UNIVERSITY OF KARACHI

Cousre title : Fundamentals of Public

Administration
Class: MPA Prev. Evening
Section : C

SUBMITTED BY
BANKISLAMI PAKISTAN - Abiha Hasan
- Ayesha Irfan

LIMITED (BIPL) - Azra Qadir

- Muhammad Moeez
- Muhammad Usama Kalam
SUBMITTED TO
Dr. Muhammad Siddique
 TABLE OF CONTENTS

1. INTRODUCTION...............................................................................................2

2. PROFILE OF BANKISLAMI.............................................................................4

3. MANAGEMENT STRUCTURE AND PERSONNELS....................................7

4. PRODUCTS & SERVICES...............................................................................10

5. MANAGEMENT STYLE ACROSS DIFFERENT DEPARTMENTS............11

6. SWOT ANALYSIS...........................................................................................16

7. CONVENTIONAL BANKING vs. ISLAMIC BANKING..............................18

8. PROBLEMS/ISSUES IDENTIFIED.................................................................20

9. RECOMMENDATIONS...................................................................................21

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 1. INTRODUCTION

Banks play very essential function in the financial existence of the country. The growth of
the economy is carefully related to the stability of its banking system. Even though banks create
no new wealth however they borrow, change and consume wealth. In this manner, they end up
very effective companions inside the technique of economic development. Current banks are
very beneficial for the utilization of the assets of the United States of America. The simple role
of the banks is to encourage the dependency of savings a few of the humans and to mobilize
those financial savings for the funding reason. Banks deposit surplus from the general public and
then increase those surplus inside the form of loans to the industrialists, agriculturists,
businessmen and unemployed human beings under distinctive schemes in order that they set up
their own commercial enterprise.
The first instance of Islamic banking came into the picture in Egypt in 1963. The pioneering
efforts by Ahmad El Najjar brought this bank into existence, whose key principle was profit
sharing (non-interest based philosophy of Shariah. The bank neither charged nor paid interest but
its activities were mostly limited to trade and industries where these banks invested directly or as
partners of depositors.
Pakistan was among the three countries in the world that has been trying to implement
Islamic banking at national level. This process started with presidential order to the local Council
of Islamic Ideology (CII) on September 29, 1977. The council was asked to prepare the blueprint
of interest free economic system. It submitted its report in February 1980, highlighting various
ways and sufficient details for eliminating the interest from the financial system of Pakistan.
In Islamic Banking cash isn't a commodity although it is used as a medium of trade and keep
of fee. BankIslami operates on the idea of earnings and loss sharing if in case the enterprise guy
suffered losses, the bank will share these losses based at the mode of finance used (Muraabaha,
Musharakah). The execution of agreements for the trade of top & offerings is a must, while
dispensing price range underneath Muradbaha, Salam & Istisna contracts. Islamic banking has a
tendency to create hyperlink with the real sectors of the economic system via using alternate
g7dactivities. For the reason that money is connected with the actual assets therefore it
contributes directly inside the financial development. In Islamic banking earnings on Deposit
varies in step with the amount.
Islamic banking has been defined as banking in consonance with the ethos and cost device of
Islam and ruled, in addition to the traditional desirable governance and threat control regulations,
through the ideas laid down by Islamic Shariah. Interest loose banking is a slim idea denoting
some of banking instruments or operations, which keep away from hobby. Islamic banking the
greater fashionable time period is anticipated now not simplest to keep away from involved
based totally transactions, prohibited in the Islamic Shariah but also to avoid unethical practices
and take part actively in reaching desires and targets of and Islamic economy.
There are three types of banks, serving in Pakistan as:

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  Government Banks (NBP, BoP)
 Private Banks-including Conventional & Islamic (UBL, BAHL, Faysal Bank Limited,
Meezan Bank)
 Foreign Banks (Citi Bank N.A, Industrial and Commercial Bank of China Limited,
Bank of China)

