Internship Report

Bank Islami Limited

Pirmahal Branch

Prepared by: Urooj Fatima

Session: 2016-2019
Program: MBA(3.5)
Regd. No: 2016-AG-3712
 Dedication
To my dearest parents, my family,
friends and respected teachers who motivated,
supported and encouraged me in every aspect of my
life.
 Abstract

Internship training for the students of Business Administration is a complimentary portion of the
education, where students are put at various organizations of their respective specialization; to
see and apply their theoretical knowledge what they have studied during their academic program
at the institute.
Bank Islami is one of those organizations where student can achieve his/her academic and
professional knowledge productively.
I was put in the Bank Islami Pirmahal Branch to complete financial system was studied i.e. cash
balances, advances, loans ,turnover, chronological development and growth ,its relative study
and financial ratios were thoroughly studied.
As Bank Islami is newly opened Islamic bank in the market where it is facing a tough
competition from other public sector and private banks therefore financial SWOT analysis was
also made however focus of the study has been on the analysis of financial ratios.

Acknowledgement
 ACKNOWLEDGEMENT First of all we are very thankful to ALLAH-RAB-
UL-IZZAT who gives us such power, knowledge and ability to accomplish our
goals. Without His kind help we would be unable to do this report.

After Allah, the last Prophet Mohammad (PBUH) Who brought for us
revelation and unlimited knowledge and civilized the barbarian human being.

First, I would like to express my sincere gratitude and thanks to ALLAH for
his guidance throughout this work and for all the blessings he has bestowed
upon me. My deep gratefulness to my country Pakistan where I grew up and
learned the first lessons and experiences in my life, and I hope that I can pay it
back some day. Allah, I would like to express my sincere thankfulness to Mr.
shahid Pervaiz (Bank Islami Branch Manager) who provided me a chance to
work in Bank Islami as an Interne and a very special thanks to Mr. Asif Ali
Sarwar (Customer Service Manager) for providing me an excellent support in
every matter. All of their supervision has given me the chance to rise as a
mature student. It helped me to become a more capable candidate to compete
other students competently and also to complete my professional degree with
lot of real-world work experience. The aptitudes that I had from this practice
were rewarded. At the end I would like to thanks my Parents, all Teachers, and
my colleagues who made me able to compete with others in professional
environment.

Executive Summary:
The whole period of my internship at Bank Islami and the preparation of this report have been really
helpful in making me understand Islami and conventional banking in theory and in practice and my
experiences are so vast that I have no words to express them.

A bank is a financial institution that accepts deposits and channels those deposits into lending activities.
The Banks primarily provide financial services to customers while the main goal is enriching investors.

Today banks work in a hybrid fashion providing a variety of services to their customers to yield heavy
profits. A valuable advice I learned on the way was;

“The days of conventional banking are long gone; it’s the era of customer oriented banking.”

Islami banking refers to a system of banking or banking activity that is consistent with the principles of
the Shari'ah and its practical application through the development of Islami economics. The principles
which emphasize moral and ethical values in all dealings have wide universal appeal. Interest free
banking is a narrow concept denoting a number of banking instruments or operations, which avoid
interest. Islami banking, the more general term is expected not only to avoid interest-based
transactions, prohibited in the Islami Shariah, but also to avoid unethical practices and participate
actively in achieving the goals and objectives of an Islamic economy.

Bank Islami Pakistan Limited (the Bank) was incorporated in Pakistan as a public limited company on
October 18, 2004 under the Companies Ordinance, 1984 to carry out business of an Islami Commercial
Bank in accordance with the principles of Islamic Shariah.

Bank Islami is the Joint venture project of 3 groups with 18.75% equity each, namely Jahangir Siddiqui &
Co. Pakistan, DCD Group UK, & Dubai Bank. Irrespective of stiff competition in the market the Bank has
successfully managed to grow over 400% during last one year. Bank Islami has become a hallmark of
innovation and bringing new products and services in the market and by introducing the Bio-Metric ATM
facility it became the first bank of the region to offer such services and till date no bank has been able to
replicate this service. Bank Islami has been able to form a strong image of having authentic basis for its
banking operations by using smart marketing ideas that resonate well with the public mind. All branches
of Bank Islami have the same look and feel irrespective of location.

Over to the end of my wonderful saga of learning and quest of knowledge I have undoubtedly
established evidently enough that Bank Islami is a force to reckon with in the industry and has the best
people working for it in the banking sector. Its philosophy of service is truly evident in its sops and surely
it compels out of every mind:

“Serving You; the Right Way!”

Abbreviations
A&IG : Audit & Inspection Group
ATM : Automated Teller Machine

DD : Demand Draft

EVP : Executive Vice president

F.I : Financial Institute

GOP : Government Of Pakistan

I.T : Information Technology

IBR : Inter Branch Reconciliation

J/V : Joint Venture

MT : Mail transfer

NBP : National Bank of Pakistan

NCB : National Commercial Bank

NIT : National Investment Trust

ROA : Return On Assets

ROE : Return On Equity

SAM: Special Assets Management

SBP : State Bank of Pakistan

SEVP : Senior Executive Vice president

SWOT : Strength Weakness Opportunity threat

TT : Telegraphic Transfer

USA : United States of America

WTO : World Trade Organization

CON TEN TS
CHAPTER NO.1……………………………INTRODUCTION TO REPORT
1.1 Back ground of studies
1.2 Purpose of the studies
1.3 Research Metholodagy
1.3.1 Primary data
1.3.2 Secondary data
1.4 Scope of studies
1.5 Merits of the study
1.6 Limitation of the study

CHAPTER NO.2………….Introduction to Banking & Bank Islami

2.1 History of Banking and its origin
2.2 Islamic Banking
2.2 Introduction of Bank Islami Pakistan Limited
2.3 Company Background
2.4 Vision
2.5 Mission
2.6 Core Values
2.7 Objectives
2.8 Board of Director

CHAPTER NO.3:……………………………………….Product and Services

3.1 Introduction
3.2 Departments
3.2.1 Operations Department:
 3.2.1.1 Nature of the deposits
3.2.1.2 Kinds of Accounts
3.2.1.3Procedures for account opening
3.2.2 Remittances Department
3.2.3 Cash Department
3.2.3.1 Kinds of cheques
3.2.4 Credit Department
3.2.4.1 Musharakah Financing
3.2.4.2 Mudarabah Financing
3.2.4.3 Working Capital Finance
3.2.4.4 Project Financing
3.2.5 Consumer banking
3.2.5.1 Online Banking
3.2.5.2 Inter Bank Transfer Fund
3.2.5.3 ATM or Debit Card
3.2.5.4 Biometric ATM
3.2.5.5 Lockers

Chapter No.4……………………………………………………… Analysis

4.1 Financial information:

4.2 Analysis of the Report

4.2.1 Financial Statement Analysis
4.2.1.1 Common Size Analysis
4.2.1.1.1 Vertical Analysis of Balance Sheet
4.2.1.1.2 Vertical Analysis of Income Statement
4.2.1.1.3 Horizontal Analysis of Balance Sheet
4.2.1.1.4 Horizontal Analysis of Income Statement

4.3 Financial Ratio Analysis

4.3.1 Profitability Ratio
4.3.1.1 Gross Profit Margin
4.3.1.2 Net Profit Margin
4.3.1.3 Return on Assets
4.3.1.4 Return on Equity
4.3.1.5 Earning per Share
4.3.1.6 Operating cost to income ratio
4.3.4.7 Debit to Equity Ratio
4.3.4.8 Debit Ratio

4.4.2 Efficiency Ratio

4.4.2.1 Interest income per employee
4.4.2.2 Profit per employee
 4.4.2.3 Business per employee
4.4.2.4 Business per branch
4.4.2.5 Employee per branch
4.4.3.6 Total Advances to total Deposit Ratio
4.4.3.7 Total advances to total Assets
4.4.3.8 Fixed Assets to Total Assets

4.4 SWOT Analysis

4.4.1 Strength
4.4.2 Weaknesses
4.4.3 Opportunity
4.4.4 Threat

CHAPTER No. 5:……………………………………………… Conclusions

CHAPTER No.6……………………………. Suggestions and Recommendation

Reference
List of Tables
Table 4.1 Financial information
Table 4.2 Profit &loss Account
Table 4.3 Financing
Table 4.4 Common Size Vertical Analysis of Balance Sheet
Table 4.5 Common Size Vertical Analysis of Income Statement
Table 4.6 Common Size Horizontal Analysis of Balance Sheet
Table 4.7 Common Size Horizontal Analysis of Income Statement

Figure 2.1 Organizational Structure

BankIslami Branch Organizational Chart

Chapter No.1
Introduction to study:
1.1 Back ground of studies
As part of the course out line of MBA (Master Business Administration) of the students
are required to undergo 6 weeks of internship with an organization. The internship is to serve the
purpose of acquainting the students with the practice of knowledge of the discipline of business
administration. This report is about Bank Islami. Bank Islami was established in 2004 and since
then, it has expended its network, becoming the Islamic Bank of the country. It offers different
products of services to its customers.

1.2 Purpose of the studies

The main of the study in hand is together relevant information to compile internship
report on BankIslami

1. To observe, analyze and interpret the relevant data competently and in a useful
manner.

2. To work practically in an organization.

3. To develop interpersonal communication.

4. This report is an essential and academic requirement for the fulfillment of the
degree.
5. To what extent the practical things differ from the theory.
6. To analyze the activities performed by the bank during the internship,

1.3 Research Methodology

The report is based on my two months internship program in Bank Islami, Pirmahal
branch. The methodology reported for collection of data is primary as well as secondary data.
The biggest source of information is my personal observation while working with staff and
having discussion with them. Formally arranged interviews and discussions also helped me in
this regards.

1.3.1 Primary data:

• Personal observation

• Interviews of staff
• Staff at night position in bank

• Staff at circle office.

1.3.2 Secondary data:

• Manuals

• Journals

• Magazine

• Annual reports

1.4 Scope of studies

As an internee in Bank Islami the main focus of my study research was on general
banking procedures in one of the branches of Bank Islami. These operations include remittances,
deposits, and to small extent foreign exchange and advances.
Similarly different aspects of overall of Bank islami are also covered in this report.

