Executive Summary

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Executive Summary:

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

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

Today banks work in a hybrid fashion providing a variety of services to their customers to yield heavy profits. A valuable advice I learned on the way was; The days of conventional banking are long gone; its the era of customer oriented banking.

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

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Islamic banking system is based on risk-sharing, owning and handling of physical goods, involvement in the process of trading, leasing and construction contracts using various Islamic modes of finance. As such, Islamic banks deal with asset management for the purpose of income generation. They will have to prudently handle the unique risks involved in management of assets by adherence to best practices of corporate governance. In order to insure that these principles are followed, each Islamic institution must establish and provide itself with an advisory council known as a Sharia'a Board.

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

BankIslami is the Joint venture project of 3 groups with 18.75% equity each, namely Jahangir Siddiqui & Co. Pakistan, DCD Group UK, & Dubai Bank. Irrespective of stiff competition in the market the Bank has successfully managed to grow over 400% during last one year. 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. BankIslami has been able to form a strong image of having authentic basis for its banking operations by using smart marketing ideas that resonate well with the public mind. All branches of BankIslami have the same look and feel irrespective of location.

The bank boasts an excellent technological ground for its operations and has a very robust streamlined way of operating. Its staff being kept highly motivated by various strategies and its human resource department, the bank always seems to leave almost all its customers with a smile over their face. The experience whether for an internee or an employee or a customer is always unique and stisfying in its own way. The banks employees play on the human way of thinking naturally since they are a young energetic team collaborating with another instead of redundant conflict siezed people in other organizations.

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My eperience with the bank was phenomenal and unforgettable at the same. I loved it and enjoyed the best I could throughout the whole journey of learning and knowledge. It felt as I have vividly expressed throughout my report as though I was always part of a bigger commitment to serve and yet it boosted my individuality to work with its team as well. I felt as though for a brief time period, this technical breathing corporate system accepted me as family, aloowed me on its deepest systems and gave me the opportunity to walk on my own before I am ready to face the big world myself. Thanking the bank simply just seems so less for all this.

Nothing short of incredible is the way in which Bank Islami Pakistan Limited functions. The more I learned through my internship, the more I came to respect it. Just as a living creature, the bank survives in the corporate world. I have grown a somewhat thorough understanding ofcourse about the working of the bank and have presented my humble views, time and again where required, to highlight further steps necessary in strengthening this magnificient organization.

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

Serving You; the Right Way!

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Introduction of Organization

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History of Banking and Its Origin

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

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

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

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

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

Size of Global Banking Industry Today:

Assets of the largest 1,000 banks in the world grew by 6.8% in the 2008/2009 financial year to a record $96.4 trillion while profits declined by 85% to $115bn in adverse market conditions. The United States has the most banks in the world in terms of institutions (7,085 at the end of 2008) and possibly branches (82,000). As of Nov 2009, China's top 4 banks have in excess of 67,000 branches (ICBC:18000+, BOC:12000+,CCB:13000+,ABC:24000+) with an additional 140 smaller banks with an undetermined number of branches. Japan had 129 banks and 12,000 branches. In 2004, Germany, France, and Italy each had more than 30,000 branchesmore than double the 15,000 branches in the UK.

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Islamic Banking

What is Islamic Banking?

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

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

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

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History of Islamic Banking:

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

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

The first modern experiment with Islamic banking was undertaken in Egypt under cover without projecting an Islamic imagefor fear of being seen as a manifestation of Islamic fundamentalism that was anathema to the political regime. The pioneering effort, led by Ahmad Elnaggar, took the form of a savings bank based on profit-sharing in the Egyptian town of Mit Ghamr in 1963. This experiment lasted until 1967 (Ready 1981), by which time there were nine such banks in the country.

In 1972, the Mit Ghamr Savings project became part of Nasr Social Bank which, till date, is still in business in Egypt. In 1975, the Islamic Development Bank was set-up with the mission to provide funding to projects in the member countries. The first modern commercial Islamic bank, Dubai Islamic Bank, opened its doors in 1975.

The Philosophy of Islamic Banking and Finance:

Islamic Shariah prohibits interest (Riba) but it does not prohibit all gains on capital. It is only the increase stipulated or sought over the principal of a loan or debt that is prohibited. Islamic principles requires consideration of capital performance while rewarding the capital. The prohibition of a risk free return and permission of trading, as enshrined in the Verse 2:275 of the Holy Quran, makes the financial activities in an Islamic set-up real assetbacked with ability to cause value addition.

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Islamic banking system is based on risk-sharing, owning and handling of physical goods, involvement in the process of trading, leasing and construction contracts using various Islamic modes of finance. As such, Islamic banks deal with asset management for the purpose of income generation. They will have to prudently handle the unique risks involved in management of assets by adherence to best practices of corporate governance. Once the banks have stable stream of Halal income, depositors will also receive stable and Halal income.

The forms of businesses allowed by Islam at the time the Holy Quran was revealed included joint ventures based on sharing of risks & profits and provision of services through trading, both cash and credit, and leasing activities. In the Verse II:275, Allah the Almighty did not deny the apparent similarity between trade profit in credit sale and Riba in loaning, but resolutely informed that Allah has permitted trade and prohibited Riba. Profit has been recognized as reward for the use of capital and Islam permits gainful deployment of surplus resources for enhancement of their value. However, along with the entitlement of profit, the liability of risk of loss on capital rests with the capital itself; no other factor can be made to bear the burden of the risk of loss. Financial transactions, in order to be permissible, should be associated with goods, services or benefits. At macro level, this feature of Islamic finance can be helpful in creating better discipline in conduct of fiscal and monetary policies.

Besides trading, Islam allows leasing of assets and getting rentals against the usufruct taken by the lessee. All such things/assets corpus of which is not consumed with their use can be leased out against fixed rentals. The ownership in leased assets remains with the lessor who assumes risks and gets rewards of his ownership.

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Riba in Quran:
1. First Revelation (Surah al-Rum, verse 39) "That which you give as interest to increase the peoples' wealth increases not with God; but that which you give in charity, seeking the goodwill of God, multiplies manifold." (30: 39)

2. Second Revelation (Surah al-Nisa', verse 161) "And for their taking interest even though it was forbidden for them, and their wrongful appropriation of other peoples' property. We have prepared for those among them who reject faith a grievous punishment (4: 161)"

3. Third Revelation (Surah Al 'Imran, verses 130-2) "O believers, take not doubled and redoubled interest, and fear God so that you may prosper. Fear the fire which has been prepared for those who reject faith, and obey God and the Prophet so that you may receive mercy."

4. Fourth Revelation (Surah al-Baqarah, verses 275-81) "Those who benefit from interest shall be raised like those who have been driven to madness by the touch of the Devil; this is because they say: "Trade is like interest" while God has permitted trade and forbidden interest. Hence those who have received the admonition from their Lord and desist may keep their previous gains, their case being entrusted to God; but those who revert shall be the inhabitants of the fire and abide therein for ever." (275)

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Riba in Hadith:
From Jabir: The Prophet may curse the receiver and the payer of interest, the one who records it and the two witnesses to the transaction and said: "They are all alike [in guilt]." (Muslim, Kitab al-Musaqat, Bab la'ni akili al-riba wa mu'kilihi; also in Tirmidhi and Musnad Ahmad).

From 'Abdullah ibn Hanzalah: The Prophet, said: "A dirham of riba which a man receives knowingly is worse than committing adultery thirty-six times" (Mishkat al-Masabih, Kitab al-Buyu', Bab al-riba, on the authority of Ahmad and Daraqutni). Bayhaqi has also reported the above hadith in Shu'ab al-iman with the addition that "Hell befits him whose flesh has been nourished by the unlawful."

From Abu Hurayrah: The Prophet, said: "Riba has seventy segments, the least serious being equivalent to a man committing adultery with his own mother." (Ibn Majah)

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Modern Islamic Banking:

The first modern commercial Islamic bank, Dubai Islamic Bank, opened its doors in 1975. In the early years, the products offered were basic and strongly founded on

conventional banking products, but in the last few years the industry is starting to see strong development in new products and services.

Islamic Banking is growing at a rate of 10-15% per year and with signs of consistent future growth. Islamic banks have more than 300 institutions spread over 51 countries, including the United States through companies such as the Michigan-based University Bank, as well as an additional 250 mutual funds that comply with Islamic principles. Conservative estimates suggest that over US$500 billion of assets are managed according to Islamic investment principles. The World Islamic Banking Conference, held annually in Bahrain since 1994, is internationally recognized as the largest and most significant gathering of Islamic banking and finance leaders in the world. The Vatican has put forward the idea that the principles of Islamic finance may represent a possible cure for ailing markets.

The recent $2.35 billion bank financing for Ettihad Etisalat Company is a significant milestone in the history of Islamic banking and sets a benchmark for Islamic financing deals into the future. For the first time in the industry's history, several Islamic banks headquartered in the Gulf have recently set up business operations in Malaysia, while making clear that on their radar screens are Indonesia and China. Riyadh, Asharq Al-Awsat- In 1990, a new player emerged in the Islamic banking market, signifying a huge leap in the Islamic banking industry. It was a landmark year in the history of Islamic banking, indicating the beginning of an industry in terms of expansion and growth.

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About Islamic Banking:

"Islamic banks operate in the Middle East, Europe, Asia and Africa. At the threshold of the 21st century, Islamic banks had about US $700 billion in funds under their management"

A few decades ago, modern banking and financial institutions that encompass Islamic values within their principles and practices seemed to be merely a remote dream. Today, however, Islamic banking has become a viable financial approach that attracts an increasing amount of capital investment. As a concept Islamic Banking was developed as a result of the religious prohibition of the payment or receipt of interest. The fundamental principles of Islamic Banking go back over one thousand four hundred years. They are set out in Shari'a law and are enshrined in the Qur'an, the Hadith and the Sunna. Today, these principles form the basis of the contemporary Islamic Banking range of Islamic financial products & services.

There is no standard way of grouping Islamic Financial Institutions, but in terms of services rendered, today Islamic Financial Institutions can be divided into the following broad categories: 1- Islamic Banks. 3- Islamic finance/Investment Banks. 5- Takaful Companies. 7- Islamic investment funds 2- Islamic Windows. 4- Islamic Mortgage companies. 6- Mudarabah Companies.

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Principles of Islamic Banking:

The principles of Islamic finance are established in the Qur'an, which Muslims believe are the exact Words of God as revealed to the Prophet Mohammed. These Islamic principles of finance can be narrowed down to four individual concepts: 1. Prohibition of Interest or Usury 2. Ethical Standards 3. Moral and Social Values 4. Liability and Business Risk

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1- Prohibition of Interest or Usury: The first and most important concept is that both the charging and the receiving of interest is strictly forbidden. This is commonly known as Riba or Usury. Money, on its own, may not generate profits. When Riba infects an entire economy, it jeopardises the well-being of everyone living in that society. When investors are more concerned with rates of interest and guaranteed returns than they are with the uses to which money is put, the results can only be negative. Usury is forbidden in all the three religions, Judaism, Christianity and Islam, but it is the people who forget the rules of Allah. All societies, nowadays - Muslims, Christians and Jews - deal with Usury.

2- Ethical Standards: The second guiding principle concerns the ethical standards. When Muslims invest their money in something, it is their religious duty to ensure that what they invest in is good and wholesome. It is for this reason that Islamic investing includes serious consideration of the business to be invested in, its policies, the products it produces, the services it provides, and the impact that these have on society and the environment. In other words, Muslims must take a close look at the business they are about to become involved in.

In all facets of the financial system, Islam has certain rules, certain regulations as to how Muslims should go about participating in these activities. For example, in share trading or the securities market, Islam looks at the activities of the companies, to establish whether or not the companies are involved in activities which are in line with Sharia'a.