1.1. BANKING SECTOR IN LAST FISCAL YEAR

Amidst challenging macroeconomic environment, banking sector of Pakistan witnessed
impressive growth during 2020. Deposits grew by 22.2% while financing was slightly up by 4%
on account of economic slowdown witnessed during second and third quarters of the calendar
year. As a result, increase in liquidity was diverted towards investments which witnessed a
growth of 31.3%. Due to hike in credit risk emanating from high discount rates during 3Q’19 to
1Q’20 and outbreak of Covid-19 pandemic during 2Q’20, total banking sector NPL and infection
ratio have increased to Rs. 853 Bn and 10.5% in Sept’ 20 from Rs. 761 Bn and 9.3% in Dec’ 19,
respectively. It is pertinent to mention that the augmentation in delinquencies occurred despite
deferment related relaxations granted by SBP.
On the profitability side, banking industry posted impressive growth during 9M’20. The apex
authority has so far reduced their policy rate by 625 bps to 7% during CY’20 to stimulate the
leverage segments of the country. Consequently, net spreads and profitability of banks are
expected to shrink significantly from 4Q’20 onwards, on account of downward adjustment on the
pricing of asset side. Conventional banks that bought fixed rate bonds during CY’19 might get
lesser effect on their spreads. This trend of downward adjustment on spreads is expected to
continue in CY’21 as well as market participants are not expecting major increase in policy rate.
Uncertainty over the actual NPL position will clear out by June 30, 2021 by when the principal
and/or profit deferments are expected to expire. On the capital adequacy end, majority of
banking companies are expected to remain compliant as the regulator has also reduced the
minimum capital adequacy ratio requirement from 12.5% to 11.5% to allow banks to absorb
expected increase in credit risk.
(Source: State Bank of Pakistan –Economic Data and Publications)

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 2. PROFILE OF BANKISLAMI

The idea of BankIslami 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.
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 tough
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. BankIslami is the first
commercial bank to receive Islamic Banking License under the Islamic Bank Policy from State
bank of Pakistan in 2003 on March 31, 2005. The BankIslami started it operations and offers
Shariah complaint retail banking, investment banking, consumer banking and state finance
products. The Bank intends to focus on Wealth Management as a core area of business and plans
soon launch proprietary products and integrated financial planning services.
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. Accordingly,
the State Bank issued detailed criteria in December 2001 for establishment of full-fledged
Islamic commercial banks in the private sector. The Government as also the State Bank is mainly
concerned with stability and efficiency of the banking system and safeguarding the interests,
particularly, of small depositors. With this concern in mind it has been decided to operate Islamic
banking side by side with traditional banking.
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. As recorded by
the management, the bank at present has 342 branches in 126 cities.

2.1. Network Expansion:

In 2006: 9 branches in Karachi & 1 branch in Quetta
In 2007: 36 branches in 23 cities
In 2008: Expansion of 66 new branches. Network grew to 102 branches in 49 cities
In 2014: 213 branches in 80 cities
In 2015: The merger of KASB by BankIslami
At present: 342 branches in 126 cities

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 2.2. Distribution Regions:

2.3. Vision:
“To be recognized as the leading Authentic Islamic Bank”

2.4. 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.
 Fast, efficient and seamless delivery of solution.

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2.5. Core Values:
BankIslami is strongly committed towards its core values of:
 Product Authenticity
 Customer Focus
 Meritocracy
 Integrity
 Team Work
 Humility
 Innovation

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 3. MANAGEMENT STRUCTURE AND PERSONNELS

3.1. Board of directors:

 Mr. Ali Hussain-Chairman (Non-Executive Director)
 Mr. Syed Amir Ali-President & Chief Executive Officer
 Dr. Amjad Waheed-Independent Director
 Mr. Haider Ali Hilaly-Independent Director
 Dr. Lalarukh Ejaz-Independent Director
 Mr. Siraj Ahmed Dadabhoy-Non-Executive Director
 Mr. Sulaiman Sadruddin Mehdi-Independent Director
 Mr. Syed Ali Hasham-Non-Executive Director
The Board of Directors of the Bank (the ‘Board’) aims to adopt best practices of the
corporate governance to promote transparency in whatever we do, avoid conflicts and deliver
sustainable value to shareholders. The Board performs its statutory roles and responsibilities
diligently while ensuring that the Bank is functioning under the competent management team.
The Board review and approve the Bank’s strategy and risk appetite. It also approves the capital
and operational plans for achieving strategic objectives on the recommendation of the
management.
The Board aspires to achieve continuous improvement in Corporate Governance culture by
enhancing its soundness and effectiveness in the years to come. They believe it as a key to
successfully fulfilling organization’s mission to become more responsible and agile Bank in an
era of disruption and digitization. During the year 2020, the Board achieved the gender diversity
by appointing a female independent director on its Board. Further, the representation of
independent directors on the Board has also been enhanced. During the year 2021, the Board
aims to conduct specialized training for board members and evaluation of the performance of the
Board and its Committees by an independent expert.
The election of the Board was held in the year 2020. The Board, while nominating and
appointing its members, ensures that it possesses requisite skills and expertise through its
members carrying diversified education and experience so as to govern the strategy, policies and
operations of the Bank.