1.5 Merits of the study

This report proves beneficial to all the finance students because it almost contain all the
information about the finance department of BankIslami. So one can easily understand to what
extent the theory is different from practical implications.

1.6 Limitation of the study

The report does not contain all the facts and figures about the area under study due to certain
limitations. Most of the data related to financial practices is confidential. And that’s why access
to that information was a difficult task. Another factor is the time limitations. As the internship is
of six weeks that’s why haven’t so much time to study all aspects and details. Despite of these
the report encompasses all the information required.
This report so doesn’t include detailed descriptions of the BankIslami as a whole but its financial
issues, policies and branch of BankIslami in Jhelum is new established.

Chapter No. 2

History:
Banks date back to ancient times. The first banks were most probably the religious temples of
the ancient world, and were most likely established sometime during the third millennium B.C.
Banks perhaps predated the invention of money, initially deposits consisted of grain and later
other goods like metals(gold). Temples were considered the safest places to store gold as they
were well built, constantly attended and protected from thieves. There are extant records of
loans from the 18th century BC in Babylon that were made by temple priests/monks to
merchants.

Banks in Persia and other territories in the Persian Sassanid Empire issued letters of credit
known as Saks during the 3rd century AD. Muslim traders are known to have used the cheque
or Sack system since the time of Harun al-Rashid (9th century) of the Abbasid Caliphate. In the
9th century, a Muslim businessman could cash an early form of the cheque in China drawn on
sources in Baghdad, a tradition that was significantly strengthened in the 13th and 14th
centuries, during the Mongol Empire.

After the fall of Rome, banking was abandoned in western Europe and did not revive until the
time of the crusades. The earliest known state deposit bank, Banco di San Giorgio (Bank of St.
George), was founded in 1407 at Genoa, Italy. The oldest bank still in existence is Monte dei
Paschi di Siena, headquartered in Siena, Italy, which has been operating continuously since
1472.

What is a Bank?
A bank is a financial institution that accepts deposits and channels those deposits into lending
activities. The Banks primarily provide financial services to customers while the main goal is
enriching investors. Government restrictions on financial activities by banks vary over time and
location. Banks are important players in financial markets and offer services such as investment
funds and loans.

In some countries such as Germany, banks have historically owned major stakes in industrial
corporations while in other countries such as the United States banks are prohibited from
owning non-financial companies. Today banks work in a hybrid fashion providing a variety of
services to their customers to yield heavy profits. The days of conventional banking are long
gone; it‘s the era of customer based banking.

Islamic Banking

What is Islamic Banking? There is no standard way of defining what is an Islamic bank is, but broadly
speaking an "Islamic bank is an institution that mobilize financial resources and invest that money in an
attempt to achieve pre-determined islamically - acceptable social and financial objectives. Both mobilization
and investment of money should be conducted in accordance with the principles of Islamic Shari'a".

It refers to a system of banking or banking activity that is consistent with the principles of the Shari'ah and
its practical application through the development of Islamic economics. The principles which emphasize
moral and ethical values in all dealings have wide universal appeal. Shari'ah prohibits the payment or
acceptance of interest charges (Riba) for the lending and accepting of money, as well as carrying out trade
and other activities that provide goods or services considered contrary to its principles.

Interest free banking is a narrow concept denoting a number of banking instruments or operations, which
avoid interest. Islamic banking, the more general term is expected not only to avoid interest-based
transactions, prohibited in the Islamic Shariah, but also to avoid unethical practices and participate actively
in achieving the goals and objectives of an Islamic economy. Islamic banking is not restricted to Muslims
only. Islamic banking has the same purpose as conventional banking except that it operates in accordance
with the rules of Shari‘ah, known as Fiqh al-Muamalat (Islamic rules on transactions).

History of Islamic Banking:

During the Islamic Golden Age, early forms of proto-capitalism and free markets were present in the
Caliphate, where an early market economy and an early form of mercantilism were developed between the
8th-12th centuries, which some refer to as "Islamic capitalism". A vigorous monetary economy was created
on the basis of the expanding levels of circulation of a stable high value currency (the dinar) and the
integration of monetary areas. A number of innovative concepts and techniques were introduced in early
Islamic banking, including bills of exchange, the first forms of partnership (mufawada) such as limited
partnerships (mudaraba), and the earliest forms of capital (al-mal), capital accumulation(namaal-mal),
cheques, promissory notes,
trusts, loaning. Organizational enterprises similar to corporation‘s independent from the state also existed in
the medieval Islamic world, while the agency institution was also introduced during that time. Many of
these early capitalist concepts were adopted and further advanced in medieval Europe.

Banks in Persia and other territories in the Persian Sassanid Empire issued letters of credit known as Ṣakks
during the 3rd century AD. Muslim traders are known to have used the cheque or ṣakk system since the
time of Harun al-Rashid (9th century) of the Abbasid Caliphate. In the 9th century, a Muslim businessman
could cash an early form of the cheque in China drawn on sources in Baghdad, a tradition that was
significantly strengthened in the 13th and 14th centuries, during the Mongol Empire.

The first modern experiment with Islamic banking was undertaken in Egypt under cover without projecting
an Islamic image—for fear of being seen as a manifestation of Islamic fundamentalism that was anathema
to the political regime. The pioneering effort, led by Ahmad Elnaggar, took the form of a savings bank based
on profit-sharing in the Egyptian town of Mit Ghamr in 1963. This experiment lasted until 1967 (Ready
1981), by which time there were nine such banks in the country.
 In 1972, the Mit Ghamr Savings project became part of Nasr Social Bank which, till date, is still in business
in Egypt. In 1975, the Islamic Development Bank was set-up with the mission to provide funding to
projects in the member countries. The first modern commercial Islamic bank, Dubai Islamic Bank, opened
its doors in 1975.

Introduction of Bank Islami Pakistan

Limited
History

Bank Islami- The Idea: The epochal idea of Bank Islami was conceptualized by Jahangir Siddiqui &
Company Limited and DCD Group in late 2003. Mr. Hasan A. Bilgrami was appointed as Adviser to the
sponsors on March 16, 2004 to formalize the idea. He presented the concept paper of Bank Islami to
sponsors on March 24, 2004. A detailed business plan was then prepared and a formal application was
submitted to the State Bank of Pakistan on May 26, 2004. On September 26, 2005, Dubai Bank joined
the Sponsors and became one of the founding shareholders of Bank Islami by investing 18.75% in the
total Capital.

Accredition by State Bank of Pakistan:

The State Bank of Pakistan issued a No Objection Certificate in no time on August 19, 2004 and Bank
Islami Pakistan Limited, the second full-fledge Islamic Commercial Bank in Pakistan, was incorporated on
October 18, 2004 in Pakistan.

Bank Islami Pakistan Limited was the first Bank to receive the Islamic Banking license under the Islamic
Banking policy of 2003 on March 31, 2005. The Bank envisioned to focus primarily on Wealth
Management as the core area of business in addition to Shariah compliant Retail Banking products,
Proprietary and Third party products, and Integrated financial planning services.

Initial Public Offering of Bank Islami:

Bank Islami Pakistan Limited made a public offering of Rs. 400 Million, at par, from 6th to 8th March.
This was the first primary issue by a Bank in over a decade in Pakistan. The Initial public offering (IPO) of
Bank Islami received overwhelming response from the general public as the applications received were 9
times higher than offered, fetching nearly Rs. 3.5 Billion, against the demand of Rs. 400 Million.

Inauguration & Network Expansion:

The State Bank of Pakistan declared BankIslami Pakistan Limited as a Scheduled Bank with effect from
March 17, 2006. BankIslami started its Banking operations on 7th April 2006 with its first branch in SITE,
Karachi. By the end of 2006, the Bank had 10 branches, nine in Karachi and one in Quetta. The Bank
further concentrated in building a nationwide network and by the end of year 2007, its branch network
grew to 36 branches in 23 cities. In 2008, the Bank opened 66 new branches nationwide which
expanded its network to 102 branches in 49 cites. This gives BankIslami the distinction of having the
fastest expanding network in Pakistan as well as offering the widest network by any Islamic Bank in
Pakistan

Competition Situation:

BankIslami is the Joint venture project of 3 groups with 18.75% equity each, namely Jahangir Siddiqui &
Co. Pakistan, DCD Group UK, & Dubai Bank. Irrespective of stiff competition in the market the Bank has
successfully managed to grow over 400% during last one year and all

set to be a 100 Online Branch Network by the year end 2008.

The same was achieved by the existing largest player in the Islamic Banking Industry Meezan Bank in 6
years time at December 2007. BankIslami has become a hallmark of innovation and bringing new
products and services in the market and by introducing the Bio-Metric ATM facility it became the first
bank of the region to offer such services and till date no bank has been able to replicate this service. Bio-
Metric identification (based on finger print) removes the need for PIN based verification and it adds the
security element in ATM transactions.

Image Marketing:

BankIslami has been able to form a strong image of having authentic basis for its banking operations by
using smart marketing ideas that resonate well with the public mind. For example, the calligraphy of the
bank's name in Urdu is claimed to have been done by the same calligraphers who have done similar
work in the Holy Mosque of Madina in Saudi Arabia. Marketing Department of the Bank was at the
forefront of re-branding exercise and achieving greater standardization across the network. All branches
of BankIslami have the same look and feel irrespective of location. An agreement was also signed with
VISA for launch of the debit card. BankIslami has also entered into an agreement with Pak-Qatar Family
Takaful for distribution of BancaTakaful from selected branches of the Bank.

Product Development:

Bank Islami Pakistan Limited had voluntarily stopped Commodity Murabahah transaction after some
scholarly reservations raised on the transaction structure. However, huge liquidity arising from
tremendous deposits growth necessitated an efficient but Shari'ah compliant Treasury Product for
management of liquidity. For this reason, Product Development and Shari'ah team of Bank Islami in
coordination with prominent market players brought certain improvements in the existing structure of
Commodity Murabahah transactions. After considerable efforts Bank Islami undertook a few
transactions, under the revised structure, during last quarter of the year 2009. Efforts are still in
progress to further improve the process which are expected to bring fruits shortly and Bank Islami plans
to present the revised structure and processes to prominent Shari'ah scholars Insha Allah after post-
launching study of the product.