3- Moral and Social Values: The third guiding principle concerns moral and social values. The Qur'an calls on all its adherents to care for and support the poor and destitute. Islamic financial institutions are expected to provide special services to those in need. This is not confined to mere charitable donations but has also been institutionalised in the industry in the form of profit-free loans or Al Quard Al Hasan.

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An Islamic bank's business includes certain social projects, as well as charitable donations. Islamic banks provide profit-free loans. For example, if an individual needs to go to hospital or wants to go to university, we give what is called Quard Al Hasan. This Quard Hasan is normally given for a short period of one year and the Islamic bank does not charge anything for that.

4- Liability and Business Risk: The final principle concerns the overarching concept of fairness, the idea that all parties concerned should both share in the risk and profit of any endeavor. To be entitled to a return, a provider of finance must either accept business risk or provide some service such as supplying an asset, otherwise the financier is, from a Sharia'a point of view, not only an economic parasite but also a sinner. This principle is derived from a saying of the Prophet Mohammed (SAW) "Profit comes with liability". What this means is that one becomes entitled to profit only when one bears the liability, or risk of loss. By linking profit with the possibility of loss, Islamic law distinguishes lawful profit from all other forms of gain.

In order to insure that these principles are followed, each Islamic institution must establish and provide itself with an advisory council known as a Sharia'a Board. The members of Sharia'a Boards can include bankers, lawyers or religious scholars as long as they are trained in the Islamic law, or Sharia'a.

In 2001, the Industry witnessed a remarkable development in this regard by the initiative of the Accounting and Auditing Organization for the Islamic Financial Institutions or AAOIFI. At that time, AAOIFI's standards were enhanced to include elements that aim at broadening the role of the external auditor. Now according to these new developments the external auditor is also required to look for compliance with Sharia'a rules as defined by the Sharia'a supervisory board of each bank and in accordance with the Sharia'a standards AAOIFI has begun to issue.

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History of Islamic Banking in Pakistan:

Steps for Islamization of banking and financial system of Pakistan were started in 1977-78. Pakistan was among the three countries in the world that had been trying to implement interest free banking at national level. But as it was an epic task, the switchover plan was implemented in phases. The legal framework of Pakistan's financial and corporate system was amended on June 26, 1980 to permit issuance of a new interest-free instrument of corporate financing named Participation Term Certificate (PTC). An Ordinance was promulgated to allow the establishment of Mudaraba companies and floatation of Mudaraba certificates for raising risk based capital. Amendments were also made in the Banking Companies Ordinance, 1962 (The BCO, 1962) and related laws to include provision of bank finance through PLS, mark-up in prices, leasing and hire purchase.

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Pakistan adopted a policy of gradual transformation of its banking system from February 1979 after several years of study and preparation by the government-appointed Council of Islamic Ideology (CII). The procedure adopted by banks in Pakistan since July 1 1985, based largely on mark-up technique with or without buy-back arrangement, was, however, declared un-Islamic by the Federal Shariat Court (FSC) in November 1991. However, appeals were made in the Shariat Appellate Bench (SAB) of the Supreme Court of Pakistan. The SAB delivered its judgment on December 23, 1999 rejecting the appeals and directing that laws involving interest would cease to have effect finally by June 30, 2001. In the judgment, the Court concluded that the present financial system had to be subjected to radical changes to bring it into conformity with the Shariah. It also directed the Government to set up, within specified time frame, a Commission for Transformation of the financial system and two Task Forces to plan and implement the process of the transformation.

The House Building Finance Corporation had shifted its rent sharing operations to interest based system in 1989. The Task Force of the M/O Law proposed amendments in the HBFC Act to make it Shariah Compliant. Having vetted by the CTFS, the amended law has been promulgated by the Government. The State Bank issued detailed criteria in December 2001 for establishment of full-fledged Islamic commercial banks in the private sector. Al Meezan Investment Bank received the first Islamic commercial banking license from SBP in January 2002 and the Meezan Bank Limited (MBL) commenced full-fledged commercial banking operation from March 20, 2002.

The Government as also the State Bank are 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 approach is to institute best practice legal, regulatory and accounting frameworks to support Islamic banks and investors alike. The year 2002-2003 witnessed strengthening measures taken in the areas of banking, non-bank financial companies and the capital markets.

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Conventional Banking Vs Islamic Banking:

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Key Distinguishing Features:

The key distinguishing features that diffrentiate Islamic banking from conventional banking are: Transactions are asset-based It is socially-responsible banking because it operates under Shariah restrictions. Does not permit financing of prohibited goods / Industries

Conventional Banking - Profit rates are fixed - Interest based -Doing financing in cash form - Does not involve itself in trade and business -Current account based on profit

Islamic Banking - Profit rates are variable -Interest free -Doing financing in form of products - Actively participates in trade and production. -Current account based on no profit no loss

- Depositors get a fixed rate regardless of the - Profit is shared with the depositor, higher the banks profitability, thus insulating them banks profit, higher the depositors income. from the banks true performance.

The conventional banking, which is interest based, performs the following major activities: Deposit creation Financing Agency services Issuing LCs Advisory-services other related services Now I would like to make a comparison of these activities with Islamic concept of banking: Deposits (The liability side) Deposit qard (loan) not amanah (Trust)

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The common misconception regarding "deposit" is that it is a form of amanah (security/trust). However, according to Shariah definition, deposit has more resemblance to qard (loan) than amanah. In Islam an item is termed as amanah, if it bears all the features of amanah. Deposits cannot be termed amanah, as they do not have two of its special features: 1. Amanah cannot be used by the bank for its business or benefit. 2. The bank cannot be liable in case of any damage or loss to the amanah resulting from circumstances beyond its control.

Whereas in banks, deposits are primarily placed to earn profit, which is only possible when the bank uses these deposits to invest in other business. Hence deposits do not fulfill the first condition of amanah, which says that it should not be used by the caretaker for his own business or benefit. Secondly, the bank is held 100% responsible for these deposits in all circumstances even in case of loss or damage to the bank. This feature releases deposits from the ruling of amanah where the assets will not be returned in case of any damage to the asset resulting from circumstances beyond caretaker's control. According to this justification, all three kinds of deposit namely current accounts, fixed deposits and saving accounts are not amanah. They are all governed by qard.

One school of thought says that only fixed deposit and saving accounts fall under the laws of qard but current account is governed by amanah. However, this is also not correct because the bank is as much liable to current account holders as its PLS account holders and is called the "guarantor" in fiqh terminology. Due to this feature, current account is also governed by qard.

The depositors are not interested in terminology but the end-result of holding an account. Therefore if a bank does not offer security to the assets, the depositors under normal circumstance will never keep their assets at such a bank. Similarly if the depositors are told that the status of their account will that be of amanah and in case of any loss to the assets, without any negligence of the bank, will not be returned to them, not a single person would put his asset in the bank. Therefore the bank provides the security to the assets, which the depositors themselves want.

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We thus conclude that the main intention of the depositors is not to put the assets in banks as amanah; rather as qard by having collateral security by appointing the bank as guarantor.

Role of the Bank as Agent:

A bank under Islamic Shariah can act as an agent (on Al-Wakalah basis) of the customer and can carry out the transaction on his behalf. Moreover it can charge agency fee for the services.

The agency fee can be charged in the following cases: Payment / receiving of cash on behalf of the customer Inward bill of collection Outward bill of collection LC opening and acceptance Collection of export bills / bills of exchange. In this case the undertaking or guarantee commission and take-up commission can be Islamized. Bank will charge an agency fee for accepting the bills, which is bought at face value. Underwriting & IPO services

Role of the Bank as Guarantor: The bank or financial institute gives a guarantee on behalf of its customer but according to Shariah, guarantee fee cannot be charged. Normally conventional banks charge fee for following guarantees: Letter of guarantee Shipping guarantee

Advisory Services: Most of the advisory services provided by the financial institutes can be carried out easily in compliance with Shariah as long as the nature of business is Halal: Privatization advisory services Equity placement

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Merger & acquisition advise Venture capital Trading (Capital market operations) Cash & portfolio management advice Brokerage services (Purchase & buying of share of companies involved in halal business, a fee could be charged for it).

Other Allowed Islamic Financial Services & Products: Remittance Zakat deduction. Sale & purchase of foreign currency Sale & purchase of travelers checks (local foreign currency) ATM services Electronic online transfer Telegraphic transfer (of cash) Demand draft Pay order Lockers & custodial services Syndicate funds arrangements services (non-interest or markup based) for some fee. Opening of bank account (current & non-interest or no-markup) Clearing facility Sales & purchase of shares/stock (of companies involved in halal activities) Collection of dividends Electronic banking window Telephone banking.

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Introduction of Bank Islami Pakistan Limited

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History

BankIslami- The Idea:

The epochal 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 to formalize the idea. He presented the concept paper of BankIslami to sponsors on March 24, 2004. A detailed business plan was then prepared and a formal application was submitted to the State Bank of Pakistan on May 26, 2004. On September 26, 2005, Dubai Bank joined the Sponsors and became one of the founding shareholders of BankIslami by investing 18.75% in the total Capital.

Accredition by State Bank of Pakistan:

The State Bank of Pakistan issued a No Objection Certificate in no time on August 19, 2004 and BankIslami Pakistan Limited, the second full-fledge Islamic Commercial Bank in Pakistan, was incorporated on October 18, 2004 in Pakistan. BankIslami Pakistan Limited was the first Bank to receive the Islamic Banking license under the Islamic Banking policy of 2003 on March 31, 2005. The Bank envisioned to focus primarily on Wealth Management as the core area of business in addition to Shariah compliant Retail Banking products, Proprietary and Third party products, and Integrated financial planning services.

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Initial Public Offering of BankIslami:

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

Inauguration & Network Expansion:

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

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Competition Situation:
BankIslami is the Joint venture project of 3 groups with 18.75% equity each, namely

Jahangir Siddiqui & Co. Pakistan, DCD Group UK, & Dubai Bank. Irrespective of stiff competition in the market the Bank has

successfully managed to grow over 400% during last one year and all set to be a 100 Online Branch Network by the year end 2008.

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

Image Marketing:
BankIslami has been able to form a strong image of having authentic basis for its banking operations by using smart marketing ideas that resonate well with the public mind. For example, the calligraphy of the bank's name in Urdu is claimed to have been done by the same calligraphers who have done similar work in the Holy Mosque of Madina in Saudi Arabia. Marketing Department of the Bank was at the forefront of re-branding exercise and achieving greater standardization across the network. All branches of

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BankIslami have the same look and feel irrespective of location. An agreement was also signed with VISA for launch of the debit card. BankIslami has also entered into an agreement with Pak-Qatar Family Takaful for distribution of BancaTakaful from selected branches of the Bank.

Key Achievements of Bank Islami:

The foremost achievement of the Bank during the year 2010 has been its emergence as a serious Islamic Bank which is increasingly being seen as the most authentic provider of Islamic Financial Solutions. Bank Islami is thankful to Almighty Allah and his customers base who are now willing to pay a premium to bank for the authenticity of products, commitment to adhere to Shariah principles without any compromise and delivery which is better than most of our counter parts, including conventional banks. In less than three years BankIslami is an established franchise.

Another key achievement of bank Islami was the completion of branch expansion target of 100 branches and sub-branches. Bank Islami actually opened 102 branches and sub-branches covering 49 cities in all four provinces, Azad Kashmir and Northern Areas. Not only does BankIslami offer the best coverage compared with any Islamic Bank, but also this is the fastest expansion achieved by any Bank in Pakistan's Banking industry. Almost all branches are online,

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serviced with 247 Phone banking and offer the same standard facilities across the network. For year 2010, BankIslami intends consolidating its network and operations.

