TABLE OF CONTENTS

Chapter No Title Page No

Acknowledgements....................................................................................i
Preface......................................................................................................ii
Executive Summary.................................................................................iii
Chapter-1: Introduction to the report......................................................................4
1.1 Background of the report..............................................................4
1.2 Purpose of the report.....................................................................4
1.3 Scope of the report .......................................................................4
1.4 Research methodology..................................................................5
1.5 Scheme of report...........................................................................5
Chapter-2: Introduction to the meezan bank limited.............................................6
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2.1 vision of meezan bank..................................................................6

2.2 mission of meezan bank………………………………………................
6 Logo of Meezan bank...................................................................7
2.4 Islamic concept in meezan bank...................................................7
2.5 Business segment of the bank.......................................................8
2.6 Organizational structure of the bank.............................................8
2.7 Share holders and shariah board of the meezan bank...................9
2.8 Share holder structure.................................................................10
2.9 Products provided by meezan bank............................................10
2.10 Technology used by meezan bank..............................................10
2.11 History of Meezan bank..............................................................10
Chapter-3: Departments and my working in
MBL…………………………………………….15
3.1 MBL Gul Bahar Branch Peshawar.............................................15
3.2 Account opening department..................................................................15
3.3 Basic of Account opening...........................................................16
3.4 Sub categories of Accounts.........................................................16
3.5 Remittance Department..............................................................18
3.6 Human Resource Committee......................................................18
3.7 Functions performed...................................................................19
3.8 Reasons for Returning cheque....................................................20
3.9 Functions of Remittance dpt.......................................................20
3.10 Pay order.....................................................................................21
3.11 Cash Departement.......................................................................21
3.12 Sale Dpartement..........................................................................22

Chapter-Chapter-4: Financial Analysis of Meezan Bank Limited..........................23

4.1 Financial Analysis.......................................................................23
4.3 Common Size and trend Analysis and balance sheet..................23
4.4 Verticle Analysis.........................................................................30
4.5 Ratio Analysis.............................................................................32
Chapter-5: Swot Analysis.........................................................................................35
5.1 Strengths.....................................................................................36
5.2 Weaknesses.................................................................................37
5.3 Opportunities...............................................................................38
5.4 Threats.........................................................................................39
Chapter-6: Consequences.........................................................................................40
6.1 Conclusion..................................................................................41
6.2 Recommendations.......................................................................42
Bibliography..........................................................................................43
 CHAPTER 1
INTRODUCTION TO THE REPORT

• BACKGROUND OF THE STUDY:

This report is a study of Meezan Bank Ltd (MBL). Now as a student why I needed to
undertake a study of Meezan Bank?
The reason was that during completion of my BBA (Hons) course work, it was an academic
requirement to undergo an internship for 6 or 8 weeks in any reputable organization so that to
test and practice the concepts that I had theoretically learnt in my courses. And that’s why I
undertook an internship in Meezan bank and now as an academic requirement, I am putting
the details of that internship forward, in the form of this report.

• PURPOSE OF THE STUDY

The purpose of this study is not to fulfill an academic requirement. Rather the very purpose
of this study is “to practically learn all the concepts that I have learnt theoretically in my
whole bachelor’s program”. And also to know that what I have studied is to what extent
practically observable or practicable.

• SCOPE OF STUDY
It encompasses financial planning; implementing designed financial strategies, control the
finance operations, analysis of software used by MBL, shortfalls and weaknesses of the
organization as well as products & services and finally recommendations to the organization.

I could venture only financial aspects of the organization (MBL). But that would have helped
me, meet my study objectives. Now the scope of this study is very broad. I have tried my
level best to venture each and every aspect and area regarding the organization and to do
justice with it. And that’s why this study gives an overview of MBL. An overview in the
sense that in this very study all areas, including Branch level activities, have been ventured
into provide that the data for this study, that I have used, is the most recent one. So that no
inconvenience could occur.
 • RESEARCH METHODOLOGY
In this very report I have used two types of data:
Secondary data; which helped me a lot composing this report includes, MBL’s Annual
report, accounts summary, websites, newspapers, State Bank’s circular, different books
relating to different areas of concern, articles written about it by different scholars and other
pamphlets and brochures.
Primary data; includes working with different personalities of MBL (Branch Manager,
Manager operations, Operations officer and Sales staff, discussions about MBL’s policies &
procedures and its performance with different people of concern and most importantly the
discussions with MBL’s employees of Branch staff.
The data have helped me a lot, composing this report and recommendations given, if any in
the report are on the basis of text given in the report, which is based on this very data.
Research methods definitely help to get superlative results analyzing the products of an
organization. I adopt various methods of research to study the MBL’s environment, assets
and operations etc. These were included:
• Studying financial reports of MBL
• Reading online survey at MBL’s website
• Interviewing customers who were visiting MBL
• Collection of data and analyzing it
• Presenting findings and recommendations

• SCHEME OF THE REPORT

Scheme of the report is straightforward. The report is divided in different sections. Each
section consists of different chapters. But this division is not done on the basis of importance;
rather it is a jump from shallow to deep water.
• LIMITATIONS OF STUDY
The Study was subject to the following limitations, the absence of which could have made
this report more accurate, systematic and factual:
• The very limited period of time was available to conduct the detailed analysis, which
hindered procurement of exhaustive and complete per day visit, which also cause
some difficulties in obtaining adequate information.
• The bank officials because of secrecy of the bank matters didn’t answer the number
of questions.
 CHAPTER 2
INTRODUCTION TO MEEZAN BANK LIMITED
• Vision of Meezan Bank:
Establish Islamic banking as banking of first choice to facilitate the implementation of an
equitable economic system, providing a strong foundation for establishing a fair and just
society for mankind.

• Mission of Meezan Bank:

To be a premier Islamic bank, offering a one-stop shop for innovative value-added products
and services to our customers within the bounds of Shariah, while optimizing the
stakeholders value through an organizational culture based on learning, fairness, respect for
individual enterprise and performance.

Brand Logo of Meezan Bank:

Meezan’s Bank logo shows that it’s all transactions are free of riba and according to Islamic
rules and regulations.

Meezan bank is the premier Islamic Bank in Pakistan. It have won more of Islamic
implemented awards. It also celebrates the events according to Islamic Shariah.
 • Values of Meezan bank:

• Core Values:
Shariah Compliance, Integrity, Professionalism, Service Excellence, Social Responsibility

• Staff:
Committed, motivated and professionally trained employees who are empathic to their
customers’ needs.

• Brand Personality:
A sober and established, strong, empathic, professional person; who is an extremely loyal and
dependable friend and business partner, and is committed to offering comprehensive value-
based Shariah-compliant financial solutions.

• Relationships:
Our relationships are long-term. We recognize and value our customers’ needs above all and
strive to ensure their fulfillment. All customers are treated with professionalism and in a
friendly manner. It is our endeavor to ensure that they receive efficient and timely service.
The Meezan Bank experience is a unique one.