The Bank also carried out major revision of Policy and Procedure Manuals for Deposit, Murabahah,
Ijarah, Diminishing Musharakah and Istisnaa' products to make them more user friendly. Finished goods
purchase product with the name ―Karobar Financing‖ has been developed for working capital financing
during the year.

Islamic Banking Training:

Besides Systems and SOPs employees are the major contributor to success or failure of any organization.
BankIslami has greatly emphasized on Islamic banking products to ensure Shari'ah compliance from
their end. With a handsome budget allocated for training program and state of the art Training Centers
have been established in Karachi, Lahore and Islamabad, a detailed Training Calender was prepared to
organize the sessions properly and to ensure that every employee gets proper training.
 Our Logo Story

Our name & logo set the benchmark:

When it is a question of faith,

Authenticity
Is the key word.
A simple, local and Authentic name that leaves
no confusion about what we do

Only Islamic Banking!

The same thought process went into designing the
logo- simple local and Authentic to the core.

 OUR VISION
The vision of bank islami is to be recognized as the leading Authentic Islamic Bank.

 OUR MISSION
The Mission of BankIslami is to create value for our stakeholders by offering Authentic, Shariah Compliant
and technologically advanced product and services. We differentiate ourselves through:

 Authenticity
 Innovation
 Understanding our client's needs
 Commitment to excellence, and
 Fast, efficient and seamless delivery of solution. As a growing institution, the foundation for our
performance lies on our human capital and BankIslami remains committed to becoming an employer of
choice, attracting, nurturing and developing talent in a transparent and performance driven culture.
 Our Core Values
BankIslami is strongly committed towards its core values of:

 Product authenticity
 Customer focus
 Meritocracy
 Integrity
 Team work
 Humility
 Innovation

Board of Directors

Chief Justice (Retd.) Mahboob Ahmed Chairman

Mr. Ahmed Goolam Mahomed Randeree
Mr. Ali Raza Siddiqui
Mr. Hasan A. Bilgrami Chief Executive Officer
Mr. Hisham Hammoud
Mr. Mohamed Amiri
Mr. Shabir Ahmed Randeree

Sharia'h Supervisory Board

Justice (Retd.) Muhammad Taqi Usmani Chairman
Professor Dr. Fazlur Rahman Member
Mufti Irshad Ahmad Aijaz
Member & Sharia'h Adviser

Audit Committee

Mr. Hisham Hammoud Chairman

Mr. Ali Raza Siddiqui Member
Mr. Shabir Ahmed Randeree Member

Executive Committee

Chief Justice (Retd.) Mahboob Ahmed Chairman

Mr. Ahmed Goolam Mahomed Randeree Member
Mr. Hasan A. Bilgrami Member
Mr. Hisham Hammoud Member

Risk Managemnt

Mr. Ahmed Goolam Mahomed Randeree Chairman

Mr. Hasan A. Bilgrami Member
Mr. Mohamed Amiri Member

Human Resource & Compensation Committee

Mr. Ali Raza Siddiqui Chairman
Mr. Ahmed Goolam Mahomed Randeree Member
Mr. Hisham Hammoud Member
Mr. Hasan A. Bilgrami Member

Company Secretary

Syed Shah Sajid Hussain

Auditors

Ernst & Young Ford Rhodes Sidat Hyder Chartered Accountants

Legal Adviser

Haidermota & Co. Barrister at Law

Management (in alphabetical order)

Mr. Adnan Hamid Ali Head, Administration & General Services

Mr. Ahmed Mustafa Head, Branch Operations
Mr. Arsalan Vohra Head, Risk Policy & Analytics
Mr. Asad Alim Head, Information Systems
Mr. Farooq Anwar Head, Operations
Mr. Hasan A. Bilgrami Chief Executive Officer
Mr. Khawaja Ehrar ul Hassan Head, Compliance
Mr. Muhammad Faisal Shaikh Head, Product Development
Mr. Muhammad Furqan Head, Credit Administration
Mr. Muhammad Imran Head, Consumer & Retail Banking
Mr. Muhammad Shoaib Khan Head, Treasury & Financial Institutions
Mr. Rehan Shuja Zaidi Head, Internal Audit
Mr. Shamshad Ahmed Head, Trade Finance
Ms. Sheba Matin Khan Head, Human Resources
Mr. Syed Akhtar Ausaf Head, Risk Management
Mr. Syed Mujtaba H. Kazmi Head, Corporate Finance
Mr. Syed Shah Sajid Hussain Head, Finance

Chapter No.3 ……………PRODUCT, SERVICES & DEPARTMENT

3.1 Introduction
Bank Islami Jhelum branch is newly opened branch in Pirmahal city, also bank Islami history is
not to much old. It’s all about to 5 to 6 year old. The organization of Bank Islami Pirmahal
branch is a complete banking system but it is covering modern technologies like ATM. This
banking system is collection of interrelated departments that works together to achieve the
objectives of the organization. Bank Islami is a hierarchical system in that it includes other sub
departments and these are integrated to work together.
In the internship of six weeks the internee worked in different departments to see how the
practical work is done and compared it with the theories she studied during her bachelor courses.
Each department has its own importance and value to the organization. But the basic thing was
that departments have to integrate to improve the performance.

Figure 3.1 BANKISLAMI BRANCH ORGANIZATIONAL CHART

Clearing Department

Remittances Department

Operations Manager

Account Opening

Department

Cash

Department

Bills

Department

Manager
Coordination
3.2 DEPARTMENTS:
Bank Islami Jhelum branches divided into different departments.
• Credit Department
• Operations Department
• Consumer Banking.

a) Credit Department
The main purpose of this department is to extend loans to its clients for the productive purpose.
Credit Department is also called Corporate Banking Group.
Bank can offer different type of financing in there branches. This type of financing are based
upon Islamic mode of financing. Just like MUSKUN home financing, Islami Auto Ijara-new
vehicle and same with imported vehicles.

b) Operations Department:
Operations department of the Bank Islami is responsible for the overall operations of the bank,
Customer Services Department, Remittance Department, Clearing Department, Accounts
Department, etc. all come under it.
c) Consumer Banking
Consumer banking is the Marketing Department of the Bank Islami. At Bank Islami, consumers
are treated very well. They are of the opinion that customers must be satisfied with the services
provided by the Bank. All of the Branches try to make sure that customers are satisfied with the
services being provided by the Bank.

3.2.1 Operations Department:

Bank Islami accounts are same as other commercial banks accounts but in some accounts they
can offer Islamic mode transactions. Accounts are given below.

3.2.1.1 Nature of the deposits

Bank deposits can be broadly classified as
• Islami current Accounts
• Islami foreign current Account
• Islami Bachat account
• Islami Mahana Munafa Account
• Islami Amadni Certificate

a) Islami current Accounts

With our Islami Current Account, you can have complete peace of mind that your funds are safe
and utilized in Halal avenues only. Islami Current Account is ideal for customers who have
frequent transaction needs and  require unlimited access to their account to meet their personal or
business expenses. Also, you have access to our entire online network of  for convenience of
instant and secure intercity transactions. So enjoy full control over your funds in a Shariah
compliant manner.
• A minimum balance of Rs. 1,000/- only to open the account
• Joint Account facility up to four joint account holders
• Access to the entire online branch network
• Free unlimited online intercity transactions
• Free 1 Card, BankIslami's ATM & Debit card
• Access to all ATMs linked to MNET and 1 Link throughout Pakistan
• InterBank Funds transfer facility through ATM
• Facility of making instant payments at Orix terminals for grocery, fuel ,dining and other
purchases
• Free Internet Banking service
• Free Account statement facility
• Hold mail and Stop payment facility

b) Islami foreign current Account

Bank Islami Islami Foreign Currency account is ideal for businesses and individuals who would
like to diversify their investment in different currencies to ensure security against currency
fluctuations or want to keep foreign currency account to meet their business needs. Also, you can
have easy access to foreign currency with no hassles of foreign exchange conversion when you
have to travel abroad or remit funds abroad to meet education, leisure or business needs.
• Safe Deposit Lockers
• Hold Mail & Stop payment facility
• A minimum balance of USD 100/-or equivalent in GBP or EURO to open the account
• Joint Account facility up to four joint account holders
• Available in USD, GBP & EURO
• Free Account statement facility
• Free Internet Banking service

c) Islami Bachat Account

Our Islami Bachat account is a bundle of benefits. It helps you keep up with your tradition of
savings with the convenience and safety of a professional and understanding bank. Also,
you earn highly attractive profits on your savings with the flexibility of making as many
transactions on your account as you want. Islami Bachat Account is ideal for customers who
need to draw money for monthly expenses but would also like to earn on your hard earned
savings. Corporate Employers can also avail this account to provide convenience, flexibility and
halal profits to their employees by opening their salary accounts with us.
• Monthly profit/loss payment on daily product basis
• Differential and specific pool allocation possible for large deposit holders
• Profit announcement at the end of every month
• A minimum balance of Rs. 5,000/- only to open the account
• Joint Account facility up to four joint account holders
• Access to the entire on line network of 102 Branches in 49 Cities
• Unlimited over the counter deposits and withdrawals, free of charge
• No restrictions on intercity transactions
• Free 1 Card, Bank Islami's ATM & Debit card
• Access to all ATMS linked to MNET and 1 Link throughout Pakistan
• Facility of making instant payments at Orix terminals for grocery, fuel ,dining and other
purchases
• Free Internet Banking service