Bank Islami core Banking system, iMal, was successfully deployed in the first branch in November 2008. The core banking module is completed deployment in nine largest branches towards end of the year2008. Deployment of iMal has made BankIslami the only bank in Pakistan to use Banking software that has been designed for Islamic Banking as well as the bank was the fifth largest net acquirer on the 1 Link ATM network.

Human Resources Department responded well to the challenge of recruitment for 66 branches. Staff strength rose from 563 as on December 31, 2007 to 1,188 on December 31, 2008. In all, 2,500 interviews were conducted and 785 training sessions were held. Online recruitment was launched with success. Staff turnover remained one of the lowest in the industry at 1.9%.

BankIslami was the first Bank that has a full time Shariah Adviser the scope of the Shariah Department was further strengthened with more pro-active involvement in Product Development, Training and Audit. The first Shariah Audit of the Bank was conducted in year 2008 and it reported that not even a single deviation was found. BankIslami is actively involved in different forums at the State Banks level for development of Islamic Standards in the country as well.

BankIslami's performance for the year 2009:

Due to a heavy expansion last year, the full cost impact of which came this year, BIPL is reporting a loss of Rs. 563M before tax and Earning Per Share stood (0.91). This is approximately Rs. 250M more than what we had budgeted. Due to economic instability, we preferred to conserve the liquidity. At the same time, private corporate credit off take was slow

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there by drying up appetite for quality credit. While our closing ADR is still less than 50%, going forward the signs are very positive. Almost 30% growth came in the last quarter only.

Growth in consumer financing was contained, though the Bank continued to finance good credit. BIPL has also successfully negotiated with CITI Bank acquisition of its mortgage portfolio of Rs. 1.5b. This transaction is expected to close in the second quarter. The Book quality remains good and improving. Most of the nonperforming financing consists of quality collateral with a market. We expect a strong recovery this year. We are aiming to close the year at around 60% ADR with NPL's contained at less than 5% of the portfolio.

The success story of the year was the growth in deposits, which came almost entirely from retail segment. BIPL is one of the few banks in Pakistan which has a genuine deposit franchise. Instead of targeting large, rate sensitive accounts, BIPL as strategy focused on retail customer which are stable, less rate sensitive and loyal. Current and Saving Accounts recorded impressive growth. Even growth in Fixed Deposits was propelled by our five and ten depository products which now accounts for 21% of the deposit base. Despite of 124% increase in deposits, cost of funds actually declined. BIPL will continue to follow the same strategy strong focus on retail deposits, a further 5% to 10% reduction in cost of fund coupled with at least 50% increase in the deposit base.

Our technology infra-structure was further strengthened during the year with full deployment of state of art sharia compliant core banking system, iMal. We remain the largest user of Linux in Pakistan which has helped us to have a stable, cost effective platform compared to our peers. Our market share in ATM transactions has improved to 11th position amongst 1-LINK members. We are aiming to complete deployment of the next phases of iMal during 2010.

Head count in 2009 increased by almost 24%. Most of the hiring took place in the branches. Head count/branch of BIPL remained impressive at around 14, which is one of the best in the industry. The highlight of this year was our focus on Training. BIPL is strictly following mandatory

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training hours for all employees which in some cases is as high as 80 hours. The first batch of trainee officers has graduated and assumed responsibility in the branches. We plan to induct a few more batches this year in Karachi, Lahore, Islamabad, and Balochistan where we have a strong presence. BIPL also continued with focus marketing initiatives. Our greatest asset today is probably our brand name 'BankIslami'. Going forward, we plan to maintain presence in selected media segments.

This was a year of consolidation for the Bank. To ensure and maintain Shari'ah compliance of highest possible standards in all transactions (particularly Murabahah transactions) in the increased branch network remained the matter of focus. Following were the major development of the period under review:

Product Development:
BankIslami Pakistan Limited had voluntarily stopped Commodity Murabahah transaction after some scholarly

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

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

Islamic Banking Training:

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

Case study based Method of training was introduced which was found very useful by the participants. Training manuals for Murabahah, Ijarah and Diminishing Musharakah products were also developed.

Following are the details of the training sessions held in 2009:

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Future Outlook:
Despite of testing times, bank Islami is optimistic about the coming years. BIPL

management team target for the coming years is to consolidate the operations and bring greater efficiencies in operations. Specifically, they would like to grow the balance sheet and wipe off the accumulated losses of Rs. 577,246,000 which are expected to decrese this year.

Growing network, a viable and working depository franchise, growth in the Islamic Banking industry and technological advantage places them in an ideal position to take advantage of the opportunities that lie ahead due to State Banks increased capital requirements. The bank is also unin IT effectively and efficiently to reduce cost ofcommunication and its taking the maximum posible banefitout of it. The bank is alsoexpectedto takeover another chainofbanks as soon as the bank recovers from the accumilated loss.

As discussed earlier, the reason for our losses this year is non-absorption of operating costs due to lower asset volumes. Besides that, BIPL has all the right straits which a successful bank may wish to have. Our net-work is large and well spread out, deposit base is stable and cost effective, intermediation cost is within the top quartile in the industry, NPLs are low and that too contained and technology base is one of the best. With improving asset deployment, BankIslami achieved operating break from December. On full year basis, we will inshallah report a profit starting from first quarter. No large expansion in net-work is envisaged this year.

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Our Logo Story

Our name & logo set the benchmark:

When it is a question of faith,

Authenticity
Is the key word.

A simple, local and Authentic name that leaves no confusion about what we do

Only Islamic Banking!

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

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Motif: The blue and green motif sets the background of the logo. Like all Authentic Islamic motifs, it has eight corners filled with flowing lines without any source point. These two features are an important part of Islamic art. Next time you see an Islamic motif, check its authenticity by these banchmarks. Script and Calligrapher: We opted for the Arabic script for its versatility, beauty and Authenticity Khate-Sulus, a script which has graced the Islamic monuments from the subcontinent to Turkey to Arabia including the two most sacred mosques, was opted for. It stands for timeless traditions and values that Muslims in these regions have shared for centuries-trade and commerce included. When it came to the Calligrapher, we went to one of the best sources in the worldUstad Shafiq-uz-Zaman, the only person chosen to do calligraphy in the Masjid-eNabwi after 500 years.

Can you think of any better and more authentic standard?

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The Crescent: A rising crescent in the traditional green encircles the motif and calligraphy. The Crescent has deep association with

contemporary and modern Islam. In our logo, it stands for Shariah encompassing everything that we do at Bankislami.

Motif Bands: Two motif bands run parallel to each other and frame the symbol. Again, stars in the bands have eight corners. This band is found on many Islamic Monuments all around the world including the Holy Kaba.

Do you think Authenticity will ever escape our attention in whatever we do?

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Board of Directors

The Board of Directors of BankIslami comprises of eminent

representatives from the Bank and its Sponsors. These include Chief Justice (R) Mahboob Ahmed (Chairman), Mr. Ahmed EIshall, Mr. Ahmed Randeree, Mr. Ali Raza Siddiqui, Mr. Hasan A. Bilgrami, Mr. Shabir Ahmed Randeree and Mr. Mohamed Al Amiri.

Chief Justice (R) Mahboob Ahmed Chief Justice (R) Mahboob Ahmed is the Chairman of the Board of Directors of the Bank. Mr. Mahboob Ahmed graduated from University of Punjab and completed his LLB in 1957. He practiced at the Bar of Lahore High Court and Supreme Court of Pakistan for 19 years particularly on the constitution and commercial sides. Mr. Mahboob Ahmed was appointed Judge of Lahore High Court in 1978 and became Chief Justice in 1990-91. He also has been the Chief Justice of Federal Shariat Court of Pakistan in 1997. He has also served as the acting Governor of Punjab. During his tenure as judge of Lahore High Court he was the first original side judge on the Banking Jurisdiction and also the Company

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Judge and Chairman-Election Authority. He also represented Pakistan in a number of conferences in the Middle East, Far East and Europe.

Mr. Mahboob Ahmed has been on the Board of Directors of Jahangir Siddiqui & Co. Ltd. since October 31, 2002. He is also the Director of Azgard Nine Limited.

Mr. Ahmed Elshall

Mr. Ahmed Elshall is the Chief Financial Officer of Dubai Bank. Mr. Elshall is an MBA, CPA and a Certified Financial Planner (CFP) and has more than 20 years of experience in Investment, Commercial and Islamic Banking.

He served as Senior Vice President and Group Head incharge of strategic projects at Union National Bank following a stint with the Abu Dhabi Islamic Bank where he held the position of SVP, Strategic Planning and Financial Control. Mr. Elshall also served as the Financial Controller, International Division and Senior Manager for Strategic Planning at Riyad Bank and as the Manger, Investors Tax Reporting Group at the Federal Home Loan Mortgage Corporation in Washington, D.C.

Mr. Ahmed Goolam Mahomed Randeree

Mr. Ahmed Goolam Mahomed Randeree is the Chairman of the DCD Group and its associated holdings in International Trade Finance and Property & Investment businesses. Having moved from South Africa to the UK in the mid 1970's, Mr. Randeree was instrumental in growing the groups Textile and Trade Finance business, Revelate Limited. The business operated throughout the UK, South Africa and the Far East. Mr. Randeree presided over the Group when its turnover and operations grew from US$ 2.5 million in 1977 to over US$ 150 million by 1998.

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Over the past 6 years, Mr. Randeree moved to the Middle East and concentrated on various new businesses on the Indian subcontinent, Hong Kong and the UAE. Dominion Asset Management, Hong Kong and Al Ajwad International, Dubai, U.A.E represent the on-going diversification of Mr. Randeree's holdings worldwide.

Mr. Ali Raza Siddiqui

Mr. Ali Raza Siddiqui joined JS-Investments as an Executive Director in 2005. Previously, he was Assistant Vice President at AIM Investments, a wholly-owned subsidiary of AMVESCAP Plc in Houston, U.S.A. At AIM, Mr. Siddiqui was part of a Five-person team responsible for the management of US$ 60 billion in mutual fund assets. Mr. Siddiqui holds a Bachelors Degree from Cornell University, USA, with double majors in Economics and Government.

Mr. Hasan A. Bilgrami

Mr. Hasan A. Bilgrami is the Founding Chief Executive Officer and Director of BankIslami. His association with BankIslami started as a consultant to the sponsoring shareholders right at the inception of the project where he was responsible for developing the business plan, arranging permissions, staffing and capital raising. Previously he worked as the Head of Asset Management with the National Investment Trust (NIT), as Country Manager Consumer Banking & Corporate Business with Gulf Commercial Bank (now PICIC Commercial Bank Limited) as General Manager Corporate Finance with ORIX Investment Bank and as Director and Head of Corporate Finance with Khalid Majid Husain Rahman, then a member firm of Deloitte & Touche. Mr. Bilgrami has overall 19 years of professional experience.

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Mr. Bilgrami has hands on experience in structuring Islamic modes of financing while he worked as a Secretary of the Financial Instruments Committee of the Islamic Finance Commission. His specific task was development of model financial instruments that could be used by the financial services industry in Pakistan. The scope of work not only included both asset and liability side products, but also included areas such as risk management and capital adequacy. Model agreements were also part of the mandate. His work of model agreements has been approved by the Shariah Board of the State Bank of Pakistan and has become the industry standard.

He is a Director on the Board of BankIslami's subsidiary, BankIslami Modaraba Investment Limited, Director of KSB Pumps Limited as well as a Chairman of its Audit Committee, Nominee Director of Haleeb Foods Limited. He is also the President of the National Council of the Institute of Cost and Management Accountants, Director of Pakistan Institute of Corporate Governance and a member of the Institute of Capital Markets, Pakistan. He has also been a Director on boards of PICIC, Soneri Bank Limited, Crescent Commercial Bank Limited, Fauji Fertilizer Company Limited and National Refinery Limited. Mr. Bilgrami graduated in Commerce from Karachi University and is a Fellow member of the Institute of Cost & Management Accountants of Pakistan and a Fellow of the Canadian Securities Institute.