• Islamic Concept in Meezan Bank:

Meezan Bank Limited, a publicly listed company, is the first and largest Islamic Bank in
Pakistan and one of the fastest growing banks in the history of the banking sector of the
Country. Having the largest branch network and product range, Meezan Bank bears the
critical responsibility of leading the way forward in establishing a stable and dynamic Islamic
banking system replete with dynamic and cutting-edge products and services. Meezan Bank
aims to fulfill its prime objective of providing customers accessibility and convenience,
within an atmosphere and culture of dedicated service and recognition of their needs.

Meezan Bank has developed an extraordinary research and development capability by

combining investment bankers, commercial bankers, Shariah scholars and legal experts to
develop innovative, viable, and competitive value propositions that not only meet the
requirements of today’s complex financial world, but do so with world-class service
excellence which our customers demand; all within the bounds of Shariah.

• Business Segments of the Bank:

• Consumer Banking
• Corporate Banking
• Investment Banking
• Commercial Banking (including Small and Medium Enterprises)
• Treasury & Financial Institutions
 • Asset Management (managed through a subsidiary Al Meezan Investment
Management Ltd.)
• Organization Structure of the Bank
All the communication and responsibility flow of the Meezan Bank seems like the other
banks but the major difference is the interaction of Shariah Supervisory board and Pdsc,
Product development & Shariah compliance. Major responsibility of Pdsc is to make process
flow of each & every product of MBL before launching and observing Shariah compliance.

• Shareholders & Shariah Board of the Meezan Bank:

The Bank’s main shareholders are leading financial institutions of the Region namely, Noor
Financial Investment Company,  Pak-Kuwait Investment Company, and the Islamic
Development Bank of Jeddah. The established position, reputation, strength and stability, of
these institutions add significant value to the Bank through Board representation and applied
synergies.
The Bank has an internationally renowned Shariah Supervisory Board Chaired by Justice
(Retd.) Maulana Muhammad Taqi Usmani, an internationally renowned figure in the field of
Shariah, particularly Islamic Finance. He holds the position of Deputy Chairman at the
Islamic Fiqh Academy, Jeddah and in his long and illustrious career has also served as a
Judge in the Shariat Appellate Bench, Supreme Court of Pakistan. The Board also includes
Sheikh Essam M. Ishaq (Bahrain), Dr. Abdul Sattar Abu Ghuddah (Saudi Arabia) and Dr.
Imran Usmani who is also the resident Shariah Advisor of the Bank.  Dr. Imran is assisted by
a team of professionals who strictly monitor the regular transactions of the Bank and are also
responsible for Product Development.
Shareholding Structure:
Shareholders Rs. in million Percentage
Noor Financial Investment 3,944 49.11
Company, Kuwait
Pakistan Kuwait 2,409 30.00
Investment Company
(Pvt.) Limited
Islamic Development 749 9.32
Bank, Jeddah
OTHERS 928 11.57
Paid up Capital 8,030 100 %

• Products provided by Meezan Bank:

Meezan Bank is the first and largest Islamic Bank in Pakistan, provides you with a complete
range of banking product and services;
Visit any of its 350 branches in over 90 cities nationwide and take the first step in saying
“NO” to Riba.
The major Islamic transactions in all the branches of Meezan Bank are given as under:
• Rupee Current & Savings Accounts
• Meezan Bachat , Meezan Business plus & Karobari Munafa Account
• Meezan Premium Banking
• Dollar / Euro / Pound Savings Accounts
• Car Ijarah
• Easy Home
• Laptop Ease
• ATM Network
• Monthly Mudarabah Certificate & Certificates of Islamic Investment
• VISA Debit Card
• 24 Hour Call Center
• Online, Phone and Internet Banking

 
 • Technology using by the Meezan Bank:
Meezan Bank has a strong technology focus. It has invested heavily in state-of-the-art
software applications – namely Tiemenos T-24 and Oracle.  It has also recently upgraded its
hardware platform and also has a ‘hot’ disaster recovery site in place to cater to any
unforeseen eventualities.

• History of Islamic Banking in Pakistan:

The history of Islamic Banking in Pakistan and highlights of Meezan Bank are given as
under:

1947:
The inception of Pakistan as the first Islamic Republic created in the name of Islam.

1948:
"We must work our destiny in our own way and present to the works an economic system
based on true Islamic concept of equality of manhood and social justice" Quaid-e-Azam
Mohammed Ali Jinnah in Opening Ceremony of The State Bank of Pakistan on July 1, 1948.

1980:
CII presents report on the elimination of Interest genuinely considered to be the first major
comprehensive work in the world undertaken on Islamic banking and finance.

1985:
Commercial banks transformed their nomenclature stating all Rupee Saving Accounts as
interest-free. However, foreign currency deposits in Pakistan and foreign loans continued as
before.
 
1991:
Procedure adopted by banks in 1985 was declared un-Islamic by the Federal Shariat Court
(FSC). The Government and some banks/DFIs made appeals to the Shariat Appellate Bench
(SAB) of the Supreme Court of Pakistan.
 
1997:
Al-Meezan Investment Bank is established with a mandate to pursue Islamic Banking. Mr.
Irfan Siddiqui appointed as first and founding Chief Executive Officer.
 
1999:
The Shariat Appellate Bench of the Supreme Court of Pakistan rejects the appeals and directs
all laws on interest banking to cease. The government sets up a high level commission, task
forces and committees to institute and promote Islamic banking on parallel basis with
conventional system.
 
2001:
The Shariah Supervisory Board is established at Al-Meezan Investment Bank led by Justice
(Retd.) Muhammad Taqi Usmani as chairman. State Bank of Pakistan sets criteria for
establishment of Islamic commercial banks in private sector and subsidiaries and stand-alone
branches by existing commercial banks to conduct Islamic banking in the country.
 
2002:
Meezan Bank acquires the Pakistan operations of Societe Generale and concurrently Al
Meezan Investment Bank converts itself into a full fledged Islamic commercial bank. The
first Islamic banking license is issued to the Bank and it is renamed Meezan Bank. President
General Pervez Musharraf inaugurates the new Islamic Commercial Bank at a formal
ceremony in Karachi.

2003:
Meezan Bank establishes itself as the pioneer of Islamic Banking in Pakistan and quickly
establishes branches in all major cities of the country. A wide range of products are
developed and launched consolidating the Bank’s position as the premier Islamic Bank of the
country Al Meezan Investment Management Limited (AMIM), the asset management arm of
Meezan Bank, introduces Meezan Islamic Fund (MIF), the country’s first open-end Islamic
Mutual Fund.
 
2004:
The State Bank establishes a dedicated Islamic Banking Department (IBD) by merging the
Islamic Economics Division of the Research Department with the Islamic Banking Division
of the Banking Policy Department. A Shariah Board has been appointed to regulate and
approve guidelines for the emerging Islamic Banking industry. The Government of Pakistan
awards the mandate for debut of international Sukuk (Bond) offering for USD 500 million.
The offering is a success and establishes a benchmark for Pakistan. Meezan Bank acts as the
Shariah Structuring Advisor for this historic transaction.
 
2005:
Meezan Bank becomes the first customer of Islamic Insurance (Takaful) by signing the first
Memorandum of Understanding MoU with Pak-Kuwait Takaful Company Limited (PKTCL).
The signing of this MoU has ushered Pakistan into a new era of Islamic Insurance (Takaful).
 