3.2. CEO/President:
 Syed Amir Ali

3.3. Shariah Board:

 Mufti Irshad Ahmad Aijaz-Chairperson (Also Chairman of Shariah Advisory Committee,
SBP)---------------------------
 Mufti Javed Ahmad-Member
 Mufti Muhammad Husain-Member

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 The Shariah Supervisory Board is responsible to develop a comprehensive Shariah
compliance framework for all areas of operations of the Bank. All products or services to be
offered and/or launched by the Bank has prior approval of the Shariah Board. The Shariah Board
reviews and approves all the procedure manuals, product programs/structures, process flows,
related agreements, marketing advertisements, sales illustrations and brochures. All reports of
internal Shariah audit, external Shariah audit, Shariah compliance reviews and SBP Shariah
compliance inspection are submitted to the Shariah Board for consideration and prescribing
appropriate enforcement action. All decisions and rulings of the Shariah Board are in conformity
with the directives, regulations, instructions and guidelines issued by SBP in accordance with the
rulings of Shariah Advisory Committee of SBP.
The Shariah Board, meets at least on a quarterly basis during a calendar year. The Shariah
Board ensures to cause that minutes of its meetings are properly recorded incorporating
necessary details of all deliberations, decisions, rulings and fatawa issued along with the
rationale and difference of opinion or dissenting note, if any. Further, the minutes are signed by
all the Shariah Board Members who attended the meeting. The Shariah Board, based on the
findings and reports, issue a report (duly signed by all members) on the Bank’s Shariah
compliance environment, conditions and further decisions for the bank.
3.4. Organizational Hierarchy Structure:

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3.5. Branch Structure:

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4. PRODUCTS & SERVICES
Consumer
 Muskun Home Finance
 Islami Auto Finance
 Banca Takaful
 Alternate Delivery Channels
Corporate
 Corporate, Small & Medium Enterprises (SME), Trade Finance
 Cash Management, Investment Banking
 Agri Finance
Retail
 Deposit Accounts (PKR/Foreign)
 Home Remittances

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 5. MANAGEMENT STYLE ACROSS DIFFERENT DEPARTMENTS
Management practice across the departments is effective and efficient in the bank which can
be easily seen by the status and number of recognitions given to BankIslami Pakistan Limited
(BIPL). Even the performance during the Covid-19 is also a proof to this.
Banks not only deal with individual customers but also with business clients so as BIPL and
on the internal side with the employees.
The HR of BIPL is termed as a bit interactive personnel as the policies of the organization
allows them to listen and act accordingly to ensure employee’s satisfaction. BankIslami operates
with a goal to provide equal employment opportunities and does not discriminate within its
employees and job applicants on the basis of gender, religion, race, color, and disabilities. In line
with this aim, the Bank inducted an exclusive batch of differently-abled employees during the
outgoing period.
Following bank’s strategic goal of ‘Employer by Choice’, BankIslami extended financial
support to its employees, during the catastrophic situation ensuing from heavy thunderstorm and
urban flooding in Karachi, by paying one-time Rain Emergency relief allowance to staff located
in Karachi, to provide coverage against household losses incurred due to urban flooding.
As part of BankIslami’s continuous development and capacity building initiative, profile
screening of support staff was done to provide them opportunity to advance their careers in
business development and other roles. The Bank also conducted manpower planning exercise to
streamline job roles of various functions. The objective was to streamline staffing needs and
ensure that each function has proper manpower.
The Enterprise Risk Management aims to minimize and manage the risks associated to the
bank. The ERM team has developed a new model for risk profiling of trade customers. The
model will assist the Bank to effectively monitor trade related customers so that Bank can adhere
with trade based money laundering guidelines of SBP. Moreover, the ERM department
implemented a new model for effective monitoring of foreign currency cash in hand. This has
allowed the Bank to avoid the cost of carrying idle foreign currency cash, thereby adding to the
Bank’s overall revenue.
Compliance department of the bank works as an internal police which means complete
monitoring of every department and all the in/out interactions of the bank. For the sake of
thorough monitoring during the previous year, the Bank successfully implemented electronic
Know Your Customer and electronic Customer Risk Profiling to further strengthen its controls to
mitigate the risk of Money Laundering / Terrorist Financing / Proliferation financing. Further, a
dedicated Trade Based Money Laundering desk was also established in AML department to
mitigate risk of Money Laundering through trade. The Bank continued to focus on AML/CFT
trainings of its staff through alternate online channels since classroom training were discontinued
due to Covid-19 situation.
Further, in relation to the implementation of SBP’s Guidelines on Compliance Risk
Management, the Bank has achieved certain crucial milestones such as formulation of
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Compliance Risk Strategy, Deployment of in-house developed CRM automated system along
with migration of previous RCSAs (Risk and Control Self-Assessment).
Alternate delivery channel (ADC) department of BankIslami aims branchless banking by
providing the facility of internet banking, ATMs services and mobile banking. ADC segment
unleashed its new and improved Mobile Banking App for both iOS and Android mobile phone
users. The new App was rolled out keeping in mind the consumer convenience. It has now been
given a fresh look and offers easy to use interface with contemporary features and services. The
Bank has also redesigned its ATM screens with additional features of SMS and Card Activation
Services and was also successful in converting its entire debit card portfolio to EMV compliant
(chip based) cards.
The legal department of the BankIslami assures the fulfillment of legalities within and
outside of the bank either it concerns the employees or the customers.
The Information technology (IT) aims to fluent working of the departments as all of the
system is dependent on the software and application being used in the bank. Along with such
system comes the concern of security of the data being utilized in these software. For both of
these BankIslami ensures to work accordingly to comply with the updated technology and
security. BankIslami is one of the first banks to introduce One Touch Banking. For the sake of
information security, department is working intensely to improve the security infrastructure of
the Bank. The department was beefed up with skilled internal resources in 2019, subsequent to
which multiple exercises were conducted to fortify information security posture of the Bank.
The marketing department, not so prominent but an important source for the recognition
and image building of the bank among the markets and customers. The Bank sponsored multiple
events to strengthen its brand positioning and create awareness of its Shariah Compliant products
and One Touch Banking solution amongst multitudes. These include participation in Zameen
Expo to promote its House Financing offerings, sponsorship of ACCA's Annual Corporate
Networking Conference in Peshawar to establish its brand in the Northern Region and
sponsorship of IBA Alumni's annual event which was attended by various industry leaders and
high net-worth individuals. To educate the masses and create awareness regarding Islamic
Banking products and its structure, the Bank developed and promoted informative video clips
which was circulated across social media.
A dedicated and 360-degree Independence Day media campaign with the title of ‘Plantation
for the Nation’ was launched to enhance BankIslami's brand equity and create positive brand
association with patriotism and environment protection. To create awareness regarding Islamic
Banking products and services, the Bank also developed and promoted informative video clips
through digital channels.