Mr. Shabir Ahmed Randeree

Mr. Shabir Ahmed Randeree is a principal and CEO of DCD Group Ltd (Global), a worldwide group with core business interests in Finance and Property & Investments. He has over 25 years of experience of a broad array of real estate investments, including the development, acquisition and management of offices, hotels, retail space and residential developments.

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He has been the Group's Managing Director for the since 1992 and previous to this he was a founder member and Managing Director of Warrenby Limited, a business involved in International Trade Finance and Real Estate Commercial Investments in the UK, and which was later acquired by the DCD Group. He also has worked in the clothing import and export business with Dominion Clothing Distributors Limited where he was the Sales and Finance Director in the mid 1980's.

Mr Randeree holds a number of Directorships, including being a Director of the Al Baraka Bank Limited of South Africa and European Islamic Investment Bank Plc in UK. Mr. Randeree is also on the Executive committee of BMRC (a Charity related to the Ethnic Minorities Foundation UK) and Trustee for the British Edutrust Foundation, chaired by Lord Bhatia Mr. Randeree has done his BA Honors in Accounting and a post graduate MBA.

Mohamed Amiri

Mohamed Amiri has over 18 years of banking experience in both Islamic & International Banking and is presently working for Dubai Bank, U.A.E as Head of Retail & Business Banking Prior to joining Dubai Bank, Mr. Amiri was working for Dubai Islamic Bank as Executive Vice President Retail & Business Banking and was successful in opening many branches in a short span of three years. Mr. Amiri also carries a 9 years of valuable experience with HSBC Dubai, where he held the position of a Branch Manager at Deira Branch, the 2nd largest branch of HSBC in the Middle East. Mr. Amiri has a Bachelors degree in Management Information System and is also a Graduate from the first batch of Mohammed Bin Rashid Program for Leadership Development (MBRPLD).

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Sponsors

BankIslami is a joint venture among three financially sound and progressive

shareholders, namely, DCD Group, Dubai Bank and Jahangir Siddiqui & Co. Ltd. Please click on the following for details of our Sponsors:

DCD Group The history of the modern DCD Group can be traced back to Jersey ( The Channel Islands ) in 1975 with the formation of DCD Holdings Limited. After three decades of trading, today the Group has its Family Investment office based out of the DIFC (Dubai International Finance Centre) with its operations extending to London, New York and Dubai.

The DCD Group's core business activities are concentrated in the Real Estate and Banking sectors. The Real Estate division of the DCD Group concentrates on enhancing and delivering long-term gains for the Group and its Partners internationally. The Group has built its track-record primarily in the UK and USA, then spread to the Middle East and a select number of Far East and

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African destinations. Over the past three decades, the Group's real estate investments have produced a consistent, attractive IRR.

The Group takes a proactive hands-on Asset Management role and is responsible as a managing partner for all or a portion of the equity required in any given transaction. As of June 2007, the total value of properties owned and/or managed by the DCD Group, was in excess of US $3.0 Billion.

The DCD Group's interests in the Banking sector comprise of various niche holdings internationally, including a stake in Dallah Albaraka Bank Limited in South Africa which was formed in 1989 .

More recently, the Group played a pioneering role with QIIB (Qatar International Islamic Bank) in the formation of the Islamic Bank of Britain PLC (IBB) and retains its shareholding in the Bank. DCD also remains a founding shareholder in the European Islamic Investment Bank PLC (EIIB), which raised approximately 200 million pound, pre and post listing on the LSE. In 2007, the Group were founding investors in The Islamic Bank of Asia in Singapore, with DBS Development Bank of Singapore as the principle promoter.

Dubai Bank PJSC

Dubai Bank PJSC which commenced operations in September 2002, is one of the UAEs most dynamic financial institutions and closely associated with Dubai's plans of establishing itself as the regions financial and trading centre. The Banks focus is to be a leading financial institution that is a flagship for Dubai, the UAE, the GCC and beyond. Dubai Bank is 70% owned by Dubai Banking Group, with the remaining 30% being held by Emaar Properties.

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Dubai Banking Group was launched in May 2008 under the directive of HH General Sheikh Mohammed bin Rashid Al Maktoum to consolidate the existing Shariah-compliant investments of Dubai Holdings and form a global Islamic investment company.

Dubai Banking Group is managed by Dubai Group, the leading diversified financial services company of Dubai Holding. Emaar Properties is the largest real estate developer in the GCC region and have managed large-scale projects in Dubai such as: Dubai Marina, Burj Dubai, Dubai Mall. The Company has a collective presence in over 36 markets spanning the Middle East, North Africa, Pan-Asia, Europe and North America.

Dubai Bank offers a full range of products and services through its Corporate & Consumer Banking divisions. These include transaction and deposit accounts,financing, trade finance, and wealth management services as well as a host of other unique Banking services. In the near future, Dubai Bank plans to increase its current Banking network by opening additional branches, and developing new alliances with key financial institutions in the GCC and beyond.

Dubai Bank has identified Islamic Banking as a promising area. On January 1,2007, the Bank became a Shariah compliant financial institution. The members of Shariah Supervisory Board of Dubai Bank consists of Justice (R) Muhammad Taqi Usmani, Sheikh Nizam Yaquby, Dr Mohamed Elgari and Dr Mohamed Daud Bakar.

Jahangir Siddiqui & Co. Ltd.

Jahangir Siddiqui & Co. Ltd. ("JSCL") is the holding company for one of the largest and most diversified financial services groups in Pakistan, involved in investment Banking, broker-dealer operations, proprietary trading, insurance, Banking and asset management.

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The Company was established in 1991 and was the first Pakistani financial services company to boast a Wall Street pedigree due to its previous joint venture with Bear Stearns and Co. It is also the only securities company to be a primary dealer for Government securities in Pakistan and is one of the largest bond trading firms in Pakistan. JSCL is a listed company on the Karachi Stock Exchange.

JSCL subsidiaries include JS Global Capital Ltd, JS Bank., and JS-Investment Ltd. JSCL also has holdings in the sugar, sugar derivatives, specialty textile, specialty steels and insurance sectors through significant minority holding in leading companies in these sectors. These strategic investments and associated companies include, EFU General Insurance, EFU Life Assurance, Allianz EFU Heath Insurance, Azgard Nine and Al Abbas Sugar Mills amongst others.

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Shareholding Pattern:
Shareholding Founding Sponsors Dubai Bank PJSC Jahangir Siddiqui & Co. Ltd DCD Group Mr. Hasan A Bilgrami Chief Justice(R) Mahboob Ahmed Total General Public* Grand Total Rs. (Million) 1,310.53 1,112.56 1,028.48 5.81 1.31 3,459 1,821 5,280 % 24.82 21.07 19.47 0.11 0.02 65.50 34.49 100

* The initial public offering of BankIslami took place in March 2006. BankIslami shares were formally listed on the Karachi Stock Exchange on April 17, 2006. On October 31, 2006, the Board of Directors of BankIslami decided to further issue capital of Rs. 1.2 Billion through a right share issue of 60% at par i.e. Rs.10 each to existing shareholders. On August 23, 2007, the Board of Directors of the Bank decided to raise the paid up capital of the Bank to Rs. 4.2 billion through a right issue of 31.25% at par i.e Rs.10 each to existing shareholders. On March 31, 2008, BankIslami issued an additional Rs. 80 Million shares to general public. On August 27, 2008, the Board of Directors of the Bank decided to raise the paid up capital of the Bank to Rs. 5.2 billion through a right issue of 23.366% at par i.e Rs.10 each to existing shareholders.

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Shariah Supervisory Board

The Shariah Board of BankIslami consists of three renowned and distinguished Shariah scholars namely Justice (R) Mufti Muhammad Taqi Usmani, Prof. Dr. Fazlur Rahman and Mufti Irshad Ahmad Aijaz. Mufti Irshad Ahmad is also the Shariah Adviser of the Bank who works full-time with the management and guides them in issues pertaining to the Shariah. Please click on the following names to view the details of our Shariah Board members:

Justice (R) Muhammad Taqi Usmani

Justice (R) Muhammad Taqi Usmani is the Chairman of Shariah Supervisory Board of the Bank. He is a renowned Islamic Scholar of Pakistan and has held a number of positions in board of prestigious Islamic institutions.

Presently, he is the Permanent member of International Islamic Fiqh Academy, Jeddah, Vice President of Darul Ulloom Karachi, Chairman International Shariah Standard Council of Accounting and Auditing Organization of Islamic Financial Institutions (AAOFI), Bahrain; Chairman of Shariah Board Bahrain Monetary Agency (BMA), Bahrain; Chairman of Shariah Board, Abu Dhabi Islamic Bank, UAE; Chairman of Shariah Board, Meezan Bank, Pakistan;

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Chairman of Shariah Board, Islamic House of Britain plc, UK; Chairman of Shariah Board, HSBC Amanah Finance, Dubai.

Muhammad Taqi Usmani obtained his 'Takhassus' (Specialization in Islamic Fiqh and Fatwa) degree, equivalent to PhD, from Darul Ulloom Karachi in 1961. He also holds a Master's degree from Punjab University in Arabic Literature and LLB degree from Karachi University.

Muhammad Taqi Usmani has served as a Judge of Shariat Appellate Bench, Supreme Court of Pakistan from 1982 to 2002 and Judge of Federal Shariat Court of Pakistan from 1980 to 1982. He has written a number of books and articles on Islamic Banking and Finance in Arabic, Urdu and English.

Professor Dr. Fazlur Rahman

Professor Dr. Fazlur Rahman is the member of Shariah Supervisory Board of the Bank. He is a renowned scholar and has over 30 years of teaching experience in various countries of the world including Malaysia and Saudi Arabia.

Presently, he is the Director of Islamic Guidance Trust and Shariah Adviser of Atlas Asset Management's Atlas Islamic Fund. He is also a faculty member of Sir Syed University in Karachi.

He has contributed several articles on interest, Muslim personal laws, and human rights etc. Moreover, one of his writings, "a study of commercial interest from the point of view of Fiqh and History", is of great repute in literary circles and has been extensively quoted by Federal Shariah Court in its Judgment in 1991 and again in 1999.

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Mufti Irshad Ahmad Aijaz

Mufti Irshad Ahmad Aijaz is appointed as the full time Shariah Adviser to the Bank. He comes from a leading family of scholars. His father, Maulana Muhammad Ashfaque Ahmad, is better known for translating in English the famous Tafseer e Usmani. He graduated from Jamia Uloom Islamiyyah, Binnori Town, Karachi and he has done his Shadat-ul-Aalamia (Masters in Arabic and Islamic Studies) from there as well. Afterwards, he completed his Takhassus fi al-Iftaa (Specialization in Islamic Jurisprudence and Fatwa) from Jamia Darul Uloom, Karachi.

Mufti Irshad Ahmad is well versed in Islamic economics. Mufti Irshad has passed an Islamic economics course Contemporary Business and Banking and its critical evaluation in the light of Shariah from the Centre for Islamic Economics, Jamia Darul Uloom, Karachi. Mufti Irshad has also recently completed his MBA program from (AMI) Iqra University, Karachi. He is also presently associated with Iqra University as Lecturer in Islamic Studies and is enrolled in the MPhil program with specialization in Islamic Finance at (AMI) Iqra University, Karachi.