2006:
A number of new dedicated Islamic Banks, namely Bank Islami and Dubai Islamic Bank,
commence operations in Pakistan. Meezan Bank continues its leadership position in the
industry by more than doubling its branch network to a total of 62 branches in 21 cities,
clearly establishing itself as the largest Islamic Bank of the country. Meezan Bank becomes
the first Islamic bank to introduce 8 am to 8 pm banking at selected branches in Karachi.
 
2007:
Meezan Bank's branch network reached the milestone number of 100 branches (including
sub-branches) in 31 cities nationwide.
Car Ijarah portfolio reached Rs. 4.1 billion and the Easy Home portfolio stood at Rs. 3.1
billion.
The Bank introduced Istisna' financing to cater to the working capital needs of customers.
Meezan Bank was awarded 'Best Islamic Bank in Pakistan' by Islamic Finance News of
REDmoney Group, Malaysia.Deposit base of the Bank grew to over Rs. 54 billion and the
Bank earned profit after tax of Rs. 963 million. Trade Finance business reached Rs. 70
billion.
 
2008:
Meezan Bank introduced Tijarah financing to allow customers to raise funds for financing of
stocks of finished goods.
Meezan Bank was awarded 'Best Islamic Bank in Pakistan' by Islamic Finance News of
REDmoney Group, Malaysia and 'Best Islamic Financial Institution in Pakistan' by Global
Finance Magazine, New York. Branch network grew to 166 branches (including sub-
branches) in 40 cities nationwide. Deposit base grew to Rs. 70 billion and the total financing
portfolio amounted to Rs. 39 billion.
 
2009:
2009 was a watershed year for Meezan Bank. The branch network reached 201 branches
(including sub-branches) in 54 cities nationwide; deposit base crossed Rs. 100 billion;
profit/return earned on financing and investment activities exceeded Rs. 10 billion and the
Bank handled more than Rs. 100 billion of import/export business.
Being a socially responsible bank, Meezan Bank launched Meezan Labbaik,
a Hajj and Umrah product - the primary objective being the desire to facilitate Muslims in
performing their holy duty. Meezan Visa Debit Card was also launched during the year which
is accepted at over 30 million outlets worldwide and allows customers to withdraw funds
from their account from more than 1.4 million ATMs worldwide and can also be used for
shopping, dining, traveling, fuel and cash needs.
Meezan Bank was awarded 'Best Islamic Bank in Pakistan' by Islamic Finance News of
REDmoney Group, Malaysia; 'Best Islamic Financial Institution in Pakistan' by Global
Finance Magazine, New York; 'Best Islamic Bank in Pakistan' for 2009 by ASIA MONEY
Magazine, Hong Kong and 'Islamic Bank of the Year' for 2009 by CFA Association of
Pakistan.
Corporate assets, including corporate Sukuk stood at over Rs. 40 billion. Corporate highlights
of 2009 included Tijarah financing with PSO, Istisna financing with PARCO
and Murabaha financing with Punjab Food Department.
The Bank started implementing its new core banking application - T-24. T-24 is a core
banking software which includes banking best practices based on Temenos' implementations
in over 600 financial institutions and 120 countries across Retail, Corporate, Private Wealth,
Islamic and Micro finance and Community Banking sectors.
 Meezan Bank’s Annual Report 2008 rated among Top 5 Annual Reports by joint committee
of ICAP & ICMAP, The joint committee of Institute of Chartered Accountants of Pakistan
(ICAP) and Institute of Cost & Management Accountants of Pakistan (ICMAP) has awarded
Meezan Bank’s Annual Report 2008 the prize of being the fourth best corporate report in the
banking sector at a ceremony held at Karachi in June 2009.
The aim of the Best Corporate Report Award is to give recognition to excellence in annual
corporate reporting in order to promote corporate accountability and transparency through
timely, informative, factual and reader-friendly annual reports.
The Best Corporate Report award is conferred to the best five annual reports in selected
sectors each year by a joint committee of ICAP & ICMAP.

2010:
Meezan Bank developed a number of new deposit products to cater to the unique needs of
different market segments. Among the products launched during this year were Meezan
Business Plus, a Mudaraba-based account that offers an array of free services for businesses,
Meezan Euro Savings Account and Meezan Pound Savings Account.
Meezan Bank's Car Ijarah completed its 9th year and stood at Rs. 4.2 billion with over 8,000
active vehicles. Meezan Bank stood among the top three auto-finance providers in the
country.
Al Meezan Investment Management launched Meezan Sovereign Fund - an open-end fund;
the eighth fund under its management, including two closed-end funds, five open-end funds
and one voluntary pension scheme. The Bank developed a financing product based on the
concept of 'Wakalah', to encourage the development of financing partnerships between
Islamic banks and Microfinance banks.
During the year, 38 Islamic banking awareness seminars were held in 23 cities across
Pakistan and were attended by more than 4,400 participants representing customers, general
public and professionals.
Meezan Bank was awarded 'Best Islamic Bank in Pakistan' by Islamic Finance News of
REDmoney Group, Malaysia and 'Best Islamic Financial Institution in Pakistan' by Global
Finance Magazine, New York.
Meezan Bank's branch network reached 222 branches in 63 cities across Pakistan and it
became the 11th largest bank in Pakistan in terms of branch network.
The Bank demonstrated robust business growth in 2010, closing the year with a deposit
figure of Rs. 131 billion and Import/Export business of Rs. 143 billion.

2012:
Meezan Bank to provide Long-Term Financing to Linde Pakistan (formerly known as BOC
Pakistan Limited) have entered into a Diminishing Musharakah Agreement for the setup of a
new state-of-the-art Air Separation Plant and related supply chain equipment in Lahore by
Linde Pakistan.
The agreement marks another historic landmark in the development and growth of Islamic
Banking in Pakistan. Meezan Bank is actively building corporate relationships and is fully
geared to cater to the financing and trade finance needs of local and multinational Corporate
Customers, Mr. Yousuf Husain Mirza (Chief Executive – Linde akistan) and Mr. Ariful
Islam 
(COO – Meezan Bank) sign the Diminishing Musharakah Agreement at the Linde
Pakistan Head Office, Karachi. Mr. Syed Tariq Hassan (Corporate Head - South - Meezan
Bank) and Mr. Ashraf Bawany (Deputy Manager Director - Linde Pakistan)along with staff
members of both companies sign the contract.
 CHAPTER 3
DEPARTMENTS AND MY WORKING IN MBL

MBL GUL BAHAR BRANCH PESHWAR

• Branch Name : GULBAHAR BRANCH
• Address : MEEZAN BANK LIMITED, Gul Bahar No: 01 Opposite Shell Petrol Pump,
PESHWAR
• Cell : +92(334)8999244
• Email : shafiullahsafi750@gmail.com
• Branch Manager : Khuram Shahzad
• BRANCH CODE: 0708

There are 4 main departments at the branch:

• ACCOUNT OPENING DEPARTMENT

• REMMITANCE DEPARTMENT
• CASH DEPARTMENT
• SALES DEPARTMENT

• ACCOUNT OPENING DEPARTMENT

Account opening and closing is the function of this department. The bank’s customers includes
individuals (single or joint), firm (partnership/proprietorship), Autonomous corporations, Limited
companies, Charitable Institutions, associations, Educational Institutions or local bodies.
Brief Explanation of these accounts is as follows
Products offered by this department:

• Riba Free Rupee Savings Account

• Current account
• Saving Account(Further categorized)
• Term deposits

• Riba Free FCY Account

• Foreign Currency Current Account
• Foreign Currency Savings Account
•
BASIC OF ACCOUNT OPENING

Account opening is the basic and first relationship, which is established between Bank and the
customer. In account opening extreme care has to be exercised in case of completion of account
opening documentation.
Whenever a client comes in the bank in order to open an account the first information that is given to
him/her about the types of accounts, which can be opened, so far this purpose the client is given
detailed information about the accounts and their respective profit rates.