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 BankIslami has a mission to create value for its stakeholders and everyone in the socio-
economic in which it operates. Therefore, the Bank firmly believes to operate in a socially
responsible and ethical manner and remains committed in making constructive contributions to
the economy, society and the environment. Throughout the year 2020, energy conservation,
donation and charity were central to BankIslami’s CSR efforts.
The management of the bank take thorough concern on the working system of the bank
including all stakeholders’ interests and concerns. That is the reason the bank awarded at the
prestigious Sixth Islamic Retail Banking Awards (IRBA) 2020 adding another feather to its cap.
The Bank had the honor to win the ‘Critic’s Choice Best Islamic Retail Bank Award in Pakistan’
along with the ‘Best Fintech Application Award’ for its One Touch Banking for this year. Syed
Amir Ali, President and CEO, BankIslami was recognized as the ‘IRBA Personality of the Year’

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while Mr. Rizwan Ata, Group Head, Distribution at BankIslami was awarded the title of ‘IRBA
Islamic Retail Banker of the Year for 2020’. These awards served as testament towards Bank’s
strategy to become one of the leading and innovative Islamic Banks of Pakistan.
In addition to the above, during the year, the Bank also bagged one of the most renowned
honor at national level by becoming the ‘Brand of the Year 2019’ under the category of Islamic
Banking.
These awards and achievements are the proof of well-managed and maintained
management of the bank. The key in this achievement underlies in the proper and in-depth
communication among all the levels of management.

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6. SWOT ANALYSIS
6.1. Strength:
 One of the prominent name in banking branch network
 Dedicated department for development of Shariah-compliant products
 Effective HR Policies
 It offers the most comprehensive and bonafide Islamic banking solutions to its customer
with a diversified portfolio of Shariah Complaint products and state of the art technology
 One of the first to introduce One touch banking
 Fewer Competitors as Islamic Banking
 Loyalty of Employees

6.2. Weaknesses:
 Lack of awareness of the people regarding Islamic banking
 Fewer branches in rural areas
 Less advertisement
 To compete with conventional bank a lot of capital is required and large amount of
resources have to be maintained to meet any loss situation in Islamic finance mode of
investment
 The bank is not giving any emphasis on the small scale business which are in abundance
in Pakistan today
 Lack of female staff can be noticed in almost all BankIslami branches this might create
some problems for female customers