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Bank Islami Areas of Working

Retail Banking We offer you a range of saving and investment alternatives to help you grow your money in safe and secure manner. Consumer Banking We offer you superior financing products and quality service to help you own your home or car for a better quality life. Corporate Banking We are your financial partners to help you meet your business needs with timely and cost effective financial solutions. Value Added Services We provide state of the art banking services and channels to help you access your funds with utmost ease and convenience.

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Financial Highlights

Amounts in Rs. Million Total Deposits Total Assets Total Financing Total Investments Asset to Deposit Ratio Return on Assets Return on Equity Earnings Per share (Rs.) No. of Employees No. of Branches

Mar07 2,717 6,268 1,470 399 54% -0.30% -0.59% -0.09 300 10

Jun 07 4,196 7,824 2,188 645 52% -0.48% -1.17% -0.13 413 14

Sept07 6,246 9,985 3,486 1,920 56% -0.36% -1.14% -0.14 471 16

Dec 07 9,934 14,447 3,963 3,864 40% -0.26% -0.96% -0.13 563 36

Mar08 9,806 14,827 4,592 4,155 47% -0.50% -1.81% -0.08 708 36

jun 08 11,353 16,581 5,387 3,841 47.45 -0.06 -0.23 -0.02 723 36

Sept08 11,242 17,231 6,827 5,018 60.73 0.04 0.15 0.02 825 40

Dec 08 12,478 19,089 6,528 5,020 52 -0.28 -1.02 -0.12 1,188 102

Mar09 16,514 22.935 6,704 7,089 29 -0.37 -1.65 -0.16 1,430 102

Total Deposits

Total Investment

Total Financing

Total Assets

Branch Network

Employee Per Branch

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Credit Rating

Credit Rating:

Long Term Short Term

A A1

The Bank has been assigned a long term entity rating of 'A' and short term rating of 'A 1' by Pakistan Credit Rating Agency Limited (PACRA), reflecting BankIslami well conceived business strategy and

establishment of an effective operating platform to execute the business strategy. (Rating as of June 2008 review)

Assessment of PACRA: BankIslami, capitalizing on its expanded outreach, experienced substantial growth in finances in 2008. This enabled BankIslami to register a significant increase in its net interest revenue. Other operating income witnessed an upsurge on account of higher fee and commission. Meanwhile, there was a sizeable increase in personnel and other expenses, owing to the ongoing network expansion. Moreover, BankIslami made a net provision of PKR 130mln, due to sizeable increase in the classified portfolio. This resulted in doubling the pre-tax loss of the bank. The performance trend remained the same in 1Q09 with a slight addition in NPLs.

Going forward, BankIslami intends to leverage its expanded outreach to enhance both its deposit base and finances portfolio. Although the bank has plans to penetrate the retail segment, no significant lending is expected over the near-term, owing to currently weak credit environment. BankIslami would continue with its recent strategy of focusing the corporate segment, though cautiously here as well. The bank, with a view to reduce its cost of funds, plans to focus more on

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demand deposits. BankIslami, to augment further its retail franchise, has entered into agreements with different organizations to launch new products and services. Meanwhile, BankIslami, with surplus liquidity and support of strong sponsors, eyes acquisition of banks as a strategy to achieve sizeable growth. These initiatives exhibit clarity of direction but the extent to which they materialize remains to be seen.

BankIslami's core banking software is iMal, developed by Path Solutions, a software house in the Middle East. Based on Shariah stipulations and compliant with Basel II, iMal provides an integrated solution for all operational requirements. The implementation of the software is to be completed by end-09.

The target is to take consumer financing, over the medium term, upto 10%-15% of the total advances. With expansion in outreach, the bank intends to rationalize its deposit mix by substituting a portion of term deposits with current deposits. Nevertheless, deployment of excess liquidity would remain a challenge in the absence of an active Shariah compliant money market. Earnings from investment banking business are expected to grow significantly. The deal pipeline is currently healthy. Meanwhile, BIPL plans to lay down requisite infrastructure for offering wealth management services, going forward. BankIslami, due to initial stage of operations, maintains ample liquidity and has a very low deposit concentration, which clearly stands out among close peers. The banks investment portfolio is modest in size (end-08: PKR 207mln) mainly dominated by strategic investment (PKR 191mln). The bank recently expanded its exposure to the sukuk market. There is a revaluation surplus, though slight, available on this investment (PKR 16 mln).

BankIslami, mainly due to un-utilized resources, has a relatively high level of capitalization (CAR), which offers significant room for credit expansion. However, with restricted internal generation, the bank would remain dependent on its sponsors meeting

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Risk Management:
Risk Management is the process of managing uncertainties that arises in the normal course of business activities. It also encapsules risk/reward trade-off. The function of risk management is one of the most important areas of the banking business, and covers a wide spectrum of financial business risk categories; including Credit, Market, Liquidity, Operational etc. The Group follows an effective risk governance which commensurate's well with our current size and structure.

During the last couple of years risk management has weathered a lot of criticism with relations to its effectiveness in the global financial markets. While financial managers at the time were clearly divided from the center on the role of risk management in the global crisis of the recent past, the division now is at the furthest from the equator. More and more significance is being attached to an effective and integrated risk management.

The Group is also committed to the full and a timely implementation of Basel II (B2) which would effectively provide for a risk-based capital approach. Currently, the Bank adheres to the regulatory requirement in this respect, and conducts its business accordingly. Risk-exposure limits in compliance with regulatory and banks own internal policies have also been defined for each asset class.

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Risk Management Framework:

The Risk management function has now taken its root within the financial institutions on a world-wide basis, and is as critical in fulfilling the institutes financial objectives as the objectives themselves. Its not just a function to foretell and manage an adverse future event, but it brings about the basic function of being informed; being informed of what can or may happen, being informed of what steps/controls need to be taken to reduce/mitigate the level of risk and to be informed and to be reasonably prepared to deal with any undesired event/ circumstances. Decisions emanating from this basic understanding form the cornerstone of our Risk Management Framework.

A strong organizational set-up, with clearly defined roles and responsibilities permits a higher level of articulation of the banks' risk mandate, establishment of a structure that provides for authority, delegation, accountability, and the development of a control framework. Risk management cannot live in a vacuum; in order to be effective, it has to be run on an enterprise level. Our framework comprises of a separate department, with a dedicated and growing team, which share our core strategic values including an effective Shariah compliance. Committees related to the management of risks at BIPL form the main layer of the framework, the inflow/outflow of information is through the dedicated function of risk management. The Head of Credit / Risk, Operations, Finance, Treasury and other related functions review the critical risk areas of operational, credit and market risk as well as other risks being faced by the organization, along with the magnitude of their impact and likelihood of occurrence.

BIPL perceives the management of risk not to be limited to a department or a function, but rather should readinto our daily business routine. Ideas and decisions are heavily based on the

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risk/ reward trade-off some of the ideas which never see the light of the day are usually the ones which have been shelved due to an unacceptable risk level. The risks when identified and analyzed are further weighed against the applicable risk weights and its impact reviewed on a periodic basis. This pro-active approach helps in outlining the organizations risk tolerance level vis-a-vis BIPL's risk appetite in relation to its size, current position and market standing, with a view to refine processes, controls and guidelines to not only mitigate, but also to effectively manage risk.

A well formulated policy and procedure is critical for an effective risk management framework; it than needs to be reinforced through a strong control culture that promotes sound risk governance. Our Risk Management Framework has been developed keeping in mind, that: - To be effective, strong monitoring and control activities should be integral to the Bank. - Critical Decision Making should be based on relevant research, proper analysis and effective communication within the Bank. - Every loss or near miss event should provide some KLO (Key Learning Outcome), developing a better risk analysis ability.

Strategic Level: At strategic level, the risk related functions are approved by the senior management and the Board. These include; defining risks, setting parameters, ascertaining institutions risk appetite, formulating strategy and policies for managing risks and establishing adequate systems and controls to ensure that overall risk remains within acceptable level and the reward compensates' for the risk taken.

Macro Level: It encompasses risk management within a business area or across business lines. Generally the risk management activities performed by middle management or units devoted to risk reviews fall into this category. Periodical sensitivity / scenario analysis, stress testing is performed, to review sensitivity and resilience of the portfolio.

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Micro Level: Risk management at micro level, is of critical importance. This function if performed with diligence and understanding, can be of maximum benefit to the organization. Micro level risk management includes the business line acquisition, strong adherence to the credit and other related criteria.

Capital Management:
Our objectives for a sound capital management are: 1) to ensure that the Group complies with the regulatory Minimum Capital Requirement (MCR) 2) maintain a strong credit rating 3) maintain healthy capital ratios to support business and to maximize shareholder value and 4) to operate with a Revolving Planning Horizon and be able to take advantage of new investment opportunities when they appear.

The State Bank of Pakistan through its BSD Circular No.07 dated April 15, 2009 requires the minimum paid up capital (free of losses) for Banks / Development Finance Institutions to be raised to Rs.10 billion by the year ending December 31, 2013. The raise is to be achieved in a phased manner requiring Rs.6 billion paid up capital (free of losses) by the end of the financial year 2009.

The paid up capital of the Bank (free of losses) as of December 31, 2009 amounts to Rs 4.706 billion. However, the Bank has been granted an exemption till March 31, 2010 to meet the Minimum Capital Requirement by the SBP, vide its letter BSD/BAI-3/608/191/2010 dated March 3, 2010. The Board of Directors, in order to comply with the enhanced capital requirement, is considering various options including but not limited to issue of right shares and acquisition options. In this connection, the Bank has already made an announcement to Karachi Stock Exchange about its decision to enter into a Memorandum of Understanding (MoU) with another Islamic Commercial Bank in relation to its merger/acquisition into/by the Bank. The Board is confident that it will meet the Minimum Capital Requirement within the stipulated time.

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In addition, the Group was also required to maintain a minimum Capital Adequacy Ratio (CAR) of 10% of the risk weighted exposure of the Group. The Group CAR as at December 31, 2009 was 20.87% of its risk weighted exposures.

Compliance with Code of Corporate Governance:

The requirements of the Code of Corporate Governance set out by the Karachi Stock Exchange in its listing regulation relevant for the year ended 31st December 2009 have been adopted by the Bank and have been duly complied with. A statement to this effect is annexed with the report.

Bank Islami is in complete complience with the Code of Corporate Governance contained in the regulations G-1 of the Prudential Regulations for Corporate/Commercial Banking issued by the State Bank of Pakistan for the purpose of establishing a framework of good governance, whereby a listed banking company is managed in compliance with the best practices of corporate governance.