Once form is signed by customer, the data regarding customer is inputted in system and then send to
CAO (Centralized Account operations) for further verification and checking accuracy

Sub-categories of Accounts and the Basic Requirements:

• MINOR ACCOUNT

• Bay form and copy of passport minor

• National Identity card of Guardian
• Signature requirement of guardian
• INDIVIDUAL ACCOUNT
• Copy of national identity card
• Complete account opening form
• Letter of introduction if required
• Visiting Card (if the person is employed)

• JOINT ACCOUNTS
As evident from the name these accounts can be jointly opened by any number of persons.
The minimum number of persons required to open a joint account is two but there is no
maximum limit.
Requirements:
• National Identity card of all Applicants.
• Signature of all Applicants.
• Zakat Affidavit of all Applicants (zakat Examption).
• Operation of account clearly mentioned.
• The options available to operate the account are:
• Jointly
• Either or Survivor
• Other(s)(Please specify)
 • CLUB /SOCIETY/ASSOCIATION [Requirements]:
• Certified copy of resolution
• Certified copy of rules
• Copies of National Identity cards of all directors/passports
• Completed account opening form
• Specimen Signature Card

• TRUSTS ACCOUNTS
• Completed account opening form
• Specimen Signature Card
• Certified copy of trust deed
• Copy of rules/by laws
• Copies of National Identity cards of all trustees

• CORPORATE ACCOUNTS

ACCOUNTS OF SOLE PROPRIETOR (Requirements)

• Declaration Letter
• Copy of NIC/Passport of the proprietor
• National Tax Certificate
• Declaration of Sole Proprietor on company letterhead
• Business registration Certificate
• Specimen Signature Cards and completed account opening form.
ACCOUNT OF PARTNERSHIP (Requirements)
• Partnership Deed, certified copy.
• Photocopies of NIC of all partners.
• Partnership Mandate (Prescribed Format).

ACCOUNT OF LIMITED COMPANIES (Requirements)

• List of Directors of company.
• NIC of all Directors.
• Copy of certificate of Incorporation.
• Memorandum of Association.
 • Article of Association.
• Copy of Board Resolution.
• Latest Copy of Form-29
• Stamp of Company, which is to be affixed on the account opening form.
• Certificate of Commencement of Business

• ACCOUNTS OF ILLITERATE [Photo Account]

These accounts can be opened individually or jointly.
For men, the right hand thumb impression and for women, the left hand thumb impression is
taken on account opening form.
The customer is given advice to come to bank by himself in order to withdraw any cash or
deposit the cheque.

Requirements:
• Photocopy of NIC of Account Holder.
• Three passport size photographs.

PROCEDURES FOR ACCOUNT OPENING

First of all, after inquiring from the customer what type of account he/she wants to open, the account
opening form is got filled from the customer and signed it. Along with the account opening
form, the customer is also signed two Specimen Signatures Cards.

After fulfilling all the formalities of account opening, the computer generated account number
is given to the customer that is of special series depending on the type of account.

LETTER OF THANKS
After opening the account “A Letter Of Thanks” is send to the customer in order to thank the
customer for opening an account in the Bank. This letter tells all the information regarding
his/her accounts, which are kept very confidential.
2) REMMITANCE DEPARTMENT

FUNCTIONS PERFORMED:
• CLEARING

• REMITTANCE

CLEARING
In clearing process, if the account holder of MBL receives the cheque of other bank like City
Bank, Habib Bank Limited etc, and he submits it in MBL branch to be cashed. At the same
time the clearing process starts. First the bank name, Cheque number and the amount are
written in the register. After this three kind of stamps are required first bank name stamp,
secondly clearing stamp of next date and If the cheque is not local then the inter city clearing
stamp is required.

Some cheques are local and some are outstation. The institution N.I.F.T. provides the services
in clearing the cheque. They send the different cheque to different banks. The N.I.F.T service
is only in few cities, like Karachi, Lahore, Rawalpindi. The cheque of inter city is send
through N.I.F.T. And where, the N.I.F.T service is not available so the cheque is sent through
T.C.S.

The clearance of cheque is informed through advice. Some cheque is not passed so they
should return so Rs. 100 is deducted and if the cheque is inter-city then the postage charges is
deducted. For this purpose the Debit & Credit voucher is used. When the cheque is cleared
the today stamp is required. Some cheque is drawn on MBL. This is called outward clearing.
These cheques will be entered in the outward clearing register. And the advice is sent for the
clearance of cheques. The account holder account is credited.

• Inward clearing
• Outward clearing

INWARD CLEARING
In the morning, the bank receives its own cheques, which have been presented by the
customers in some other bank to be deposited in their account. NIFT provides the facility of
bringing cheques for inward and also takes the cheques of outward clearing to other banks.
The cheques received in inward clearing are the cheques drawn on bank and the bank has to
pay for them. For this purpose the bank makes clearing in computer by checking the balances
of the respective customer, if their balances are up to the mark then that cheque is cleared and
the respective customer account is debited with the respective amount. If the balances are
short then that cheque is bounced back to the related bank.

Reasons for returning a cheque:

• All required stamps of Clearing, Crossing and Endorsement are not present on
cheques.
• Cheque is post date.
• Refer to drawer
• Effects not cleared, may be presented again
• Amounts in words and figures differ.
If any of these reasons exists then that cheque is returned through NIFT and deducts Rs. 300
from customer’ account as cheque returned charges.
Then the report of returning any cheque is sent through fax to the head office Karachi. After
this put the entry in Cheque return register showing the following columns:

• Date
• Title of account
• Account number
• Cheque number
• Bank and Branch name
• Reason to return

OUTWARD CLEARING:
All the cheques of other banks which are deposited to MBL are presented in outward
clearing. This is said as outward clearing because they are presented on the very next day
after depositing a cheque.

FUNCTIONS OF REMITTANCE DEPTT.

The remittances department transfers the funds from one bank to other bank and from one
place to another place. In remittances department the collection take place. The MBL made
payment of only open cheques on the counter and prohibits the payment of crossed cheques.
MBL transfers money from one place to another by the following means:

• Pay order
 • Demand drafts
• Inward collection
• Outward collection

a) PAY ORDER:
Pay order is an order to pay money but this payment is to be made within city. In other words
it can be said that the payee and the payer should be in one city.