d) Islami Mahana Munafa Account

Long term investments yield high returns but delayed profit payment. With our Islami Mahana
Munafa Account you don't compromise on any. Now you can enjoy the freedom of halal
monthly gains for a prosperous present while building your wealth for a secure future. Also,
Islami Mahana Munafa Account will provide you with security, convenience and flexibility of
investment tenure to suit your needs.
• Free Internet Banking Service
• Hold Mail & Stop payment facility
• Safe Deposit Lockers
• 100% interest free
• Available in Pak Rupees
• Tenure of investment are 1, 2, 3, 5 & 10 years
• Minimum amount of investment is Rs. 10,000/- only
• Profit/loss payment on monthly basis until the maturity date
• Payment of amount of investment on the maturity date
• Differential and specific pool allocation possible for large deposit holders
• Profit announcement at the begining of every month
• Free facility of transfer of profit and invested funds in nominated Islami Current or Islami
Bachat Account
• Monthly profit/loss payment on daily product basis
• Free Six monthly Account Statement facility
e) Islami Amadni Certificate
Why take interest when you can earn Halal profit on your investment. With Islami Amadni
Certificate your hard earned investment works harder to yield high expected profits so you can
build your wealth for a prosperous future. You get the best of both worlds in a safe, secure and
flexible package to perfectly meet your needs.
If you are a salaried individual, a businessperson or a corporate entity with some long term
investment funds to spare, our Islami Amadni certificate is an ideal solution for you. With our
Islami Amadni Certificate, the higher your investment the higher will be your return and that too
in a Shariah compliant manner. Also, you have the flexibility to choose amongst various
investment tenures to suit your personal or business needs.
Islami Amadni Certificate offers you the following key salient features:
• Available in Pak Rupees
• Investment can be done for 1, 3, 6, 12, 24, 36 or 60 months
• Minimum amount of investment is Rs. 10,000/- only
• Payment of profit/loss and amount of investment on the maturity date
• Quarterly profit payment for investment of 12 months and above
• Differential and specific pool allocation possible for large deposit holders
• Profit announcement at the end of every month
• Free Account statement facility
• Free facility of transfer of profit and invested funds in nominated Islami Current or Islami
Bachat Account
• Free Internet Banking service having free Term deposit enquiry facility
• Facility of premature encashment available. In such a case, the corresponding period
weightage would apply, unless stated otherwise

3.2.1.2 Kinds of Accounts

Accounts can be classified in the following types
• Individual accounts
• Joint accounts
• Partnership accounts
• Minor accounts

a) Individual Accounts
Individual accounts are the account, which is opened and operated by a single person. Before
opening the account bank sees proper identity and introduction of the individual. Individual’s
instructions are strictly observed in operation of the account.

b) Joint Account
Two or more persons who are neither partners nor trustees can open this type of account. At the
time of opening account specials instructions are taken by the account holders that who is going
to operate the account they are asked whether it will be operated singly or jointly and to whom
the balance will be transferred at the death of an account holder on the basis of either or survival.
If the joint account holder wishes to delegate their authority to operate on the account to an
outside party all the joint parties should sign this authority.
c) Partnership Account
Partnership accounts are opened in the name of the business e.g. M/S ABC Electronics etc. for
opening of this account a partnership deed NIC required. Bank staff acquires special instructions
by all partners for the operation of the account. Partnership account can only be opened in the
form of a current account
d) Minor Account
The contract act 1872 has disqualified a minor from entering into a contract except the one for
his necessities. According to Pakistan Law a person is regarded as a minor until he has attained
the age of 18 years. However under section 3 of majority act 1875 if a competent court of law
appoints a guardian of his person or property before his 18 years the majority extends to the age
of 21 years. Bankers in Pakistan have allowed the opening of minors account only with the idea
of inculcating in them the habit of saving. So guardian requests in the name of the minor for
opening of an account. There are other accounts, which are called specialized accounts. These
are given below.
• Joint stock account
• Accounts of clubs, societies and associations
• Agent accounts
• Executors and administrators accounts
• Pak rupee non-resident account

3.2.1.3Procedures for account opening

In order to operate an account with the bank, a customer has to open an account. In large
branches Grade 1, II or III officers is made responsible for opening new accounts. However in
small branches, the manager himself fulfills all the formalities for opening new accounts. It is
necessary because in case of fraud unintended overdraft, or negligence, the bank will have a
source to trace out the customer. Such source is established by asking the customer to bring an
existing customer of the bank that will introduce him to the bank. In order to protect against
losses resulting from fraud or unintended overdraft the account opening activity has been
formalized through certain steps. These steps include
• Formal Application: Customers are required to fill in the prescribed account opening
form, which the bank provides to the customers free of cost. In this basic information about
himself is provided by the customer like his name, address, occupation and nature if account he
wants to operate.
• Obtaining introduction: Introductory references are quid pro quo for opening the
account. For this it is necessary that an existing customer verify the authenticity of the facts
provided in the account opening form.
• Specimen Signature: The customer gives the banker a specimen signature generally
taken on a card specially designed for this purpose. Name of the customer and account number
are entered on it. This specimen signature is used later on by the bank to verify the signature on
cheques drawn on the bank by comparing these signatures on the card and the other on the
cheques.
• Minimum Initial Deposits: The customer has to make a certain minimum deposits to
open an account. However, later on customer can withdrawn part of this amount but must
maintain minimum deposits to avoid closure of the account or service charges.
• Operating the Account: When the account is opened banker customer relationship is
established. The customer in order to be able to operate the account is given the following
documents:
• Pay-In-Slip Book: This book is issued to the customer containing slips upon which
money is deposited. Each slip contains blank spaces for amount, account number, date, depositor
signature and name of the account holder.
• Cheque Book: The customer to withdraw the money from the bank uses Chequebook.
Chequebook consists of 10, 25, 100 leaves. When new cheque book is required by the customer
he has to fill in the cheque book” requisition slip” with two signature on it and give it to the
concerned officer who on verification of the signature will issue new cheque book.
• Qualification of the Customer: The relation of the banker and the customer is purely a
contractual one. Therefore any person who is capable of entering into a contract according to the
Section 11 of the contract Act 1872 can be a customer. However the following qualifications are
necessary for a person to become a customer.
• He must be of the age of majority
• He must be of sound mind
• He must not be disqualified under any law.

3.2.2 Remittances Department

One of the important functions of a bank is to transfer funds for customers from one location to
another. Remittances department deals with the transfer of money for customer from one bank to
another or from one branch to another. Instrument used by the BankIslami for remittances
includes:
• Telegraphic transfer
• Demand draft
• Mail transfer
• Pay order
a) Telegraphic Transfer
Telegraphic transfer is one of the quickest modes of transferring funds. It is an electronic system
of transferring funds that is why it is used by most of the businesses for the purpose of
transferring funds.
b) Demand Draft
A draft is just like an order cheque. A draft is drawn by one branch of a bank upon the other
branch of the same bank. The late down procedure is that the sender has to fill the beneficiary
name, account number and his name in the form. After the deposit DD is given to the customer
and transaction is registered in the issuing register and an advice is sent to the branch to which
the DD is sent. It is common mode of fund transfer. It is different from telegraphic transfer and
in sense that funds are not immediately to the collecting branch and the receipt of the branch.
The collecting branch will credit the account of the beneficiary at the receipt of advice from the
paying branch. Demand draft can be open, which can be cashed at cash counter after properly
identifying the true beneficiary, or crossed which can only be cashed by crediting is to the
account of the beneficiary.
c) Mail Transfer
Mail transfer (MT) is same as Demand Draft, but the characteristic which makes it different
from Demand Draft that in case of demand draft bank physically hands the DD to the customer
and upon presenting the draft the amount can be withdrawn. But as regards the mail transfer one
branch sends instruction to the other branch ordering it to the credit the amount to the account of
the person in whose favor the amount is deposited.
d) Pay Order
Pay order is the most convenient, simple and secure way of transfer money. It is just like demand
draft except that pay order is made for local order of money where as demand draft is meant for
remittances of funds from one city to other.

3.2.3 Cash Department

Cash department basically handles cash receipts and cash payments. The procedure for which is
given below
a) Receipts
Cash department receives money from customers for crediting it to their respected accounts for
which then used for paying their bills or remitting to their creditors and suppliers as the case may
be. When depositing cash the client fills the prescribed form of pay and slips where in he
provides basic information like the amount to be deposited, date, account nature and number etc.
then he hands over the form and paying slip along with the money to the cashier to the counter.
The cashier signs and stamps the form or paying slips and returns one copy of the same to the
depositors. After the hours, all pay and slips to the computer section, which credits the same,
their respective accounts.

b) Payments
When bank receives money from customers, it undertakes to repay the same upon demand. The
money can be withdrawn through cheques, drafts or pay orders. However before making
payments, bank satisfies itself that the instrument is valid and there is sufficient balance in the
customer account to support the payment. For making payments the procedure followed.
Cheque is first presented to token clerk. Token clerk notes down date, amount on the cheque, and
account number in token register, assign token number to cheque on the back of it gives token to
the customer and then forwards the cheque to an officer to the check the signature and verify it
with signature on specimen card which the customer signed at the time of opening the account.
The cheque is then forwarded to the computer department for verification of the balance. The
cheque is then forwarded to the cashier who makes payment to person who presents the token.
The process may differ from what mentioned above depending the nature of cheque.
A cheque is defined as written order of a depositor to pay to or to order of a designated party or
bearer, a specified sum of money on demand.

3.2.3.1 Kinds of cheques

Basically there are three types of cheques. They are as follows.
• Bearer cheque: It is en cashable at the counter. Payments of the cheque can be made to
any people who present it to the bank.
• Order cheque: It is also en cash able on the counter. But its holder must satisfied the
banker that he/she is true holder and entitled to collect the payment of the cheque for this he/she
has to prove his/her identity through an existing account holder of the bank.
• Crossed cheque: It is not en cash able on the counter. It can only be credited to the
payees account. If there are two persons having accounts at the same bank and one of account
holder issues cross cheque in favor of the other then the cheque will be credited to the account of
the person to whom the cheque was issued at debited from the account of the person who had
issued the cheque.

3.2.4 Credit Department

Bank Islami offer different mode of financing according to Islamic mode. There are main to
types of Financing modes in bank islami Mudarabah and Musharakah. Other modes of financing
are divided in to categories Short term financing and long term financing.