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Milestones

24 March 2004 26 May 2004 19 August 2004 18 October 2004

Concept paper of Islamic Bank presented to Sponsors; JS Group and DCD Group Application for the license of an Islamic Bank was submitted to SBP BankIslami received the No Objection Certificate from SBP BankIslami became a legal entity after SECP granted it an incorporation certificate

31 March 2005 26 September 2005

SBP Governor, Dr. Ishrat Hussain issued Islamic Banking license to BankIslami Dubai Bank became founding shareholder of BankIslami by investing 18.75% in the total Capital

26 February 2006 6 March 2006 17 March 2006 7 April 2006 7 April 2006

BankIslami share debuted on the Karachi Stock Exchange BankIslami's three day Initial Public Offering (IPO) was initiated and got oversubscribed by 9 times State Bank of Pakistan declared BankIslami Pakistan Limited as a Scheduled Bank BankIslami started commercial operations from its 1st branch at SITE, Karachi BankIslami became the First bank in Pakistan & Asia and the Second Bank in the World to install BIOMETRIC ATM BankIslami became the First bank in Pakistan to launch Internet banking from start of operations BankIslami's second and third branch opened simultaneously in Clifton and Korangi Industrial Area in Karachi The Fourth branch of BankIslami located on 26th Street of Phase V, D.H.A opened

7 April 2006

28 April 2006 9 June 2006

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its doors for customers 7 July 2006 The official inauguration of BankIslami was conducted at the Governor House, Sindh BankIslami's Shaheed -e- Millat branch located at Adam Arcade, BMCHS, Shaheede-Millat Road, Karachi starts operations State Bank's Director of Islamic Banking, Mr. Pervez Said inaugurated the induction ceremony of the first Trainee Officers batch of BankIslami Phone Banking services were launched by BankIslami Sixth branch of BankIslami opened on Rashid Minhas Road, Karachi BankIslami's North Nazimabad branch started operations. It was the 7th branch opened by the Bank BankIslami formally inaugurated its eighth branch located in Gulshan-e-Maymar BankIslami went nationwide with the opening of its 9th branch on Jinnah Road, Quetta. This was BankIslami's first branch outside Karachi BankIslami opened its 10th Branch in Baqai Medical University, Karachi

14 July 2006

31 August 2006 4 September 2006 8 September 2006 8 December 2006 15 December 2006 22 December 2006 29 December 2006

3 March 2007 30 April 2007 3 May 2007 11 May 2007 25 May 2007 15 June 2007 21 June 2007 29 June 2007 6 July 2007

BankIslami signed ORIX network for its '1 Card' BankIslami became the first Bank in Pakistan to sign contract with Haydrian for 'XM3", a state of the art Anti Money Laundering (AML) software BankIslami launched home financing product "MUSKUN" BankIslami's Islamabad branch opened in Blue Area, Islamabad Wah Cantt Branch of BankIslami was opened Karachi Stock Exchange Branch of BankIslami was opened BankIslami signed agreement for a state of art Shariah compliant Banking system software "iMAL" with Path solutions Mirpur (Azad Kashmir) Branch of BankIslami was opened BankIslami deployed its Deposit ATM machine. Based on GBNA technology, the ATM is capable of accepting 100 notes at a time

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18 August 2007

BankIslami bought JS Finance Limited, a Modaraba management company and renamed it as BankIslami Modaraba Investments Limited BankIslami opened its branch in Lahore. This was the 15th Branch of BankIslami and its first in Lahore 16th branch of BankIslami opened in Jodia Bazar, Karachi BankIslami completed its First Investment Banking transaction by issuing privately placed SUKUK of Rs. 1.2 Billion for PEL 17th branch of BankIslami opened in Pishin 18th branch of BankIslami opened in Sukkur 19th branch of BankIslami opened in DHA, Lahore 21st branch of BankIslami opened in Hyderabad 20th branch of BankIslami opened in Chaman BankIslami led managed a Consortium to successfully achieved the financial close of a landmark Investment Banking deal of SSGC Sukuk of Rs. 5 Billion 22nd branch of BankIslami opened in Muslim Bagh 23rd branch of BankIslami opened in Qila Saifullah 24th branch of BankIslami opened at Cloth Market, Karachi 25th branch of BankIslami opened in Multan 26th branch of BankIslami opened at Bank Square Road, Larkana 27th branch of BankIslami opened in Faisalabad Nine branches of BankIslami opened in different cities of Pakistan. The branch network grew to 36 branches in 23 Cities of Pakistan

31 August 2007 7 September 2007 25 September 2007 16 November 2007 26 November 2007 28 November 2007 2 December 2007 3 December 2007 10 December 2007 18 December 2007 18 December 2007 19 December 2007 24 December 2007 26 December 2007 27 December 2007 31 December 2007

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13 February 2008

BankIslami's branch network expansion plan of opening 30 branches and 32 sub branches in 2008 approved by State Bank of Pakistan BankIslami installed the first ever ATM in an Islamic School at Darul Uloom, Karachi 37th branch of BankIslami opened at DHA, Phase IV, Karachi BankIslami's Response to Fatwa against Islamic Banking. (Download) BankIslami posted an operating profit of Rs. 19.210mn in 2nd quarter of 2008 BankIslami announces right issue of 23.36% subject to SECP approval. 38th branch of BankIslami opens on UP More Road, Karachi BankIslami opens branches at Kotli, Islamgarh and Sharea-e-Faisal Road, Karachi. BankIslami opens its sub branch in Shadman Town No.1, North Nazimabad Karachi. Sub Branch of BankIslami opens in Khyber Bazar, Peshawar BankIslami opened its 50th Branch today. It has been the fastest growth by any Bank in Pakistan. BankIslami opens seven new branches nationwide. Bankislami crosses 50 branches mark by opening its branch at Nazimabad Block A Karachi. BankIslami opens ten Online branches this month. BankIslami signs strategic cooperation with Pak Qatar Takaful Company for Takaful cover to BankIslami Auto Ijarah customers. BankIslami ceates history by becoming the first bank to open 100 plus branches in less than three years and with this complete its yearly expansion plan of reaching to 102 Online branches in 49 cities nationwide.

14 February 2008 22 August 2008 29 August 2008 27 August 2008 27 August 2008 12 September 2008 26 September 2008

17 October 2008 18 October 2008 31 October 2008 31 October 2008 November 1 2008 November 30 2008 December 5 2008

December 31 2008

March 31 2009

BankIslami witnesses phenomenal increase of 32% in Deposits and 39% increase in Customer base over the same period last year.

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Branch Network

Our Network:
BankIslami offers its products and services through a wide network of branches and ATMs in different cities of Pakistan. Currently it has the following branches and ATMs:

Corporate Headquarters BankIslami Pakistan Limited 11th Floor, Executive Tower One Dolmen City, Marine Drive Block 4, Clifton, Karachi, Pakistan UAN: (021)- 111-BIP-111 (111-247-111) Fax: (021)-5378373 E-mail: info@bankIslami.com.pk SWIFT Code: BKIPPKKA

Our Branches: Punjab Blue Area Branch, Islamabad Blue Area Branch, 5-6, Chenab Center, Block-104-E F-7/G-7, Jinnah Avenue Tel.: 051-2804271-74 Fax.: 051-2804275 I-9 Branch, Islamabad Plot No-2 E, I-9 Markaz Islamabad. Tel.: 051-4858403-08,4445851 Fax.: 051-4445852

F-10 Islamabad plot- No 06-C Markaz F-10 Islamabad. Tel.: 051- 2222961-66 Fax.: 051- 2222965

I-8 Branch, Islamabad Plot No 24 Executive Centre I-8 Markaz Islamabad. Tel.: 051-4861017,4861029,4861117-18,4861038 Fax.: 051-4861060

Turnol Sub Branch, Islamabad

Satellite Town Branch, Rawalpindi

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Muhammad Ayub Plaza Main G.T Road Turnol, Islamabad Tel.: 051-2217022 Fax.: 051-2217021 Chaklala Scheme III, Rawalpindi Plot# 11, Commercial Bazar, Chaklala Scheme III Rawalpindi. Tel.: 051-5766140-43 Fax.: 051-5766144 Jail Road Branch, Lahore Plot No. 5-A, House No.5, Main Gulberg Road, near EFU Building, Jail Road, Lahore, Pakistan. Tel.: 042-5790571-88 Fax.: 042-5790573 Badami Bagh Branch, Lahore 23-peco Road Badami Bagh Lahore. Tel.: 042-7723865-68,7723881 Fax.: 042-7723882 DHA G Block Sub Branch, Lahore 47-G,Commercial Area, Phase I Block - G, Stadium Road, D.H.A, Lahore Tel.: 042-5691066-72 Fax.: 042-56910673 Azam Cloth Market, Lahore F-1207 Azam Cloth Market Lahore. Tel.: 042-7670188,7658602,7670256 Fax.: 042-7658232 Thokar Niaz Baig Branch, Lahore

69/B, 4th Road, Satellite Town, Rawalpindi, Pakistan. Tel.: 051-4572001-4 Fax.: 051-4572005 Saddar Branch, Rawalpindi Survey No-367/25 Compound bungalow, No-60 Bank Road Cantt Rawalpindi. Tel.: 051-5120381-4 Fax.: 051-5120385 DHA Branch, Lahore 153 Block "Y" DHA, Lahore Tel.: 042-5692598-9, 5692637 Fax.: 042-5692499 Ferozepur Road, Lahore 174- Ferozepur Road Lahore. Tel.: 042-7524321,7524324,25,7524327 Fax.: 042-7524331 Akber Chowk, Lahore 883-D, Peco Road, Faisal Town Akber Chowk, Lahore. Tel.: 042-5221731-37 Fax.: 042-5221738 Darogha wala gate Branch, Lahore 326 G.T.Road(Link Shalimar Road) Tel.: 042-6530512-16 Fax.: 042-6530517 Johar Town Branch, Lahore

3/D- Nawab Town, Rawind Road,Thokar Niaz Baig,Lahore M-Block, Johar Town, Lahore

Airport Road Branch, Lahore Plot no 595/8, Airport Road,Main Defence Road, Lahore Cantt ( Adjacent to Phase VIII ), Lahore Tel.: 042-5701160-65 Walton Road Branch, Lahore Plot 48-E Super Town, Walton Road Lahore, Cantt.

Circular Road Branch, Lahore Circular Road , Near Mochi Gate, Lahore Tel.: 042-7374009-15 Fax.: 042-7374016 Susan Road Branch, Faisalabad Plot No S-8 Madina Town Main Susan Road Faisalabad.

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Tel.: 042-6603701-2

Tel.: 041-8728626-8, 8728631-08-31 Fax.: 041-8728671 Gujranwala Branch Gujranwala BX-11-75-7S-10+12, GT Road, Gujranwala, Pakistan. Tel.: 055-3820511-16 Fax.: 055-3820517 Vehari Road Branch, Multan Vehari Road, Multan. Tel.: 061-6761900-6 Fax.: 061-6761907 Sargodha Branch 65/2 Railway Road, Sargodha. Te.: 048-3768264-68 Fax.: 048-3768269 Mian Channu Branch Ghazi Mor G.T Road Mian Chunnu Tel.: 065-2664001-7 Fax.: 065-2664008 Sadiqabad Branch Allama Iqbal Road, Opp. Ghalla Mandi, Sadiqabad Te.l: 068-5700594-7, 068-5800591-3-5 Fax.: 068-5800598 Bhawalpur Branch Block No. 915, Circular Road, Bahawalpur. Tel.: 062-2732235-38 Fax.: 062-2732239 Kashmir Road Branch, Sialkot B-III-116/99/2 Kashmir Road, Sialkot. Tel.: 052-4270419-20, 4270429-30,4270439-40 Fax.: 052-4270426 Jhang Branch 95-A College Chowk , Jhang. Tel.: 047-7651401-05 Fax.: 047-7651406

Kotwali Road Branch, Faisalabad P-16, Kotwali Road, Faisalabad Tel.: 041-2412123-29 Fax.: 041-2412130

Abdali Road Branch, Multan Abdali Road, Chowk Nawan Sher, Multan Tel.: 061-4500356-59 Fax.: 061-4500360 Gulgusht Branch, Multan Jalal Masjid Chowk, Multan

D.G. Khan Branch Jampur Road Dera Ghazi Khan Tel.: 064-2473201-07 Fax.: 064-2473208 Rahimyar khan Branch Model Town Branch 21-A, Model Town, Rahim Yar Khan, Pakistan. Tel.: 068-588691-77 Fax.: 068-5886978 SIE 1 Branch (Gujrat) Danish Metal Work, SIE-1, Gujrat Te.: (053)3538010 -15 Fax.: (055) 3538016 Okara Branch 69/1 M.A.Jinnah Road, Okara. Tel.: 044-2522901-6 Fax.: 044-2552907 Mainwali Branch Mouza urra khel Pacca,Main Sargodha Road,Mianwali Tel.: 0459-237531 Fax.: 0459-237532