In pay order the payment can be made Account payee only

PROCEDURE:
In case of pay order first of all the customer has to fill a pay order application form in
favoring section: name, account number, amount, beneficiary name, address, etc.

The data is entered in already set format of pay order in computer and pay order print out is
taken. An authorized person and manager operations are signed pay order.

The original copy of the pay order is given to the customer and carbon copy is kept with bank
for office record.

Cheque Books Handling

• Application for New Cheque Book
• Initiating request for cheque books in portal of MBL
• Handling delivery of cheque books to the customer

3) CASH DEPARTMENT

The cash department is the most important department of the bank. It receives cash from
customers and then deposits it into the accounts of the customers and maintained their
balances. This is the most important and critical department in a Bank. There are two basic
functions performed by the cash department. These are

Receipts
An individual who has account in the Bank can deposit money in his account. For deposit of
the money the individual has to fill the deposit slip in which the account holder writes his
name, Account number, amount of the money both in figures and in words.

After filling the deposit slip the Cash amount along with the deposit slip is submitted with the
cashier. The cashier collects the cash and counts it and after verification the cashier stamps
the deposit slip. One part of the deposit slip is given back to the customer and the other part
of the deposit slip remains with the bank for the record purposes
.The cashier also record the deposits made by the customers in credit sheets daily. The
deposits of all customers of the bank are controlled by mean of ledger account. Every
customer has its own ledger account and has separate ledger cards in which his / her total
record is kept.

Bill collection is also one of the main functions of bank. Cashier has to prepare a list of bills’
serial number, a copy of which is to be sent to the corresponding organization.

Payments
The procedure of clearance of a cheque or payments is as following. First of all the customer
presents his cheque to the cashier. The cashier records the account number and the amount,
which is to be drawn. Then the cashier check the cheque number in the computer for the
verification whether the account holder has such amount in his account which he is
demanding or not. If the computer passes the cheque, the Passing officer signs the cheque and
sent it to the cash counter then cashier pays the written amount to the customer and then in
the end cashier records the amount paid in computer.

4) SALES DEPARTMENT
Sales department includes Business Development Officers who are assigned targets of
deposits and financing. And they have responsibility to bring new customers to the bank &
also to maintain relationship with the existing customers of the bank.

The performance appraisals of BDOs are directly related to the assigned targets of them.
 CHAPTER 4

FINANCIAL ANALYSIS OF MEEZAN BANK LIMITED

4.1 FINANCIAL ANALYSIS:

Financial analysis is an evaluation of a firm’s past financial performance and its prospects for
the future. It consists of applying analytical tools and other relevant data to obtain useful
information. The financial statement with the attached schedules and Directors report on past
performance and future prospects give compact information. The interested parties need to
interpret this information about performance of the company through the use of financial
tools. The main purpose of financial analysis is to give a clear picture of the financial position
by studying the relationship and comparisons between the items in the statement. Keeping in
view its importance. In addition the banking sector indicators like deposit and Advances
positions, the investments and Advances to Total Assets have been calculated and analyzed.

4.1.1 COMMON SIZE AND TREND ANALYSIS:

Common Size analysis can be extremely helpful to highlight the changes overtime in the
financial performance and financial conditions of the bank.
4.2 BALANCE SHEET OF MEEZAN BANK Dec, 31.2018

Assets Rupees in “000”

2018 2017 2016
Cash & Balances with treasury 65,022,041 64,556,170 56,036,849
banks
Balances with other banks 8,255,187 4,896,816 12,021,351
Investments 123,742,867 119,238,246 130,150,297
Due from financial institutions 184,814,600 147,229,221 129,115,165
Islamic financing and related assets 512,564,522 420,029,088 311,530,270
Deferred tax assets 982,936 -- --
Other taxes 28,779,592 20,984,101 14,271,194
Total assets 937,915,405 783,808,000 662,055,454
Liabilities
Bills payable 23,750,543 17,175,035 13,756,970
Deposits & other accounts 785,407,811 667,181,865 559,397,881
Sub-ordinated loans 14,000,000 7,000,000 7,000,000
Due to financial institutions 36,417,811 36,813,295 32,005,501
Deferred tax liabilities - 8,182 1,362,909
Other liabilities 37,947,052 25,553,230 18,058,575
Total liabilities 897,582,350 753,730,607 631,581,836
Net assets 40,333,055 35,077,393 30,473,618
Share capital 11,691,924 10,629,022 10,027,379
Reserves 15,161,249 13,368,809 9,699,585
Unappropiated Profit 13,525,765 10,340,589 8,422,009
Defict/ surplus on revaluation of (45,883) 738,973 2,324,545
assets
40,333,055 35,077,393 30,473,618
4.3 COMMON SIZE ANALYSIS OF BALANCE SHEET:

 VERTICAL ANALYSIS:
Vertical analysis can be calculated by dividing balance sheet item on total
assets and then multiply it by 100.

 Formula
Vertical analysis = item of balance sheet /total assets * 100
 BALANCE SHEET OF MEEZAN BNK

Dec, 31,2018

Balance sheet item 2016 2017 2018

Cash & Balances with treasury banks 12 44
Balances with other banks 3 2.9 2.4
Investments 22.9 29 28
Advances 50 46 45
Operating fixed assets 2.6 2.6 2
Deferred tax assets 0.32 0.66 0.69
Other taxes 6.3 5.2 5.7
Total assets 100 100 100
Liabilities
Bills payable 1.2 0.88 0.78
Deposits & other accounts 88 91 8
Sub-ordinated loans - - -
Liabilities against assets subject to finance lease 0.005 0.013 0.008
Deferred tax liabilities - - -
Other liabilities 5 5 4.7
Total liabilities 99.60 99.05 88
Net assets - - -
Share capital 1.13 1.2 1.4
Reserves 2.4 2.4 2.2
Inappropriate Profit 6.5 6.4 6.0

Non-controlling assets 0.011 0.047 .04

Surplus on revaluation of assets 2.6 2.4 2

100 100 100
Interpretation

Similar protocol was used with vertical analysis of balance sheet. Here 2017 was
taken as base year falling till 2018.