3.2.4.1 Musharakah Financing

In Musharakah, a joint enterprise is formed for conducting some business in which all partners
share the profit according to a mutually agreed pre-determined ratio, whereas, the loss is shared
in the ratio of capital investment. From Shariah perspective, Musharakah is one of the preferred
modes of financing.
The scope of Musharakah is broad. Musharakah can be applied to fulfill project financing needs
as well as working capital financing needs of Corporate Clients. Since Musharakah transactions
are based on pure profit and loss sharing arrangement, therefore, the risks associated with such
transactions are greater as compared to other financing modes. Due to this reason, Musharakah
transactions are executed subject to satisfactory review of feasibility of the proposed
transaction/project.

3.2.4.2 Mudarabah Financing

Mudarabah is a kind of partnership where one partner gives money to another for investing in a
commercial enterprise. The investment comes from the first partner who is called 'Rabb-ul-Maal'
while the management of the business is an exclusive responsibility of the other, who is called
'Mudarib'. The profits generated are shared according to a mutually agreed pre-determined ratio,
whereas, loss is borne by Rabb-ul-Maal unless the loss is due to negligence of Mudarib.

3.2.4.3 Working Capital Finance (shot term financing)

At Bank Isami, we understand that your business needs constant access to low cost and flexible
financing, in order to meet day-to-day funding needs. Our teams of experienced Relationship
Managers with wide sector experience offer you effective cash flow management by way of
financing arrangements suitably structured to your needs and your risk profile.
Cash is the lifeline of your business. Let your business have a blooming & prosperous life with
our Working capital finance facility. To fulfill your working-capital financing requirements,
Bank Islami offers a wide range of products as follows:

a) Murabahah Financing:
Murabahah is a type of sale in which the seller discloses the cost of goods and profit to the buyer.
Through this short-term financing mode, Bank Islami can finance the asset purchase requirement'
of the Corporate Customers.
The Customer, intending to utilize the Murabahah facility, identifies the commodities ('assets') it
needs to purchase through Murabahah facility. Bank Islami purchases the assets from Supplier
and then sells the same to the Corporate Customer against an agreed price (including disclosed
profit portion) on deferred payment basis.
b) Istisna Financing:
Istisna is a contract of sale of specified items to be manufactured/constructed, with an obligation
on the part of the manufacturer/seller to deliver them to the buyer upon completion.
Istisna can be used for made-to-order commodities where the buyer (BankIslami) would order a
specific good with some specifications to be manufactured by the Corporate Client in a particular
period of time and deliver to BankIslami after completion.
c) Salam Financing:
Salam is a sale, whereby, the seller undertakes to supply some specific commodity to the buyer
at a future date in exchange for an advanced price fully paid on the spot. As a matter of principle,
the sale of a commodity which is not in the possession of the seller is unlawful. Thus, the
practice of Salam is legalized as an exception and is allowed under certain term and condition.
Salam is allowed for commodities only which are homogeneous and fungible in nature i.e. every
unit of the commodity should be identical and substitutable in nature e.g. sugar, rice, wheat etc.
Therefore, Salam is an ideal mode for financing for agricultural concerns. Salam financing can
also fulfill all working capital requirements of manufacturers/traders dealing in homogeneous
commodities.
3.2.4.4 Project Financing (medium and long term)
Bank Islami offers medium and long-term financing facilities for infrastructure, BMR and
industrial projects in all sectors directly or on syndication basis.
a) Ijarah:
Ijarah is a contract, whereby, Bank Islami will lease out an asset to the Corporate Client and
receive periodical rentals from the Client for the use of that asset. The asset will remain in the
ownership of the Bank throughout the term of Ijarah. At the end of the Ijarah term, the asset can
be purchased by the Client at an agreed price.
Ijarah is mainly used for long and medium term fixed asset financing for infrastructure, BMR
and industrial projects.
b) Diminishing Musharakah:
The product of Diminishing Musharakah is offered on the basis of 'Shirkat-ul-Milk'. Shirkat-ul-
Milk means partnership of persons in an undivided property. Process of Diminishing
Musharakah financing involves Bank Islami taking share in the ownership of a specific asset
along with the Corporate Client and then gradual purchase of the Client of Bank Islami's
ownership share in the asset through out the term of Diminishing Musharakah. At the end of the
Diminishing Musharakah term, Client becomes the sole owner of the asset. Diminishing
Musharakah is mainly used for long and medium term fixed asset financing for infrastructure,
BMR and industrial projects. Diminishing Musharakah is also an ideal mode for Real Estate
Financing.

3.2.5 Consumer banking

Same as other BankIslami offers Same services as online banking, Transfer funds, Lookers
facilities, ATM card facilities.

3.2.5.1 Online Banking

Bank Islami's has a wide network of 102 Branches in 49 Cities all of which provide Online
Banking services. Online Banking means that all our 102 Branches in 49 Cities are connected
with each other so that you can instantly access your account and make transactions in any
BankIslami Branch. The following are the key benefits that you will get out of using our Online
branch network:
• Cash Deposit for immediate credit to a remote branch.
• Remote Cheque Encashment from any Online branch.
• Instant Funds Transfer between any 2 Online branches.
• Balance Enquiry and Statement of Account from any Online branch

3.2.5.2 Inter Bank Transfer Fund

Do you want to provide ease and convenience to your friends, family, colleagues and business
associates. With our Interbank funds transfer (IBFT) facility you can easily transfer funds in their
accounts via your ATM. Now, when dealing with you they can ensure hasslefree funds transfer
in their accounts. No nuisance of waiting for Cheque clearance or going to the branch to deposit
Cash or Cheque.
IBFT facility enables you to send and receive funds Online from and to any Account holder of
1Link IBFT participating member Banks. Following are the key benefits that you will get out of
using our IBFT facility:

3.2.5.3 ATM or Debit Card

 is a Shariah compliant ATM/Debit card, all in one, which acts as a complete replacement for
cash. Now you have the freedom to access your Bank account 24 hours a day to make instant and
cashless payments at a multitude of shops, outlets and restaurants in addition to its use  on our
ATM network.
  ATM Card:
You can withdraw cash anytime and anywhere from around 2,500 ATMs countrywide linked to
both the M-Net and 1-Link switches.
  Debit Card:
You can buy grocery, fill fuel, dine-out and make purchases at over 3,600 retail outlets linked to
the Orix Network countrywide.

3.2.5.4 Biometric ATM

Enjoy secure and safe ATM transactions with BankIslami’s Biometric ATM based on Bank
Islami’s One Card, which provides maximum security since it uses the most authentic way to
verify your identity. How? Apart from a pin-code, you can also use your finger or thumb
impression for identification purposes. After all, your fingerprints are yours and they cannot be
copied. Amazing! Isn't it?
Built with the state-of-the-art technology, these ATMs are the first of its kind in Pakistan.
Insert your One Card in the Biometric ATM machine
Place your Right/Left thumb impression on the space provided at the right side of the machine.
• Select the type of account from which you want to withdraw funds
• Select the amount to withdraw
• Take your Cash
• Take your Receipt

3.2.5.5 Lockers
Let us make this world safer and secure for you and your family. Our Safe Deposit  Locker
facility enables you to store your valuables in strong heat resistant steel lockers with 24 hour
security. Be it jewellery, passports, share certificates or title deeds, you can rest assured that your
valuables are not prone to loss, fire or theft. You can also nominate/authorize your dear and
loved ones to operate the Locker. Now you can live a carefree & stress free life while we take
care of your valuables while retaining your privacy.
Following are the key benifits that you will get out of using safe deposit locker facility
• Protection against weather conditions & power failures with smoke-sensor's, backed by
fire fighting equipment and 24 hour manned security.
• A Locker custodian to offer friendly and personalized assistance.
• Maximum of four (4) deposit operators per Locker.
• Safety of your valuables from loss, fire and theft.
• Unlimited free visits to your Locker.
Chapter #4
Training Program
Internship Schedule
Starting and ending dates of the internship are as follow.
Starting Date: 8-08-2019
Ending Date: 12-09-2019

Employees of Branch:
Names of Employees Designation
Shahid Pervaiz Branch Manager
Asif Ali Sarwar CSM
Mubashar Nazir PBM
Muhammad Aftab PBO
Muhammad Azeem khan CSO
Saher Khalid CSO
Faisal Mujtaba BE

Activities Performed In:

1. Marketing Of Female Clients Of Locality by Visiting’s Girls Colleges
and other Educational Institutions as well as Promotion of Islamic
Banking.
Objective of Study:
The main objective of my study is to measure the customer
awareness towards Islamic banking, its products, services, its
objectives, compliance with shariah, financial services and
customer services and customer attitude based on this awareness.
 Awareness and Adoption of IB:
According to Oxford Dictionary; “Awareness is concern about and well-
informed interest in a particular situation or development”. In this study we
examine the awareness/knowledge regarding Product and services,
awareness in term of advertisement and awareness about financial teaching
of Islam.
Advertising
is also one of the dimensions of awareness. Mass media advertising was less important for a
customer as bank selection criteria. Likewise, commercial banks are still willing to invest a large
amount of funds for advertising for greater competitiveness despite the uncertainties of its
returns. we wanted to explore the awareness of customers towards the Islamic banking products.
The findings highlighted that the need of strong advertising campaign to overcome the lack of
awareness of the customer regarding the IB.

 Awareness (Product & Services) is a significant influential factor in adoption of IB

 Awareness (Financial teaching of Islam) is a significant influential factor in adoption of
IB
 Awareness (Advertising) is a significant influential factor in adoption of IB
2. Will conduct research work on Account opening rate in conventional
banks and Islamic banks of locality and providing feed back at end of
said period.

Islamic and conventional banking

Islamic banking is different from the conventional banking asities interest
free. Islamic banking operates under different principles and they have
different risk profiles. The Islamic banks have regulations of two types; first
is the government and the central bank that govern the conventional banks as
well and the other is the Shariah Supervisory Board that approves the
products of the Islamic banks and keeps a check over the implementation of
the rules defined by the board. The central bank defines some rules which
are specific to the Islamic banks.