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Sahiwal Branch 418 High Street, Sahiwal. Tel.: 040-4228284-88, 4467688,4461688 Fax.: 040-4462688 Jehlum Branch Tehsil Road, Near Shandar Chowk, Jehlum Tel.: 0544-620503-4 & 8, 620584 & 88 Fax.: 0544-620498 Taxila Branch Fasial Shaheed Road, Taxila Ph: 051-4535055 - 58 Fax.: 051- 4534985

Chakwal Branch Khasra # 4516 Jhelum, Road Chakwal. Tel.: 0543-552739,42,44,45,56 Fax.: 0543-552760 Wah Cantt. Branch A-12, Shahwali Colony, Mall Road, Wah Cantt, Tel.: 051-4539046-7 Fax.: 051-4539044 Hazro Branch Circular Road, Hazro Tel.: 057-2310048-51 Fax.: 057-2310019

Sindh Main Branch Clifton, Karachi 11th Floor, Executive Tower, Dolmen City, Marine Drive, Block-4, Clifton, Karachi. Tel.: 021- 5839906 Fax.: 5378373 Al Hilal Society Branch, Karachi Shop No,1 Ground floor, Jawwad Court Plot No, SC-11, KDA Scheme No#7 Main University Road, Chandni Chowk,Karachi. Tel.:021-4860713-16,4860728 Fax.: 021-4860704 Baqai Medical University Branch, Karachi 51-DHTOR, Baqai Medical Centre, Super Highway,North Bond).Karachi. Tel.: 021- 4410220-4410201 Fax.: 4410294. Cloth Market Branch, Karachi Cloth Market Branch Shop-05 Cochinwala Market Laxmidas Street Karachi. Tel.: 021-2469031-35 Fax.: 021-2469030 26th Street D.H.A. Branch, Karachi 26th Street Branch, 31-C, Badar Commercial Street No.1 Phase V, D.H.A. Karachi. Tel.: 021 5349244-5 Fax.: 5349243 Baloch Colony Branch, Karachi Plot No, SA-2/1 Block-3 Administrative Society, Karachi. Tel.: 021-4300036-42 Fax.: 021-430004

Burns Road Sub Branch, Karachi Land Survey, Sheet No. AM 51 Burns Road, Karachi Ph: 021-2215505, 2215527, 2215689 Fax.: 021-2215480 DHA Phase IV Branch, Karachi Plot # 36-C Sunset Commercial Street # 2 D.H.A Phase 4 Karachi. Tel.: 021-5313191-7 Fax.: 5313190

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Dhoraji Sub Branch, Karachi Al Madina Heights, Plot Survey No. 35 C/449 C. P Berar Cooperative Housing Society Tel.: 021-4860407-10,4860566-68 Fax.: 021-4860569 Gulshan-e-Maymar Branch, Karachi Gulshan-e-Maymar Branch, Areeba Heaven, SB-3, Sector X-II Karachi. Tel.: 021-6833354-5 Fax.: 6833445 Karachi Stock Exchange Branch, Karachi Room No. 520, 5th Floor, KSE Building Karachi Tel.: 021-2462861-67 Fax.: 021-2462490 Malir Cantt Branch, Karachi Plot No. 35, Block-5 Cantt Bazar, Malir Cantt Karachi. Tel.: 021-4491481-82

F.B Area Sub Branch, Karachi Plot No.C-6, Block 4, KDA Scheme #16 F.B. Area, Karachi Tel.: 021-6827783-87 Fax.: 021-6364659 Jodia Bazar Branch, Karachi Jodia Bazar Branch Ibrahim Manzil, Jodia Bazar Darya Lal Street Karachi. Tel.: 021-2462488-9, 2462831-4 Fax.: 2416368 Korangi Branch, Karachi Korangi Branch, Plot No. 51/9-B Sector 15 Korangi Industrial Area, Karachi. Tel.: 021-5114488-91 Fax.: 5114494 Nazimabad #7 Sub Branch Plot No-4 Row No-1 sub block,iii Situated at Nazimabad, Karachi. Tel.: 021-6707492-96 Fax.: 6707497

North Nazimabad Block A, Branch, Karachi Shop No. 3A, 3B, 3C, 2B Unique Centre, Blcok A, North Nazimabad, Karachi Tel.: 021-6722504-6 Fax.: 6722507 Orangi Town Branch, Karachi Plot No. LS 55 & 56, ST 11-A Sector 1, Block D, Orangi Town,Karachi. Tel.: 021-6664031-34,6692257-59 Fax.: 021-6662257

North Nazimabad Branch, Karachi North Nazimabad Branch, D-5, Block-L, North Nazimabad Karachi. Tel.: 021-6676474-75 Fax.: 6676488 Power House Branch, Karachi St-3 As-28 Comm. Area Sector 5-H Power House, New Karachi. Tel.: 021-6901356 - 9, 6901362 Fax.: 021-6901364

Rashid Minhas Road Branch, Karachi S.I.T.E. Branch, Karachi Rashid Minhas Road Branch, Plot No. FL-3/13 & 14, Shop Nos. 8 & 9, Anum Trade Center, E-31-B, Block-5, Gulshan-e-Iqbal Karachi. Ghani Chowrangi, S.I.T.E., Karachi. Tel.: 021-4818227-9 Tel.: 021-2587661-2 Fax.: 4818135 Fax.: 2587510

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Shadman Town Branch, Karachi Shadman Town Sub Branch, Shop No. 1-5 KDA Flats Phase # 3, Sector 14/B Shadman Town No. 1, North Nazimabad Karachi. Tel.: 021-6950027-33 Fax.: 021-6950034 Shaheed-e-Millat Branch, Karachi Shop No. 15 & 16, Adam Arcade, B.M.C.H.S. Shaheed-e-Millat Road, Karachi. Tel.: 021-4145305-9 Fax.: 4145310 Saddar Branch, karachi Plot no 7/17 saddar bazar quarter Bohri bazar raja ghanzaefar ali khan road saddar karachi Tel.: 021-5219891-94 Fax.: 021-5219895 UP More Branch, Karachi UP More Branch, LS-7, Street No. 8 Sub Sector 11-I, North Karachi Town Ship Karachi. Tel.: 021-6950158-59-61-64-66 Fax.: 6950167 Auto Bahan Branch, Hyderabad Hyderabad Branch Plot # C-10-8, C-10- 3 Block C Auto Bhan Road. Hyderabad, Pakistan. Tel.: 022-3820301-2-3-4-5-6-7 Fax.: 022-3820308 Tando Allahyar Branch Tando Allahyar Branch Mir Pur Khas Road, Tando Allahyar Tel.: 022-3891114, 3892424, 3891442, 3892443 Fax.: 022-3891699

Shah Faisal Colony Branch, Karachi Shah Faisal Colony Branch Shop No 1 & 2 Plot No A/6, Shop No 1 & 2 Plot No A/7 Surrey No, 135, Deh Drigh Colony Shah Faisal Colony Karachi. Tel.: 021-4686121-25 Fax.: 021-4686126 Shahra-e-Faisal Branch, Karachi Shahra-e-Faisal Branch, Shop No. 1, Faisal Tower. Plot No. 25/3 Survey Sheet No. 35/1 Block 7 & 8 Maqbool CHS Ltd. Tel.: 021-4555985-87 Fax.: 021-4555991 University Road Branch, Karachi Shop No. 1, Ground Floor, Jawwad Court, Plot No. SC-11, KDA Scheme No.7, Main University Road

Gulistan-e-Jauhar Branch, Karachi Shop No. W-9, 10 8 11 Eastern Print Appt. Sub Plot No: Fl-23/4 On Plot No. Fl-23/4 Block 15, KDA Scheme 36 Gulistan-e-Johar Karachi. Heerabad Branch, Hyderabad A/113-261, Jail Road, Heerabad, Hyderabad. Tel.: 022-2636768-70, 2636862 -3 Fax.: 022-2636864 Mirpurkhas Branch Station Road Mirpur Khas Branch New Town Station Road, Mirpur Khas, Pakistan. Tel.: 0233-874287 Fax.: 0233-875802

Sukkur Branch Sukkur Branch, Umar Welding Store City Survey No. 3/21 Station Road Sukkur. Tel.: 071-5617322-8 Fax.: 071-5617329 Nawabshah Branch Nawab Shah Branch City Survey No. 225 Ward A Masjid Road Nawab Shah.

Larkana Branch Larkana Branch City Survey # 1806 Word-A Bank Square Road Larkana. Tel.: 074-4059833-6 Fax.: 074-4059887

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Tel.: 0244-330920-4, Balochistan

Fax.: 0244-330928

Jinnah Road Branch, Quetta Jinnah Road Quetta, Pakistan. Tel.: 081-2821743-28-46 Fax.: 081-2821650 Airport Road Branch, Quetta Alam Khan Chowk Airport Road Quetta. Tel.: 081-2864627-29, 081-2840114, 081-2840121 Fax.: 081-2840135 Muslimbagh Branch Muslimbagh , Baluchistan Tel.: (0823) 669823-29 Fax.: (0823) 669830 Chaman Branch Trench Road,Chaman. Tel.: 0826-618032-37

Iqbal Road Branch, Quetta Shop No 605 Khewat No. 200 Khatooni No 234 Ward No 18 Urban No 1 Sharah-e-iqbal Quetta Tel.: 081-2866510-13-36 Fax.: 081-2829739 Kucklak Branch, Quetta Chaman Raod Quetta, Quetta Tel.: 081-2891591-2 Fax.: 081-2891580 Pishin Branch Pashin Branch Bund Road, Opp Madina Hardware, Pasheen Tel.: 0826-421384 Fax.: 0826-42187 Zhob Branch Market Road BranchZhob. Dukki Branch Masjid Road, Dukki Baluchistan

Fax.: 0826-618039

Loralai Branch Bhagi Bazar Branch, Loralai. Qila Saifullah Branch Main Junction Road, Qila Saifullah. Tel.: 0823-610895,610804-05 Fax.: 0823-610806 NWFP Jamrud Road Branch, Peshawar Near Hotel Grand, Jamrud Road,Peshawar Tel.: 091-5711482-4 Fax.: 091-5711489 Chitral Branch Attalique Bazar,Chitral Tel.: 0943-414501,414530,414550 Fax.: 0943-414591

Khyber Bazaar Branch, Peshawar Shop No. 6 & 7 Haji Khan Building Tel.: 091 2590341-7 Fax.: 091 2590348 Mansehra Branch Swati Arcade, Abbottabad Road, Tehsil & District Mansehra Tel.: 0997 307761 4 Fax.: 0997 303479

Dera Ismail Khan Branch Gilgit Branch West Circular Road, Near Taank Adda, Dera Ismail Askari Bakers, Gilgit Cantt Khan. Tel.: 0966 715018-9 Fax.: 0966-715021 Tel.: 05811 57832 6 Fax.: 05811 57837

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Abottabad Branch Business Complex Khasra No. 2302 To 2305 Aamir Shaheed Road Abbottabad. Tel.: 0992-343959 - 64 Fax.: 0992-343957 Azad Kashmir Islamgarh Branch, Azad Kashmir Ground Floor Main Kotli Road, Islam Garh Tehsil Distric Mirpur(AJK) Tel.: 058612 - 43971-7 Fax.: 058612 - 43970

Haripur Branch Circular Road, Haripur. Tel.: 0995-613570-73 Fax.: 0995-613574

Mirpur Branch, Azad Kashmir Plot No # 2- B/3 Sub Sector A/2 Mian Muhammad Road Mirpur Azad Kashmir. Tel.: 058610-39701-4 Fax.: 058610-39705