1. The change of Share of Cash and balances with treasury banks in total assets is 12%
and there is any change in balance with other bank in 2018 and decline by 44%.
2. Advances are 50% of total assets in 2018 but it is a decreasing trend in 2018 which is 46%.
There is no change in the other operating assets. There is a 1% change in other assets.
3. The share of bill payable in total liabilities is1.2% in 2017 and it decreases to 0.88%
in 2018. Borrowing form financial institution is 5.4% in 2017 but it declines in 2018
to 2.16%. There is an increasing trend in deposits with other banks.
4. Other liabilities are remains same for both years.
5. There is no change in share capital, reserve and un-appropriated profit. There is a
decreasing trend in Surplus on revaluation of asset.
 COMMON SIZE ANALYSIS OF INCOME STATEMENT
INCOME STATEMENT
MEEZAN BANK LIMITED
Year Ended December, 31.2018

Item of income Statement 2016 2017 2018

Mark up/Return 78,124,796 88,681,381 95,689,741

Mark up/Return 40,448,291 45,169,744 48,516,517

Net Mark up 37,676,505 43,511637 47,173,224

Provision against Non-performing advances- 11,148,773 7,007,975 6,219,671

net

Provision for diminution in the value of 651,282 2,904,949 3,138,494

investment-net

Impairment of good - 92,593 -

Provision against off balance sheet obligation 20,237 3,965 -

Bad debts written of directly - - -

11,820,292 10,009,482 9,358,165

Net mark up 25,856,213 33,502,155 37,815,059

Non-mark up

Fee, commission & brokerage income 8,996,973 9,871,667 9,948,547

Dividend income 1,896,817 1,067,273 1,595,192

Income from dealing in foreign currencies 3,103,673 2,278,898 3,196,630

Gain on sale & redemption of securities-net 4,593,041 2,512,363 2,390,211

Investment classified as held for trading 2,355 6,730 (35,039)

Share of loss from joint venture-net of tax 41,715 16,976 32,181

Share of profit from associates-net of tax 5,238 66,906 83,559

Gain on revaluation of previously held interest - 180,131 -

Other income 552,950 2,183,891 2,543,139

Total non mark-up 19,109,332 18,150,883 19,754,420

Non-mark up 44,965,545 51,653,038 57,569,479

Administrative expenses 22,816,665 26,732,045 30,760,815

Other provision/write offs 628,391 179,819 554,810

Other charges 321,647 118,887 137,852

Total Non-mark up 23,766,703 27,030,751 31,453,477

21,198,842 24,622,287 26,116,002

Extra ordinary/unusual items - - -

Profit before taxation 21,198,842 24,622,287 26,116,002

Taxation-current 8,890,206 9,871,640 9,229,882

Piror year 4,137,307 938,158 260,000

Deferred 1,003,099 2,049,600 (1,083,045)

3,749,800 6,883,882 8,406,837

Profit after taxation 17,449,042 17,738,405 17,709,165

4.4 VERTICLE ANALYSIS:

The vertical analysis for income statement can be calculated by dividing income
statement item on sales and then multiply it by 100. i.e.

 Formula

Vertical analysis = income statement item/sales * 100

2016 2017 2018

Mark up/Return 100% 100% 100%

Mark up/Return 51 50 50

Net Mark up 48 49 49

Provision against Non-performing advances-net 14 7.9 6.5

Provision for diminution in the value of 0.83 3.27 3.2

investment-net

Impairment of good - 0.10 -

Provision against off balance sheet obligation 0.025 0.004 -

Bad debts written of directly - - -

15 11 10

Net mark up/t income after provision 33 37 39

Fee, commission & brokerage income 11 11 10

Dividend income 3.4 1.20 1.6

Income from dealing in foreign currencies 3.9 2.5 3.3

Gain on sale & redemption of securities-net 5.8 2.83 0.4

Investment classified as held for trading 0.003 0.007 0.4

Share of loss from joint venture-net of tax 0.05 0.019 0.3

Share of profit from associates-net of tax 0.006 0.077 0.87

Gain on revalution of previously held interest - 0.20 -

Other income 0.70 2.4 2.6

Total non-mark up/ income 24 20 20

 57 58 60

Non-mark up/ expenses

Administrative expenses 29 30 32

Other provision/write offs 0.84 0.20 0.57

Other charges 0.411 0.13 1.4

Total Non-mark up 30 30 32

Extra ordinary/unusual items - - -

Profit before taxation 27 27 27

Taxation-current 11 11 10

Piror year 5.2 1.05 027

Deferred 1.28 2.3 -1.13

4.7 7.7 8.7

Profit after taxation 22 20 19

Interpretation:

The two year analysis from 2017-2018 showing the increase and decrease of income
statement within its all items. Following are the up down movement of vertical analysis of
income statement of two years where 2017 is the base year.

1. There is decreasing trend in mark up interest expense, and the share of net mark up
income consistently increases in 2018.
2. The share of Net mark-up/interest income after provisions is increasing respectively.
3. The share of dividend income in interest income is consistently decreased.
4. The gain on sale of securities has decline in 2018 compare to 2017 and the other income
has increased as compare to last year.
5. The share of Total non mark-up/interest income gradually decreased.
6. Total non mark up interest/expanse remains constant in both years.
7. The share of Profit before tax in interest income is constant in both years.
8. The share of profit after tax in interest income gradually decreased respectively.
9. The share of un appropriated profit decreased by1%9%11% respectively in 2016, 2017 and
2018.
4.5 RATIO ANALYSIS:

A ratio is a quantitative relation between two magnitudes of the same kind. In ratio analysis,
the financial ratios of the firm are compared to that of its competitors. This comparison
allows the firm to detect major operating differences. Another very popular method of ratio
analysis is to compare the firm’s financial ratios to industry averages. There is no doubt that
financial ratios are a useful guide for managerial decision-making. Let us now calculate some
of the key financial ratios of MBL for the years 2017-2018, and try to understand these ratios.
These ratios are calculated from the “Balance Sheet” and “Profit & Loss Account” of MBL,
2017-2018.

4.5.1 LIQUIDITY RATIO:

Definition

a) CURRENT RATIO:

Current ratio is a measure of the current adequacy of company's current assets to meet
its current obligations. It must be greater than 1. If it is less than 1, liabilities exceed current
assets. For every Rs.1 of liabilities, the company has a ratio amount of current assets
available. The concept behind this ratio is to ascertain whether a company's short-term assets
(cash, cash equivalents, marketable securities, receivables and inventory) are readily
available to pay off its short-term liabilities (notes payable, current portion of term debt,
payables, accrued expenses and taxes). In theory, the higher the current ratio, the better.

Current Ratio = Current Assets/Current Liabilities

Current Ratio (2017) = 335,919,453/741,169,195 =0.45

Current Ratio (2018) = 381,834,695/845,635,298 =0.45

Interpretation
The year 2016 (0.54) was not satisfied for bank as current assets are less than current
liabilities. However, in 2018 the management of Meezan Bank Limited is able to overcome
this problem.
 b) CASH RATIO:
This ratio shows that the cash is enough for payment of current liabilities or not. This
ratio is obtained by dividing cash by current liabilities. For a bank this is the cash held
by the bank as a proportion of deposits in the bank.

Cash Ratio = Cash/Current Liabilities

Ratio for the Year (2017) = 64,556,170/741,169,195 =0.087

Ratio for the Year (2018) = 65,022,041/845,635,298 =0.076

Interpretation
The cash ratio of Meezan bank shows a mixed trend during two years of operations.
During these two years, the ratio is satisfactory as per standards of this ratio. The year
2017(0.14), representing highest and 2018(0.13) representing lowest ratio in these two years.