The present study

The present study is confined to the profitability, efficiency and liquidity
comparison between two types of banking, that is, Islamic and conventional
banking. For this purpose, two big Islamic banks ,i.e. Meezan Bank
Pakistan and bank Islami are taken in the study for the comparison of their
performance with two large commercial banks of Pakistan, i.e. Standard
Chartered Bank Pakistan and MCB Bank during the year 2013-2017.
Summary and conclusion
The present study is conducted to empirically test that whether there is any
difference in the performance of the Islamic and conventional banking with
respect to the customer deposit of each bank. The secondary data is taken
from the annual reports of the conventional and Islamic banks.
The future of Islamic banking seems brighter than the conventional banking
as the results show that the Islamic banking is not suffered from the global
financial crisis to the extent conventional banking is suffered.
 3. Providing Support and Guidance to Female Customers as and when
Required In Office Place:

Banking with Women Customers

On one hand, women are more satisfied than men with mobile banking. On the
other hand, women are less active customers — not only in mobile banking but
also online banking and a variety of financial chores. Gaps like this between
 satisfaction and usage underscore the need for financial institutions to
understand better how women approach financial matters differently from men.
Gender differences influence women’s desire for money management tools,
their mobile mindset, and their attitudes about security, privacy, and emerging
technology that will shape the future of financial services.

Building Empowered Customers

Watching the face of a rural woman as she signed for a bank card with a biometric
fingerprint reaffirmed for us not only that poor people want to be part of the 21st
century, but that participating fully in 21st century amenities is empowering. But
it is not enough simply to access this new financial service; it is also important to
recognize its potential benefits. For example, if a woman receives a government
cash transfer as a direct bank deposit, but withdraws all the money immediately
because she had never used a bank and does not understand how it works, she is
denied the full advantages of having a bank account. Leapfrogging this divide
offers the potential for mass financial inclusion, but achieving this goal requires
specific actions to ensure the fullest use of digital finance.

Leveraging FSPs to support customer

empowerment
Ultimately, customers are responsible for their own empowerment. However, FSPs, in
their capacity as facilitators, can support a more activist role for customers by
leveraging the interactions between customers and institutions.
What actions can FSPs take to facilitate customer empowerment? First they must
listen to their clients. Then they must choose among options — some big actions,
some small. Here we highlight three broad areas of activity.
 Ensure a positive customer experience. Fundamental to sustainability and
scale is brand loyalty. Offering added value for the customer and a positive
transactional experience contributes to the achievement of these goals.
Achieving this means understanding how people use money and identifying the
attributes of products and services that are a priority for their market and that
positively affect use and the customer experience. The most important factors
to date are timeliness, convenience, cost to the customer, and risk of a loss.
  Enable learning by doing. In their capacity as enablers of customer
empowerment, FSPs can encourage the customer to exercise agency—that is,
the capacity to act freely and to make their own decisions. Customers also need
time for trial and error so trust and confidence can be built in these new
delivery systems. Giving customers greater control over their finances results
when the conduct of transactions is intuitive and easy to remember, and when
behavioral constraints to access and use — particularly literacy, psychological,
and social barriers — are addressed. FSPs can encourage new behaviors by
offering incentives and tools using information and communication technology,
such as Short Message Service (SMS) messaging, and games.
 Respect customers and listen to them. Empowerment is possible only when
the environment permits openness, transparency, and constructive feedback,
and allows for effective and “just-in-time” recourse mechanisms. FSPs are
responsible for implementing structures and providing information that will
allow customers to exercise their rights and commitments; customers are
responsible for being informed about both their and the FSP’s rights and
obligations.
Customers need time for trial and error so trust and confidence can be built in
new digital financial products and services. Inevitably, this process will involve
changes in operations, customer capabilities, and products, some of which are
not even on the drawing boards yet. With collaboration between customer and
provider, and each reaching out to social networks, the resulting products and
services should add value to the user and meet the sustainability and scale goals
of the provider.

Chapter #5
Analysis

4.1 Financial information:

The financial information of the Bank Islami is summarized as under:

Table 4.1 Financial information

 FINANCIAL HIGLIGHTS 2008 2007
  Rs.(Million) Rs.(Million)
Total Deposits 12,478 9,934
Total Assets 19,089 14,447
Total financing-net 6,528 3,963
Total Investment 5,020 3,864
Shareholder's Equity 5,192 3,845
Branches     102(units) 36(units)
Employees   1,188(units) 563(units)

Table 4.2 Profit &loss Account

PROFIT/LOSS ACCOUNT 2008 2007
  Rs.Million Rs.Million
Return Earned 1468.69 602.06
Profit Paid 729.53 303.84
Net Spread 739.16 298.22
Fee, Exchange income 141.39 71.46
Core Banking income 880.55 369.68
Provision -130.56 -28.37
Other income 54.75 68.82
Operating Expenditure -1033.9 -510.59
Profit/loss before tax -229.15 -100.46
Taxation 176.22 63.44
Loss after tax   -52.93 -37.02

Table 4.3 Financing made by bank

FINANCINGS   2008 2007
  Rs.'000 Rs.'000
Financing in pakistan    
-Murabaha 2363736 581505
-Istin'a 184797 31886
-Diminishing Mushraka-Housing 682141 179213
-Diminishing Mushraka-other 1457729 1576705
-Againt Bills-Murabaha 3576 6158
-salam - 105000
-Musawamah 3387 66362
 -Financing to employees 200664 112592
  4896030 2659421
Net investment in Ijarah financing 1791430 1332819
Financing- gross 6687460 3992240
Provision for non performing financing    
-specific -141687 -20285
-General -18242 -9088
Financing- Net   6527531 3962867

4.3 Analysis of the Report

4.3.1 Financial Statement Analysis
Financial statement analysis are the principal means of reporting the financial condition and
result of operations of an organization, or in other words we can that financial analysis are
carried out for the purpose of identifying the financial strengths and weaknesses of an
organization by properly establishing relationships between the balance sheet and the income
statement items. This analysis helps various parties in decision making who are interested in the
activities of business. To improve the quality of decision making, proper analysis of these
statements helps a lot. The firm itself and the outsider providers of capital, creditors and
investors all undertake financial statement analysis. The type of analysis varies according to the
specific interests of the party involved.

The financial data of BankIslami is analyzed in the following two ways:

• Common Size Analysis.

• Ratio Analysis.

Common Size analysis and ratio analysis are used to measure firm’s performance over time and
while making comparisons with different balance sheet and income statement items. In the
common size analysis we use the balance sheet and income statement and measure their
performance as compared to other years and in the same year, by generating a percentage
increase or decline.
4.3.2 Common Size Analysis
An analysis of percentage financial statements where total assets divide all balance sheet items
and all income statement items are divided by net sales or revenues is called common size
analysis. Common size analysis can give analyst valuable insight into changes that have occurred
in a firm’s financial condition and performance. As common size analysis gives us relative
percentage of an item with respect to total, so the growth or decline in various items of balance
sheet and income statement can not be detected from common size percentages.

It further consists of

• Vertical Analysis

• Horizontal Analysis

a) Vertical analysis

Vertical analysis compares each amount with a base amount selected from the same year.
Simply, we compare the items of balance sheet or income statement vertically by taking one item
as 100%

b) Horizontal analysis

Horizontal analysis compares each amount with a base amount for a selected base year or we
take each item of base year as 100% and compare with other items.

The internee has limited her analysis to vertical analysis only.

Table 4.4 COMMON SIZE (VERTICAL) ANALYSIS OF BALANCE SHEET

ASSETS 2007 2008
Cash and Balance with treasury bank 9.91% 11.39%
Balance with other banks 17.80% 11.56%
Lending to Financial Institutions 4.32% 0.20%
Investments 26.77% 26.29%
Advances 27.42% 34.19%
Operating fixed assets 7.56% 10.00%
 Deferred tax assets 0.62% 1.30%
Other Assets 5.54% 4.93%
Total Assets 100% 100%
LIABILITIES    
Bills payments 0.58% 1.85%
Borrowings 0.48% 1.28%
Deposits and other accounts 68.76% 65.37%
Sub-Coordinated Lone - -
Other liabilities 3.55% 4.29%
Deferred tax liabilities - -
Total liabilities 73.39% 72.80%
SHAREHOLDERS EQUITY    
Share capital 22.15% 27.66%
Reserves - -
ACCUMLATED LOSS -0.31% -0.51%
Total equity 21.83% 27.14%
Total liabilities and Total equity 100.00% 100.00%

4.3.2.1 Vertical Analysis of Balance Sheet

Vertical analysis shows the proportionate percentage of different items of the balance sheet with
respect to Total Assets. The vertical analysis of Bankislami shows that there are different
proportions of different assets and liabilities over the time period. This is due to many reasons.
First of all the assets have changed and increased over the time period. The change in assets
affects the overall vertical analysis as the change is analyzed with respect to assets. The major
components in the balance sheet of banks are deposits, advances and investment, as the major
expense and income occurred due to these respectively. So looking closely to these items
advances increased from 2007 to 2008. On other hand the investment remains same in both
years. Bankers are left with only option of investing in short-term investments, to increase their
profit margin. Investments, as being a non-interest source of income are more promising than
advances that are becoming less profitable due to declining interest rates. Bankers prefer to give
advances when the interest rate was high but then prefer to invest in non-interest income in 2007
when the income from investment was higher than the interest rate. Now our discussion comes to
deposits. Deposits also increase in year 2008. Now coming to other important items i.e. cash in
hand and balance with other banks. These items show the liquidity of the organization and
meeting short term liabilities. The cash in hand is increasing from 2007 to 2008, but the balance
with other bank is decreasing. Thus showing that now the bank is more liquid, and liquidity is
inversely proportion to profit. The cash in hand should be invested in short term investments, so
that the organization can earn profit on idle money. Now coming to the shareholder’s equity, the
equity has been increased from 22% to 27% of total asset over the time period. This shows that
either people are interested to invest in the BankIslami, or reserves has increased or valuation of
assets is the cause behind this increase.