6.3. Opportunities:
 Growing local and international Islamic banking market
 Increasing awareness about Islamic financial services and demand for Shariah-compliant
products and services
 Open New Branches in small areas.
 New Market Segments for Ijarah, i.e. Home Appliances
 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
 Hiring young and specialized staff
 The Bank should increase its advantages programs by using all available media of
advantages like TV, cable. Billboards, radio to increase its business by providing more
information to people about BankIslami

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 More and more people are coming towards Islamic Banking System

6.4. Threats:
 Islamic banks are increasing i.e. more competition from banks like Meezan Bank
 Conventional banks are also introducing the Islamic Banking Facility
 Misconceptions and misunderstandings among the general public about Islamic banking
 Economic instability of the country
 Use of latest and updated technology by other banks possess threat

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 7. CONVENTIONAL BANKING vs. ISLAMIC BANKING
Conventional banks deals in money only be lending, borrowing and charging interest on the
money.

Interest (Riba) is not permissible in Islami Shariah.

Apparently Riba increases the wealth but in reality Allah S.W.T declares that it does not (Sorah
Al-Rum, Ayah # 39)
Riba and trade are different. Allah S.W.T allows trade and prohibits Riba (Sorah Al-Baqarah,
Ayah # 275)
From Hazrat Jabir Ibn-e-Abdullah (RA): “The Prophet PBUH (cursed the receiver and the payer
of interest, the one who records it and the witnesses to the transaction and said: "They are all
alike [in guilt]”. (Muslim, Tirmidhi and Musnad Ahmad)
Islamic banking, also known as non-interest banking, is a system that is based on the
principles of Islamic or Shariah law. In Islamic law, one must WORK to earn profits, and simply
lending money to someone who needs it does not count as WORK. Instead an Islamic bank must
provide some goods/services to earn profits

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 There are some prominent differences between these two systems of banking.
 Transactions are asset-backed in Islamic banking while in conventional banking
transactions are money lending & Riba-based.
 Concept of risk sharing is available in Islamic banking while there’s no concept of risk
sharing in conventional banking.
 Islamic Banking does not permit financing of prohibited goods / Industries while on the
other hand financing of prohibited goods & Industries like alcohol, casinos etc are
permissible.
 Ethics and moral values play a major role in investment decisions. These values are a
must to be followed. On the other hand its a matter of choice.

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 8. PROBLEMS/ISSUES IDENTIFIED
Despite all of the achievements and the efficient working of departments, there is a room for
more innovations and improvements.
As reported in Dawn Newspaper in October 2018 “Cyber attack costs BankIslami Rs2.6m”,
this article describes the scam happened in 2018 which cost Bankislami a big sum of money.
Now this proves that the bank must work and implement strong security barriers on the banking
system to minimize such losses.
Centralization in bank. A high degree of centralization in management is prominent in the
bank. Maximum number of decisions are in the hands of upper hand. To some extent and till at
specific level of operations, this phenomenon benefits in managing responsibilities but after a
specific level it poses issues in handling situation i.e. delaying of task, miscommunication, not
being able to cope major issues quickly. These issues could cause a serious setback.
Customers are unaware about charges for Demand Draft, Telegraphic Transfer and Pay
Order as manager should tell them charges before giving form through which wastage of time
minimize. Even still customers are still not clearly aware about the Islamic banking procedures
as they still mix the concepts of Islamic banking with conventional.
Although the HR policies are very much in favor of employees, still the employees face
issues. Bankislami is less focused on human capital imposing low job satisfaction among
employees. Employees and their management provides a prominent competitive advantage.

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9. RECOMMENDATIONS
Bankislami must opt to work on following areas:
Ensure extensive data security
More and more trainings to enhance the knowledge base of employees for effective &
efficient working. Knowledge management system needs to be introduced to learn from the
mistakes and experiences reducing training time.
More effort is required on marketing and awareness creation activities by the bank to remove
misconceptions regarding Islamic banking.
They need to hire young and fresher staff for their branch to inculcate new academic
knowledge and experience.
They should work on digitization of processes like Account opening and other things, just
Standard Chartered bank, they have set up a goal of Branchless banking. Somehow
branchless banking would affect the employment ratio. Bankislami should opt for this
initiative in a way that it does not affect the employment issue by expanding department of
digital banking. And for this thing Bankislami have to arrange some seminars regarding
branchless banking and the security of this thing, even they should go for awareness sessions
to minimize misconceptions among the customers.

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REFERENCES
- www.bankislami.com.pk
- www.dawn.com
- By interviewing the personnel

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