4.5.2 LEVERAGE RATIO: DEFINITION

a) DEBT TO EQUITY RATIO:

The debt-equity ratio compares a company's total liabilities to its total shareholders'
equity. This is a measurement of how much suppliers, lenders, creditors and obligors have
committed to the company versus what the shareholders have committed to total assets in the
debt ratio. Similar to the debt ratio, a lower the percentage means that a company is using less
leverage and has a stronger equity position to a large degree, the debt-equity ratio provides
another vantage point on a company's leverage position, in this case, comparing total
liabilities to shareholders' equity, as opposed

Debt to Equity Ratio = Total Debits/Stock Holder Equity

Debit-Equity Ratio (2017) = 753,730,607/10,629,022 = 6.83

Debit-Equity Ratio (2018) = 897,582,350/11,691,924 = 6.91

Interpretation
The debt to equity ratio of Meezan Bank shows a ratio of 6.83 in 2017. The ratio is
increase to 6.91 in the year 2018.So in 2017 there are more leverage in capital structure so
2018 is best for bank.
 b) DEBIT TO ASSET RATIO:

The debt to total assets ratio measures the percentage of firm’s assets that are financed with
debts.

Debit to Asset Ratio = Total Debit/Total Assets

Debit to Asset Ratio (2017) = 825,460,717/946,253,269 = 0.87

Debit to Asset Ratio (2018) = 906,719,635/1,038,018,467 = 0.87

Interpretation

In 2017 and 2018 the debt to asset ratio is 87%, which is same and it shows that the
remaining 13% of financing came from equity investors.

c) NET PROFIT MARGIN:

Net profit margin measures the percentage of revenue remaining after all cost and
expenses, including interest and taxes have been deducted.

Net Profit Margin = Profit after Taxation/Total Revenue X 100

Net Profit Margin (2017) = 17,449,042/78,124,796X100 = 22.33

Net Profit Margin (2018) = 17,738,405/88,681,381X100 = 20.00

Interpretation

Net profit margin shows the highest trend in 2017 as it was 22.33%; the percentage is
decreased in 2018 as it was 20%.The primary reason of this decline is current global
economic conditions and current political crisis in Pakistan.
 CHAPTER 5
SWOT ANALYSIS OF MBL

SWOT ANALYSIS
“You have brilliant ideas but if you can not get them across, your ideas will not get you
anywhere.”Lee lacocca

• STRENGTHS
• Network:
MBL was established in 2002 but it has created history by setting over 350 branches in 90
cities across Pakistan in just few years of its operations. This is the fastest ever branch
network growth by any bank in Pakistan’s banking history and having high growth
potential.

• Pure Islamic banking:

MBL is conducting its business in a pure Islamic way that is according to Shariah and
Islamic rules. So it is doing pure Islamic banking that is the greatest strength of bank as
compare to conventional banks.

• Members of shariah board:

The members of the Shariah Supervisory Board of Bankislami are Internationally-
renowned scholars, serving on the boards of many Islamic banks operating in different
countries.
• Value added services:
MBL has differentiated itself from other banks in offering services which is a great source
of attraction for customers as free online, free internet banking, free eStatements, free Pay
order issuance facility, free ATM and 24/7 call center, free cheque book issuance etc.

• Centralized check and balance system:

There is centralized check and balance system in MBL. Operations of the branches are
monitored by the head office (Situated in Karachi) on daily basis all over the Pakistan. So
MBL is providing reliable services to customers.
• Online banking:
 It has branches in all the major cities of Pakistan with the facility of free online banking,
it is very easy for its customers to transact all over the country.
• Customer relation:
The employees at the bank provide impeccable customer service to their customers. For
them “the customer is the king’. Customers are treated with great respect and honored to
the utmost degree.
• Products and services:
The products and services designed by the bank are specifically modified to the
individual needs of its customers.
• Friendly and cooperative working environment:
The working environment of the bank is very friendly and cooperative. There is no
bossiness in the higher management. The upper management consults its staff in making
decisions and provides them independence in their job areas. For the objective is
performance and not conformance with the boss.
• Technological innovations:
Bank enjoys a strategic competitive advantage over all domestic players by virtue of its
leadership in technological innovations like centralized account opening system etc.
• Human resource department:
MBL has good human resource department that has responded well to the challenge of
recruitment. Good training sessions are held by the bank through which staff turnover
remained one of the lowest in the industry.
• Instruments payable at any branch:
MBL’s instruments are Payable at any Branch all over the Pakistan which is its greatest
strength as compare to other banks.
• WEAKNESSES:
• Smaller number of branches:
Bank has smaller number of branches and they are at greater distance potential customers may
prefer to go to the other feasible options.
• One branch in Swabi city:
There is one branch in Swabi city that’s why there is great work load on staff.
• Lack of awareness:
People are not fully aware about Islamic banking and have no reason to switch to it so
under such conditions the promotional activities of the MBL are not enough. The bank should
create awareness in the people that how they are different from the conventional banking by
its marketing and advertising activities.
• Centralization:
Centralized decision making causes lots of failure in decision making.
• Lack of female staff:
Lack of female staff causes problems for female customers.
• Overseas branch network:
There is no overseas branch network of MBL so it will unable to compete with those banks
that have overseas branch network and have huge number of investors.
• Lack of space and furniture facility
Lack of space and furniture facility in MBL every branch creates inconvenience for staff,
customers and internees as well.
• Job advancement:
Job advancement procedure is not for lower staff and junior executives. Lower staff should be
trained about the operations of the bank and junior executives should given promotions by
defining the criteria like performance.
• Lack of employees in some departments:
Although MBL is good employer of talented professionals but it have seen lack of employees
in some departments that result in inefficiency of that department.

• OPPORTUNITIES
• MBL is growing at a rapid pace because of less number of competitors.
• Islamic banking is working at its peak in some Asian countries and many other
Islamic countries so there is a strong potential of Islamic banking in Pakistan this
is another opportunity for MBL to make progress quickly.
• MBL also provide opportunity to those professionals who do not prefer to work
with banks who deal in “Riba”.
• Demand for Islamic products and services growing rapidly.
• Coming up with products for SME to target the medium level customers.
• Illiterate account holders now enjoy the facility of atm by biometric atm device
and biometric ATM is also safe.
• MBL is introducing innovative products.
• Doing business with companies having Islamic mindset.
 • MBL is a full pledge Islamic bank, while many banks have only Islamic windows

• THREATS
• New Islamic banks are entering in market so MBL have to face stiff competition.
• Banks like alfalah, mcb, and standard chartered setting up their Islamic section so it is
a threat for MBL because they have good name in market.
• Uncertain economic conditions and changing government attitude towards Islamic
banking is also threat for bank.
• Bank Islami is the largest competitor of MBL and providing almost same services as
MBL is providing. It also has a strong network so it can reduce the market share of
MBL.
• People are not fully aware about Islamic banking so they thought that Islamic banks
are deceiving under the name of Islam.
• Conventional banks are also opening Islamic windows
• Economic conditions of society are making threats for MBL, If there is no
investments than there will be no business at all.
 CHAPTER 6
CONSEQUENCES
• Findings:
My Report’s findings are as follows;

• There is no Islamic system in all Islamic countries to stop Interest based banking,
because some people want return of their investment either it is according to Islamic rules or
not.
• Due to State bank the private banks could not provide hundred percent free Islamic
banking.
• As many respondents said for pure Islamic riba free banking implementation of
Islamic system is must because every Muslim know that riba(interest) is forbidden in Islam
and it is a war with Allah and his messenger as Allah Subhanutallah declare war against those
who take , give and witness Interest (riba).
• As the statistics indicate that many respondents think that foreign influence which
include specially the U.N.O, I.M.F and World bank one of the from constrain due to which
Islamic states could not provide riba free Islamic banking. As bit is clear when these
organization give loans they impose their rule and regulation on Islamic countries which are
not in favor of Islamic countries.
• The Islamic bank must be according to Quran and Sunnah otherwise we cannot say
Islamic banks to those banks which are not according to Quran and Sunnah.
• We can’t impose someone to invest according to rules of Islamic Shariah but we can
influence them by motivating a potential investor to invest their finance in Islamic banks
• Since Meezan Bank is the premier Islamic Bank and having a formal history in
development of Islamic Bank.
• The Meezan Bank is taking a great risk in implementation of Islamic Banking concept
because here the Meezan Bank is changing the attitude of their customers.
• All the Banks are implementing the Islamic Banking concept in exercising only some
windows or providing certain Islamic Banking products or services while the Meezan Bank is
providing about all the products and services according to Islamic Fiqh.