Table 4.5 COMMON SIZE (VERTICAL) ANALYSIS OF INCOME STATEMENT

2007 2008
Markup Revenue 100% 100%
Markup Expense 50.3% 49.65%
Gross Profit 49.5% 50.34%
Provision for Advances 4.6% 8.85%
Provision for Investments - -
Bad debts written off - -
4.6% 8.85%
Net Markup Income 44.68% 41.41%
NON-MARKUP INCOME
Fee and Commission 10.13% 7.6%
Dividend Income 3.8% 1.9%
Exchange income 1.66% 2.1%
 Other income 1.4% 1.4%
Total non-markup income 27.88% 41.88%
Total Income 68.10% 54.76%
NON-MARKUP EXPENSE
Admin Expenses 84.21% 70.02%
Other provisions - -
Other charges 0.48% 0.3%
Total non-markup expense 84.71% 70.36%

lOSS Before Tax -16.61% -15.59%

LOSS After Tax -6.14% -3.54%

4.3.2.2 Vertical Analysis of Income Statement

The Vertical analysis of Income statement of BankIslami as given in the above table is showing a
percentage change with respect to the sales or markup income. There is a consistent decreasing
trend in the bank’s gross profit. The main reason behind this is that the bank has not controlled
its markup expenses in relation to total markup revenue. In simple words we can say that this
inclining trend in the markup expenses resulting in the decreased gross profits. This can be
because of decreasing interest rate on advances or increasing interest rates on deposits to
encourage savings. Markup expenses are actually cost of sale in case of a bank. Furthermore this
decreasing trend in gross profit shows the inefficiency of the bank’s management in controlling
markup expenses. So this decreasing trend of gross profit is a negative or unhealthy sign and the
bank’s management should consider it and take some actions to improve its position.

Table 4.6 COMMON SIZE (HORIZANTAL) ANALYSIS OF INCOME STATEMENT

  2006 2007 2008

Markup Revenue 100% 502% 1369%
Markup Expense 100% 1527.87% 3808.53%
Gross Profit 100% 267.90% 812.35%
Provision for Advances 100% 2734.67% 12943.56%
Provision for Investments - - -
Bad debts written off - - -
  100% 2734.37% 12942.56%
Net Markup Income 100% 235.87% 657.52%
NON-MARKUP INCOME      
Fee and Commission 100% 1684.46% 3168.72%
Dividend Income 100% 70.61% -87.17%
Exchange income 100% 1284.86% 3855.81%
Other income 100% 163.39% 29.17%
 Total non-markup income 100% 214.91% 345.45%
Total Income 100% 228.39% 548.39%
NON-MARKUP EXPENSE    
Admin Expenses 100% 248.56% 606.56%
Other provisions - - -
Other charges 100% -75.74% -58.85%
Total non-markup expense 100% 220.55% 549.07%
       
lOSS Before Tax 100% 192.05% 566.16%
LOSS After Tax 100% 343.18% 533.59%

4.3.2.3 Horizontal Analysis of Income Statement

Horizontal analysis of income statement shows three year in which year 2006 is as base year and
value of year 2007 and 2008 will be calculated on the bases of year 2006. we see too much
difference between the values that is because of big difference between the values in these years
and bank are at the begging stage .

Table 4.7 COMMON SIZE (HORIZANTAL) ANALYSIS OF BALANCE SHEET

ASSETS 2006 2007 2008

Cash and Balance with treasury bank 100.00% 223.96% 143.49%
Balance with other banks 100.00% 126.20% 79.37%
Lending to Financial Institutions 100.00% -49.70% -190.29%
Investments 100.00% 583.77% 818.05%
Advances 100.00% 213.14% 580.60%
Operating fixed assets 100.00% 47.85% 233.11%
DEFERRED TAX ASSETS 100.00% 133.33% 781.48%
OTHER ASSETS 100.00% -48.53% -33.62%
Total Assets 100.00% 159% 274%
LIABILITIES      
Bills payments 100.00% 165.22% 234.78%
Borrowings 100.00% -60.00% 290.00%
Deposits and other accounts 100.00% 358.72% 701.74%
SUB-ORDINATED LOAN - - -
Other liabilities 100.00% 103.55% 284.62%
Deferred tax liabilities - - -
Total liabilities 100.00% 324.59% 487.58%
 SHAREHOLDERS EQUITY      
Share capital 100.00% -40.00% 63.95%
Reserves - - -
ACCUMLATED LOSS 100.00% 362.50% 976.77%
Total equity 100.00% -42.41% -115.81%
Total liabilities and Total equity 100.00% -8.01% -70.04%

4.3.2.4 Horizontal Analysis of Balance Sheet

There are too much difference between these ratios are due to bank was in initial stages. It a 5 th
annual report of bankislami and values in year 2006 is too much low as compare to the year 2007
and 2008. That creates big difference in the values.

4.4 Financial Ratio Analysis

Ratio means “one number expressed in terms of another “. Ratio is a statistical yardstick by
means of which relationship between two or more various figures can be compared and
measured. The ratio analysis can be done under

4.4.1 PROFITABILITY RATIO

Under this heading, two commonly used ratios are gross profit margin and net profit margin
ratios. These are now discussed in detail.

4.4.1.1 Gross Profit Margin

Gross Profit is the difference between revenues and cost of goods sold. Gross profit is critical
because it represent the amount of money remaining to pay operating expenses, financing costs,
and taxes and to pay for profit. Gross profit margin is the amount of each sale rupee left over
after paying cost of goods or services sold. It is calculated as follows:

Gross Profit Margin = Gross Profit / Sales x 100

For 2007 298218/602060*100= 49.53 %
For 2008 739160 / 1468688* 100 = 50.32 %
It is obvious from the values of Gross Profit Margin that the trend is increasing in year 2008. The
reason for this increasing in sales with respect to markup. Sales can be affected by number of
reasons, the increase in interest rates due to inflation; competitors have captured more market
share or inefficient management. This increasing trend is good for any organization because the
net profit will not affected much.

4.4.1.2 Net Profit Margin

The BankIslami measures the loss that is available from each rupee of sales after all expenses
have been pad, including cost of sales, selling, general, and administrative expenses;
depreciation; interest; and taxes. The ratio is calculated as follows:

Net Profit Margin = Net Loss after Taxes / Sales x 100

For 2007 -37023/602060*100= -6.14%
For 2008 -52930/ 1468688* 100 = -3.60%

4.4.1.3 Return on Assets

The ROA ratio provides a standard for evaluating how efficiently financial management employs
the average dollar invested in the firm’s assets, whether the dollar came from investors or
creditors. 

Return on Assets = Net Loss/ Total Assets x 100

For 2007 -37023/14447473*100=-0.025 %
For 2008 -52930/ 19088600* 100 =-0.027 %
The return on investment values of BankIslami shows negative sign. That means Bank is going
into loss. When bank is going in loss how we get return on assets from that loss.

4.4.1.4 Return on Equity

It is another measure of overall performance of a company. Return on equity (ROE) shows the
company’s residual profits as a proportion of the book value of common stockholder’s equity.

Return on Equity = Net Loss after Tax / Common Stockholder’s equity x 100
For 2007 -37023 / 3200000*100= -1.157%
For 2008 -52930 /5279679 *100=-1.0025 %
The ROE of BankIslami showing Bank are going in loss, so shareholder equity also bear loss
from net loss.

4.4.1.5 Earning Per Share

=Net Income/No. of Shares Outstanding

For 2007 -37023 / 81954118 *100= -0.0452%

For 2008 -52930 / 116337654 *100= -0.0455%

4.4.1.6 Operating Cost to income ratio

This ratio can be measured by dividing non interest cost with income earned during that period
of time.
= Non-interest cost/ income
For 2007 140281/410127=0.342
For 2008 196139/804743=0.2437

4.4.1.7 Debit to Equity Ratio

The debt to equity (debt or financial leverage) ratio indicates the extent to which the business
relies on debt financing. A high financial leverage or debt to equity ratio indicates possible
difficulty in paying interest and principal while obtaining more funding. In debt equity ratio, the
total debt is compared with the shareholder’s equity; the lower the ratio the better the company’s
solvency, the higher ratio is a risk to a present or future creditor.

Debt to Equity Ratio = Total Debt/ Owner’s equity

For 2007 987904 /3200000 *100= 30.872%
For 2008 6567882 /5279679 *100= 124.399%
The debt to equity ratio has increased from 30.8% to 124.399%. The ratios are very high in both
the cases but in the case of banks, the portion of debt is much higher than the equity as most of
business of bank survives on external funds. But as we can see that the debt to equity ratio has
increased this is not a good sign for any organization, but this increase is not due to increase in
equity but due to decrease in debt.
4.4.1.8 Debit Ratio
= total Liabilities /Total Assets

For 2007 3844726 / 14447473 *100= 26.61%

For 2008 5191821 / 19088600 *100= 27.19%
The debt ratio measures the proportion of total assets financed by the company’s credit. The
higher this ratio the greater is the amount of other people money being used in an attempt to
generate profits. So bank is using a great deal of people money to generate profits.

4.4.2 Efficiency Ratio

4.4.2.1 Interest income per employee

This ratio shows how an employee earns from interest income. In this we divided Interest income
with the number of employees with in the banks. In these calculation amount in million.

For 2007 6020.06/563=10.69

For 2008 1468.69/1188=1.83
4.4.2.2 Profits per employee
We can calculated profit per employee by dividing total profit with number of employees. But in
case of bankislami in both years bank are going in loss so the ratio is in negative.
For 2007 -100.46/563= -0.1784
For 2008 -229.15/1188= -0.1928

4.4.2.3 Business per employee

This ratio shows hoe much an employee can get business from market. It can be calculated by
dividing total profit after taxation. But in case of bankislami it will in negative because bank is in
loss.

