report Stock Report

9. Maturing of Receivables Maturing of Receivables

10. Duplicate of CNIC of Duplicate of CNIC of

Proprietor/Partners/Directors Proprietor/Partners/Directors

11. Import/Export business authentications Import/Export business testaments from

from banks. (On the off chance that banks. (On the off chance that relevant)

applicable)

12. Last half year bank explanation. Most recent half-year bank explanation
 [33]

Small & Medium Enterprise Financing Schemes:

Corporate Vendor and Distributor Finance Program

Meezan Bank Limited and Karandaaz Pakistan have mutually propelled the Corporate Vendor

and Distributor Finance Program went for giving development cash-flow to private ventures in

existing quality chains in the nation. Through this program, the two associations will give Rs. 9

billion to little and average sized corporate sellers and wholesalers on a program based model

throughout the following 5 years.

Advantages of Scheme for Corporate

1. Strategic chance to achieve ideal yield levels.

2. Help in future development arranging and basic leadership.

3. Extended access to the monetary framework for key merchants and wholesalers.

4. Reduce corporate accounting report presentation to seller and wholesaler financing

5. Increase effectiveness through overhauling and reinforcing of corporate supply chains

and conveyance channels

6. Increase an incentive by encouraging access to fund and keeping money connections

7. No certification, accept no asset report introduction

Benefits of Scheme for Vendors:

1. Improve profitability with an enduring wellspring of pay

2. Provide the administration of an Islamic Bank

 [34]

3. Provide upgraded credit period in the event of long haul financing with simple

reimbursements

4. Flexible guarantee prerequisites contrasted with customary financing

5. Helps in the general extension, the increment in set up and generation limit.

6. Furnishes a two-sided association with the manage an account with a record as a

consumer.

Program Partner Karandaaz Pakistan:

A privately owned business set up in August 2014 by the United Kingdom's Department for

International Development (DFID) and the Bill and Melinda Gates Foundation to elevate access

to fund for independent ventures through an industrially coordinated speculation stage, and

money related consideration for people by utilizing innovation empowered arrangement.

 [35]

Open doors for Pakistan’s Youth:

Meezan Bank has planned a lot of plans for giving Shariah-agreeable financing offices under the

PMYBL program. PMYBL is a program of the Government of Pakistan went for financial

advancement of the nation's childhood. The program will give an expansive canvas of plans

concentrated on empowering the nation's youth to get business openings.

Financing Categories:

a. Small entrepreneur

b. Miniaturized scale Enterprise

c. Farming (Tractor Ijarah)

d. Vehicle Ijarah

a. SMALL ENTREPRENEUR

Unemployed youth, particularly taught ones who are searching for setting up or expanding

Shariah-consistent business in their own ability through the foundation of the venture.

b. MINIATURIZED SCALE ENTERPRISE

Individuals who have effectively finished 3-4 cycles with Akhuwat and need to move on from

their present business measure.

c. FARMING (TRACTOR IJARAH)

Meezan Bank will give financing to the Young agriculturists who require Tractor financing
 [36]

d. VEHICLE IJARAH

Vehicles like Bolan and Ravi will be financed with the end goal of Taxi, Delivery Vans and

comparable exercises and so forth.

Key Features:

1. Financing Amount: Up to PRs 2.0M (with the exception of in Micro Enterprise

where it is Rs 0.1M to Rs 0.2 M)

2. Profit Rate: 6% p.a. for the client. The administration will pay the distinction of the

expense at K+5%

3. Client Contribution: Min 10% (aside from in Tractor Finance where it is 20% least)

4. Security: Ownership of benefit if there should arise an occurrence of Ijarah. Individual

Guarantee of candidate and Third gathering assurance of it is possible that one

underwriter or most extreme three underwriters with a consolidated total asset of 1.5

occasions of the back sum. Hypothecation of business resources Postdated Checks In lieu

of assurance or according to Bank's interior strategy, Bank may look for (working on this

issue to case premise) unflinching property (private, business or rural) either in

candidate's name or underwriter's name with 1.5 occasions of the estimation of the back

sum.

5. Tenor: Up to 8 years
 [37]

Eligibility Criteria for Pakistan’s Youth:

1. The candidate might be Men or Women holding substantial CNIC, matured between 21

and 45 years with pioneering potential.

2. Candidate and Guarantor ought not to be a defaulter of any bank (clear e-CIB & Data

check).

3. Candidate must live in the region, from where he/she is applying for financing, for a base

period up to three years.

4. Candidate and underwriter must not be sentenced by any Court of Law

5. On account of Tractor Ijarah, the rancher should possess a farming place where there are

somewhere around five sections of land

6. The record of loan repayment of candidate and underwriter must be perfect.

7. For financing under small scale undertaking demonstrated the enterprising capability of

the candidate and his fruitful fulfillment of 3-4 cycles of Qarz-e-Hasana with Akhuwat is

wanted.

8. The underwriter must not be a representative of Meezan Bank

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References:

Abdouli, A. (1991). Access to finance and collaterals: Islamic Versus Western Banking.

Journal of KAU: Islamic Economies. vol.3, pp. 55-62

Iqbal.Z, (1997), Islamic Financial Systems, Finance and Development, pp. 42 -45.

Ahmad, A. Homud, S. Kahf, M. (1998). Islamic Banking and Development, an Alternative

Banking Concept. IRTI, KSA.

Johnson, Katherine, "The Role of Islamic Banking in Economic Growth" (2013). CMC

Senior Theses. Paper 642. http://scholarship.claremont.edu/cmc_theses/642

Hanif, Muhammad and Iqbal, Abdullah Muhammad, Islamic Financing and Business

Framework: A Survey (November 10, 2009). European Journal of Social Sciences, Vol. 15,

No. 4, 2010. Available at SSRN: https://ssrn.com/abstract=1503190

Performance of Islamic banking and conventional banking in Pakistan: a

comparative study: http://www.diva-

portal.org/smash/get/diva2:113713/FULLTEXT01.pdf

Islamic Export Refinance Scheme Brochure - State Bank of Pakistan:

(http://www.sbp.org.pk/Incen/Islamic-Export-Broucher.pdf)
 [39]

http://www.diva-portal.org/smash/record.jsf?pid=diva2%3A113713&dswid=-1731
 [40]

http://www.cba.edu.kw/wtou/download/conf4/nedal.pdf

http://www.diva-portal.org/smash/get/diva2:113713/FULLTEXT01.pdf

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1503190

http://repository.um.edu.my/761/3/Thesis-contents.pdf

http://scholarship.claremont.edu/cgi/viewcontent.cgi?article=1618&context=cmc_theses

https://www.omicsonline.org/open-access/growth-of-islamic-banking-in-pakistan-2223-5833-
1000231.pdf

http://www.cba.edu.kw/wtou/download/conf4/nedal.pdf

http://openaccesslibrary.org/images/HAR316_Mark_Loo.pdf

http://www.sbp.org.pk/incen/FAQs-EFS.pdf

http://www.sbp.org.pk/Incen/Islamic-Export-Broucher.pdf

http://www.investorwords.com/15589/musawamah.html

https://www.investopedia.com/terms/m/musawamah.asp

http://documents.worldbank.org/curated/en/506171487156711093/text/112825-WP-PK-Islamic-
Banking-PUBLIC.txt

http://www.sbp.org.pk/sme/pdf/smebooklet-05-jul-08.pdf

https://www.meezanbank.com/easy-home-calculator/