• Conclusions:
• The preceding discussion makes it clear that Islamic banking is not a negligible or
merely temporary phenomenon. Islamic banks are here to stay and there are signs that they
will continue to grow and expand. Even if one does not subscribe to the Islamic injunction
against the institution of interest, one may find in Islamic banking some innovative ideas,
which could add more variety to the existing financial network.
 • One of the main selling points of Islamic banking, at least in theory, is that, unlike
conventional banking, it is concerned about the viability of the project and the profitability
of the operation but not the size of the collateral. Islamic banks on a profit-sharing basis
would finance good projects, which might be turned down, by conventional banks for lack
of collateral. It is especially in this sense that Islamic banks can play a catalytic role in
stimulating economic development. In many developing countries, of course, development
banks are supposed to perform this function. Islamic banks are expected to be more
enterprising than their conventional counterparts. In practice, however, Islamic banks have
been concentrating on short-term trade finance which is the least risky.

• Part of the explanation is that long-term financing requires expertise which is not
always available. Another reason is that there are no back-up institutional structures such as
secondary capital markets for Islamic financial instruments. It is possible also that the
tendency to concentrate on short-term financing reflects the early years of operation: it is
easier to administer, less risky, and the returns are quicker. The banks may learn to pay more
attention to equity financing, as they grow older.

• It is sometimes suggested that Islamic banks are rather complacent. They tend to
behave as though they had a captive market in the Muslim masses that will come to them on
religious grounds. This complacency seems more pronounced in countries with only one
Islamic bank. Many Muslims find it more convenient to deal with conventional banks and
have no qualms and desires about shifting their deposits between Islamic banks and
conventional ones depending on which bank offers a better return. This might suggest a case
for more Islamic banks in those countries as it would force the banks to be more innovative
and competitive. Another solution would be to allow the conventional banks to undertake
equity financing and/or to operate Islamic 'counters' or 'windows', subject to strict
compliance with the Shariah rules. It is perhaps not too wild a proposition to suggest that
there is a need for specialized Islamic financial institutions such as mudarabah banks,
murabahah banks and Musharakah banks which would compete with one another to provide
the best possible services

•So the Meezan Bank shows us that all the modes of financing are implemented in the
Meezan Bank

• Recommendations:
Keeping all the findings of my working, I recommend the following suggestions for
development of Islamic Banks especially The Meezan Bank.

All the Islamic countries must implement Shariah as a system because this is a way that we
can save our self from interest (Riba) and from declaration of war from Allah and his
messenger.
 • The Islamic banks must be hundred percent pure Riba free banking according to
Shariah.

• Dependency of Islamic countries on western Countries should be limited.

• U.N.O and IMF should not interrupt the policies of Islamic countries.

• There should be Islamic system in Islamic countries.

• The restrictions from UNO and IMF can only be removed by the implementation
Islamic law and then providing to Islamic Ummah an economic system according to QURAN
and Sunnah.

• The State Bank needs to develop human resource by organizing Seminars, workshop,
and other related training schemes especially for the Riba free banking to build their
knowledge and make them enable to make strategies for improving and developing Riba free
banking.

• Riba free banking needs Research and development in the field of Islamic finance,
especially in Shariah compliant product development. State Bank requires an innovative
approach keeping in view the Shariah essential of Islamic modes of financing.

• The riba free banks also need to diversify their product according to the Shariah
Principles. Therefore they need to develop purely Islamic instruments to deal in it.

• A number of peoples are not understanding the basic concept of Islamic modes of
financing, The Meezan Bank should advertise like that the every common person can easily
understands the Islamic finance transactions.

• Our Ulamas and Islamic Scholars should preach and write the books which can easily
describe and change the attitudes of the potential financier.

• The State bank of Pakistan should commence a committee or board of Islamic Shariah
which will interpret and exercise the rules and policies of Islamic banking transactions.

• Current ratio:
• The financial statements of Meezan Banks shows that the current ratio in the fiscal
years 2016,2017 and 2018 are increasing which shows that the bank have enough cash to
generate. However in 2017 the ratio fell down which shows that the bank performance was
poor in that fiscal year. The bank need to improve further their current asset in order to
maximize their current ratio.
• Cash ratio;
• The financial ratio of Meezan Bank shows that the cash ratio of the bank went low
during the years 2016, 17, 18 the cash ratio in the year 2017 was 0.087 which further went
down in 2018 to 0.076 which shows that the bank did not have enough cash to generate
against their liabilities.
• Debt to equity ratio:
• The financial statement of Meezan bank shows that the debt ratio in 2017 was low
which gets up in 2018 but again in 2019 their debt ratio fell down a little bit as compared to
2018.
• Asset turnover ratio:
• The financial statements of Meezan bank shows that they are using their assets more
efficiently in 2019 as compared to 2018 and 2017 which is good and they should maintain
this performance good as to keep good banking reputation.
• Net profit margin:
• The net profit margin of Meezan Bank in the financial year 2016 and 2017 is 0.39%
while in the year 2017 the NPM ratio is .25% which shows that the bank perform poor
against the expectation of stockholders. In the year 2018 the NPM ratio increases to .38%.
The figures of 2018 indicates that bank perform very well in terms of generating profit as
compare to previous year. The higher NPM ratio indicates that the Bank performed efficient
at converting sales in to profit.

BIBLIOGRAPHY

 Annual Report of Meezan Bank Limited 2018.

 Dr ASRAR H SIDDIQUI,Practice and Law of Banking in Pakistan.

 M. SAEED NASIR, Money and Banking & Finance.

 Justice (Retd) Muhammad Taqi Usmani, Book on Islamic Finance

 Islamic banking: State of the Art, Ziauddin Ahmad Ex- Deputy Governer of The State
Bank of Pakistan.

 Dr. Muhammad Imran Ashraf Usmani (2002), Meezan Bank’s Guide to Islamic
banking, Darul Ishaat, Karachi, Pakistan.

 Islamic Development Bank, Islamic Research And Training Institute, Islamic

 Internet

 www.meezanbank.com.pk
 www.google.com

 www.worldbank.org

 www.apnahyderabad.com