For 2007 -37.02/563= -0.065

For 2008 -52.93/1188= -0.0445

4.4.2.4 Business per branch

In this ratio we can calculated hoe much a branch can get business from market or how much a
branch share in profit, it will be an average. It can be calculated by dividing profit after taxation
with the number of branches that bank have. But in case of bankislami ratio will be in negative
because bank is in loss in both year.
For 2007 -7.02/36= -0.02
For 2008 -2.93/102= -0.518

4.4.2.5 Employees per branch

Employee per branch shows hoe much an average of employees are there in the bank branches. It
can be calculated by dividing number of employees with number of branches.
For 2007 563/36 =15.63
For 2008 1188/102=11.64

4.4.2.6 Total Advances to Total Deposit Ratio

=Total Advances/ Total Deposits*100

For 2007 3,963/ 9,934 *100= 39.89%

For 2008 6,528 / 12,478 *100= 52.31%
This ratio tells us how much of the bank has advanced. This ratio is not very much favorable for
the bank.

4.4.2.7 Total Advances to Total Assets

=Total Advances/ Total Assets*100

For 2007 3,963 /14,447*100= 27.43%

For 2008 6,528 / 19,089 *100= 34.19%
This ratio shows the advances which the bank makes as the percentage of its total assets. If the
advances are increasing then the total assets then it is favorable for the bank. Because there are
ore advances, there is more income of the bank and respectively more profit. This ratio is
showing decreasing trend.

4.4.2.8 Fixed Assets to Total Assets

=Fixed Assets /Total Assets*100

For 2007 11093 / 14447 *100= 76.78%

For 2008 1910 / 19088 *100= 100%
In the bank fixed assts are comprised of equipment, furniture and buildings. These assets have
great importance or the bank in order to maintain the working conditions up to the mark. This
ratio is satisfactory for the bank.

4.5 SWOT Analysis

In past the organizations were limited to their own performance and outputs, they only consider
what they get and what they lose, with the emergence of management studies and globalization
now the organization cannot survive until they competes with their surroundings and then
internationally. World has set some standards for organizations so each and every organization
have to look what is happening around?

Today’s organizations are perplexed with the phenomena of intense competition. It has become
imperative for them to be taking guard for their survival. So in search for excellence it is the
critical self-appraisal which is attached so much importance. Even in mundane affairs of life,
introspection is necessary even at the individual level. Every sagacious person examines his
conduct critically in relation to his environment. And then pauses, looks, transform and conform
to what is required. If he doesn’t he is lacking sagacity and world tells him emphatically. When
we come towards organization then it is the question of its very survival. It is a practice, which is
indispensable for future growth. There are many techniques to analyze the organizations
performance i.e. input/ output analysis, pest analysis, SWOT analysis etc. SWOT analysis is kind
of tool that is used to analyze an organization’s performance in relation to its environment
external or internal opportunities and threats.

Strategy analysis and selection of the best alternative is of critical importance and prime
responsibility for any organization’s management. Management has to go through extensive
internal and external analysis to determine their organization’s performance in relation to their
mission and objectives.

The SWOT analysis of BankIslami is as follows.

4.5.1 Strengths
• Advantages of religious proposition in a country made on name of Islam i.e. Pakistan.
 • Competitive advantage: Less marketing is required than conventional banking and better
cost control as a result.

• Morale and commitment to serve is higher among bankers and staff due to religious
value.

• Huge amount of savings can be mobilized and thus boosting the deposit base of banks
using charities and Zakat fund schemes, etc.

• Less use of money for speculative purposes thus chances of investment failure and much
volatility in investment is reduced.

• Innovative aspect is also found in it, using phone banking, e- banking, etc. a blend of
tradition and modern life can be easily served to customers.

• Location wise & geographically, it is feasible and operational all across the country, as
Pakistan is 98% Muslim population country scattered in all nooks of national territory.

• Quality of services will not less than conventional banking services so a competitor to
established banking (interest based) in same market.

4.5.2 Weaknesses
• Lack of standardization across the Muftis /scholars of the country and among the scholars
and bankers.

• Disadvantage of proposition is that there would be a hesitant and new thing not fully
accepted / suited to World Bank, ADB, and other multinational donor agencies to invest
through banking sector in country.

• A lot of capital is needed to boost it in front of conventional banking, and also huge
reserves have to be maintained, to meet any loss sharing situation in Islamic finance
modes of investment.

• Time/season factor becomes a major problem in case of Islamic banks, as people would
like to shift their money from zakat deductible accounts or they wish to pay their zakat
from “Halal” funds during Ramadan or on Eid festivals, etc. creating short term liquidity
problems for the banks.
 • There are differences in theory and practice of Islamic banking in Pakistan to some extent
creating an inherent weakness.

• Management and staff need further training to serve Islamic financial services and
relevant experience as well to done their job efficiently.

• Value chain management will become a major hurdle to Islamic Halal funds of Islamic
banks, as it will need Islamic money and call money markets, investment opportunities
with pure halal businesses, Islamic equity market (instead of stock market), etc.

4.5.3 Opportunities
• More opportunities now lie in Islamic banking as it has been accepted by BASEL, WB,
ADB, international agencies, multinational corporations, non-Muslim governments, etc.
with creation of big sukuk and Islamic deposit base in Gulf and Malaysian regions.

• Traditional interest based banking will have to defend through heavy marketing and
advertising in Muslim countries which off course reduce their profitability.

• Islamic banking is a complete solution to economic and to some extent social needs of
Muslims from House building to education in addition to conventional help in commerce,
business and industry.

• Modern Islamic banking emerged in late 20th century with more or less advent of internet
and information age, thus it is naturally blended with tools of internet, and computer
based banking, and will witness a sharper growth than traditional banking growth of last
500 years.

• New markets have been emerged with growth of Islamic banking as well: Islamic
mortgage, Islamic insurance, new investment projects etc.

• In non-Muslim countries, like France where Muslim are in minority (around 10%) of
population, Islamic banking will enjoy the benefit of niche marketing and if properly
targeted will obtain better results.
4.5.4 Threats
• A lot of legislation is required for Islamic banking world wide and especially in non-
Muslim countries; even in Pakistan some legal loopholes are present in its proper
implementation.

• Comprehensive Islamic economic and banking models have yet to develop or they are
not in their maturity stage to provide a blueprint of economic development and
prosperity.

• IT developments and Research in latest Banking are in non-Muslim countries where

conventional interest based banking have a very strong position thus Islamic banking will
enjoy latest tools of IT, but lesser than conventional banking.

• Environment for Islamic banking in west has been declined after 9/11 attacks on WTC,
New York and later Prophet Mohammad (P.B.U.H.) protests in Muslim world, widening
the gaps between the western investors and Islamic banking markets.

• Market demand is good but very less as compared to conventional interest based banking
throughout the world, i.e. beyond some countries.

• Sustainable financial backing by large multinational firms, investment banks, and World
major economic powers is lacking.

Chapter No. 5
5.1 CONCLUSION
BankIslami Pakistan Limited is an Islamic bank in Pakistan. The mission of bank islami is to
introduce Islamic banking in Pakistan and globally. They can worked under leadership of Dubai
Islamic Bank and Jahangir Siddiqui & co. an audited firm in Pakistan.
This internship experience has been very much informative for me as it helped me in numerous
ways like in learning new things and ideas about official environment and now I have the
knowledge and experience of working in office environment I have realized my abilities and
expertise of working in that kind of environment. Internship is a supervised pre-professional
career related experience paid or unpaid, part or full time, with measurable learning objectives
and formal evaluation. And it is requirement for MBA degree.

• The branch manager is usually given very little regarding sanction of advances and over
draft whereas the responsibilities are numerous.

• The branch is newly opened in Pirmahal city, also bankislami is not to much old. Its all
about 5 to 6 year old bank.

• I can study and make analysis on year 2007 annual report of bankIslami. Its fifth annual
report of that bank but till yet bank is going in loss. There may be a different reasons behind that
bank is newly be opened and they can offer Islamic mode of financing.

• The branch yet not stared financing, that problem same as different cities with bankislami
branches.

• The mobilization of deposits is mainly considered as the responsibility of the branch

manager but the rest of the staff is usually least interested

• The bank has been applying he modern concepts of management and marketing at both
micro levels. The interior and exteriors of the branch have been changed but the staff of the
branch has been found less motivated towards the organizational objectives.
• The decision making is still centralized as the middle and low level management is not
taken into confidence.

• The promotional policy of the bank was observed as without any specific direction.
Though the bank has defined its mission and vision but no specific plan has been designed so far.

• The bank staff has been found as less satisfied with bank policies and the recent
retrenchment in the bank has created unrest and panic.

• Most of the employees working in this branch are not much familiar with computer. They
just know how to use their part of software if any problem comes in the computer they can’t fix
it.

• The relationship between the employees of the branch is not that good because of which
the whole environment of the branch becomes less favorable for work.

• Miss utilization of office utilities, especially the telephone.

5.2 RECOMMENDATION

• The branch manager should arrange a training program for its existing employees to help
them perform their duties more effectively.

• The branch manage can start financing in there branch with there existence capital.

• There should be a proper platform provided to its employees from where they can help
the management in achieving its objectives.

• The branch should try to enter into the market of Islamic banking it would increase its
competitive edge over the other branches in the secretariat.

• The bank should appoint customers relation officer where the volume of work is too high.
This will give an impression to client for personal Banking. This will help in improving the
image of the bank and hence will attract more clients.

• An Automated Teller Machine should be placed in the branch because during my

internship I found many customers complaining for the ATM machine.

• The departments of this branch should be increased because its customers have to go to
other branches of BankIslami in order to get the services which they need.

• BankIslami is not very well known bank in the market. Their market standing is not as
strong as there competitors. For this BankIslami should opt for heavy advertisement both
electronically and on print media to create public awareness. This product Business Power is
suffering because of this reason as well.

Reference
Book & Web References

• Islamic and finance bulletin (oct-Dec 2008) issue by Islamic banking department
SBP.
• Islamic and finance bulletin (July-Sep. 2008) issue by Islamic banking
department SBP.
• Muhammad Taqui Usmani (Islamic Finance)
• www.bankislami.com.pk
• www.islamicfinder.org
• www.dubaibank.ae
• www.albalagh.net/Islamic_economics/
• http://www.islamicfinancenews.com/
• www.sbp.org.pk
• http://www.sbp.org.pk/ibd/bulletin/Bulletin.asp