Our ATM Network: BankIslami branches are installed with BIOMETRIC ATMs. All BankIslami Customers can use their 1 Card (ATM/Debit Card) on 1Link & MNET Networks and Orix Network. Punjab Blue Area Branch Islamabad. I-9 Branch (Islamabad) I-8 Branch (Islamabad) F-10 Markaz Branch (Islamabad) Turnol Branch Satellite Town Branch (Rawalpindi) Saddar Branch (Rawalpindi) Chaklala Scheme No. 3 (Rawalpindi) Jail Road Branch (Lahore) Akbar Chowk Branch (Lahore) Azam Cloth Market Branch (Lahore) Badami Bagh Branch (Lahore) Darogha wala gate Branch (Lahore) D.H.A.Y Block Branch (Lahore) Ferozepur Road Branch (Lahore) G-Block, D.H.A. Branch (Lahore) Thokar Niaz Baig Branch (Lahore) Johar Town Branch (Lahore) Airport Road Branch (Lahore) Walton Road Branch (Lahore) Circular Road Branch (Lahore) Gujranwala Branch Abdali Road Branch (Multan) Vehari Road Branch (Multan) Gulgusht Branch (Multan) SIE 1 Branch (Gujrat) Jhang Branch Mian Channu Branch Susan Road Branch (Faisalabad) Kotwali Road Branch (Faisalabad) Kashmir Road Branch (Sialkot) Sahiwal Branch Sargodha Branch Mainwali Branch Okara Branch Bhawalpur Branch Sadiqabad Branch Rahimyar khan Branch Jehlum Branch Hazro Branch Wah Cantt. Branch Taxila Branch Chakwal Branch D.G. Khan Branch Sindh Main Branch Clifton (Karachi) 26th Street D.H.A. Branch (Karachi) Al Hilal Society Branch (Karachi) Baloch Colony Branch (Karachi)

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Baqai Medical University Branch (Karachi) Cloth Market Branch (Karachi) Dhoraji Branch (Karachi) Gulshan-e-Maymar Branch (Karachi) Karachi Stock Exchange Branch (Karachi) Malir Cantt Branch (Karachi) North Nazimabad Block A, Branch (Karachi) Orangi Town Branch (Karachi) Rashid Minhas Road Branch (Karachi) Shadman Town Branch (Karachi) Shaheed-e-Millat Branch (Karachi) Saddar Branch karachi UP More Branch (Karachi) Darululoom (Karachi) Auto Bahan Branch (Hyderabad) Sukkur Branch Larkana Branch Balochistan Kucklak Branch (Quetta) Airport Road Branch (Quetta) Muslimbagh Branch Chaman Branch Loralai Branch Pishin Branch NWFP Chitral Branch Jamrud Road Branch (Peshawar) Abottabad Branch Dera Ismail Khan Branch Azad Kashmir Islamgarh Branch (Azad Kashmir)

Burns Road Branch (Karachi) Cloth Market Branch (Karachi) F.B.Area Branch (Karachi) Jodia Bazar Branch (Karachi) Korangi Branch (Karachi) Nazimabad No. 7 branch (Karachi) North Nazimabad Branch (Karachi) Power House Branch (Karachi) S.I.T.E. Branch (Karachi) Shah Faisal Colony Branch (Karachi) Shahra-e-Faisal Branch (Karachi) University Road Branch (Karachi) Gulistan-e-Jauhar Branch (Karachi) Heerabad Branch (Hyderabad) Mirpurkhas Branch Nawabshah Branch Tando Allahyar Branch Jinnah Road Branch (Quetta) Iqbal Road Branch (Quetta) Qila Saifullah Branch Zhob Branch Dukki Branch

Khyber Bazar Branch (Peshawar) Mansehra Branch Gilgit Branch Haripur Branch Mirpur Branch (Azad Kashmir)

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Mission, Vision and Objectives of Organization

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Our Vision

The Vision of BankIslami is to be recognized as the leading Authentic Islamic Bank.

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The Mission of BankIslami is to create value for our stakeholders by offering Authentic, Shariah Compliant and technologically advanced product and services. We differentiate ourselves through:
Authenticity Innovation Understanding our client's needs Commitment to excellence, and Fast, efficient and seamless delivery of solution. As a growing institution, the foundation for our performance lies on our human capital and BankIslami remains committed to becoming an employer of choice, attracting, nurturing and developing talent in a transparent and performance driven culture.

Our Mission:

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Our 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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Objectives of Bank Islami:

The main objective of bank Islami is Serving in the Right way To create value for stakeholders by offering Authentic, Shariah To provide compliant and technologically advanced product and services. To continue developing and delivering

innovative products and services. To achieve sustainable growth, maximum market share, and high profitability in all areas of banking. To maintain absolute world class service excellence, with a dedicated focus on value and recognition for our customers. To build and sustain a high performance culture in accordance with Islamic values and Shariah principles. To promote Riba free Banking in Pakistan as well as in foreign countries. To become an employer of choice, attracting, nurturing and developing talent in a transparent and performance driven culture.

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Corporate, Business and Departmental Level Strategies

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Corporate, Business and Departmental Level Strategies:

Despite of testing times, bank Islami is optimistic about the coming years. BIPL management team target for the coming years is to consolidate the operations and bring greater efficiencies in

operations. Specifically, they would like to grow the balance sheet and wipe off the accumulated losses of Rs. 577,246,000 which are expected to decrese this year.

Growing network, a viable and working depository franchise, growth in the Islamic Banking industry and technological advantage places them in an ideal position to take advantage of the opportunities that lie ahead due to State Banks increased capital requirements. The bank is also unin IT effectively and efficiently to reduce cost ofcommunication and its taking the maximum posible banefitout of it. The bank is alsoexpectedto takeover another chainofbanks as soon as the bank recovers from the accumilated loss.

As discussed earlier, the reason for our losses this year is non-absorption of operating costs due to lower asset volumes. Besides that, BIPL has all the right straits which a successful bank may wish to have. Our net-work is large and well spread out, deposit base is stable and cost effective, intermediation cost is within the top quartile in the industry, NPLs are low and that too contained

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and technology base is one of the best. With improving asset deployment, BankIslami achieved operating break from December. On full year basis, we will inshallah report a profit starting from first quarter. No large expansion in net-work is envisaged this year.

Due to a heavy expansion in year 2008, the full cost impact of which came in the year 2009, BIPL is reporting a loss of Rs. 563M before tax and Earning Per Share stood (0.91). This is approximately Rs. 250M more than what we had budgeted. Due to economic in-stability, we preferred to conserve the liquidity. At the same time, private corporate credit off take was slow there by drying up appetite for quality credit. While our closing ADR is still less than 50%, going forward the signs are very positive. Almost 30% growth came in the last quarter only.

Growth in consumer financing was contained, though the Bank continued to finance good credit. BIPL has also successfully negotiated with CITI Bank acquisition of its mortgage portfolio of Rs. 1.5b. This transaction is expected to close in the second quarter. The Book quality remains good and improving. Most of the non-performing financing consists of quality collateral with a market. We expect a strong recovery this year. We are aiming to close the year at around 60% ADR with NPL's contained at less than 5% of the portfolio.

The success story of the year was the growth in deposits, which came almost entirely from retail segment. BIPL is one of the few banks in Pakistan which has a genuine deposit franchise. Instead of targeting large, rate sensitive accounts, BIPL as strategy focused on retail customer which are stable, less rate sensitive and loyal.

Current and Saving Accounts recorded impressive growth. Even growth in Fixed Deposits was propelled by our five and ten depository products which now accounts for 21% of the deposit base. Despite of 124% increase in deposits, cost of funds actually declined. BIPL will continue to follow the same strategy strong focus on retail deposits, a further 5% to 10% reduction in cost of fund coupled with at least 50% increase in the deposit base.

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Our technology infra-structure was further strengthened during the year with full deployment of state of art sharia compliant core banking system, iMal. We remain the largest user of Linux in Pakistan which has helped us to have a stable, cost effective platform compared to our peers. Our market share in ATM transactions has improved to 11th position amongst 1-LINK members. We are aiming to complete deployment of the next phases of iMal during 2010.

Head count in 2009 increased by almost 24%. Most of the hiring took place in the branches. Head count/branch of BIPL remained impressive at around 14, which is one of the best in the industry. The highlight of this year was our focus on Training. BIPL is strictly following mandatory training hours for all employees which in some cases is as high as 80 hours. The first batch of trainee officers has graduated and assumed responsibility in the branches. We plan to induct a few more batches this year in Karachi, Lahore, Islamabad, and Balochistan where we have a strong presence.

BIPL also continued with focus marketing initiatives. Our greatest asset today is probably our brand name 'BankIslami'. Going forward, we plan to maintain presence in selected media segments.

BankIslami, capitalizing on its expanded outreach, experienced substantial growth in finances in 2008. This enabled BankIslami to register a significant increase in its net interest revenue. Other operating income witnessed an upsurge on account of higher fee and commission. Meanwhile, there was a sizeable increase in personnel and other expenses, owing to the ongoing network expansion. Moreover, BankIslami made a net provision of PKR 130mln, due to sizeable increase in the classified portfolio. This resulted in doubling the pre-tax loss of the bank. The performance trend remained the same in 1Q09 with a slight addition in NPLs.

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Going forward, BankIslami intends to leverage its expanded outreach to enhance both its deposit base and finances portfolio. Although the bank has plans to penetrate the retail segment, no significant lending is expected over the near-term, owing to currently weak credit environment. BankIslami would continue with its recent strategy of focusing the corporate segment, though cautiously here as well. The bank, with a view to reduce its cost of funds, plans to focus more on demand deposits. BankIslami, to augment further its retail franchise, has entered into agreements with different organizations to launch new products and services. Meanwhile, BankIslami, with surplus liquidity and support of strong sponsors, eyes acquisition of banks as a strategy to achieve sizeable growth. These initiatives exhibit clarity of direction but the extent to which they materialize remains to be seen.

The target is to take consumer financing, over the medium term, upto 10%-15% of the total advances. With expansion in outreach, the bank intends to rationalize its deposit mix by substituting a portion of term deposits with current deposits. Nevertheless, deployment of excess liquidity would remain a challenge in the absence of an active Shariah compliant money market. Earnings from investment banking business are expected to grow significantly. The deal pipeline is currently healthy. Meanwhile, BIPL plans to lay down requisite infrastructure for offering wealth management services, going forward. BankIslami, due to initial stage of operations, maintains ample liquidity and has a very low deposit concentration, which clearly stands out among close peers. The banks investment portfolio is modest in size (end-08: PKR 207mln) mainly dominated by strategic investment (PKR 191mln). The bank recently expanded its exposure to the sukuk market. There is a revaluation surplus, though slight, available on this investment (PKR 16 mln).

BankIslami, mainly due to un-utilized resources, has a relatively high level of capitalization (CAR), which offers significant room for credit expansion. However, with restricted internal generation, the bank would remain dependent on its sponsors meeting

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Organizational Structure

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Organizational Structure of BankIslami Pakistan Limited:

Central Hub Southerenren Hub Northeren Hub Blochistan Hub Interior Sindh Hub Lower Central Hub

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Organogram of a BIPL Branch:

Chief Executive Officer

Section Head

Regional Genral Manager

Hub Manager

Branch Manager Customer Service Manager Customer Service Executive Customer Service Officer 5 Sub Members

Wealth Manager

Business Executive

5 Sub Members

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Organogram of Bank Islami Bahawalpur Branch:

Mr. Hafiz Aqeel (BM)

Mr. Khurram Rasheed (CSM)

Wealth Manager (vacent)

Khalil Ahmed (Cashier)

Mr. Burhan Ahmed (CSE) Mr. Asad Mehmood Khan Ali Zai (CSO) 5 Sub Members (vacent)

Mr. Qaiser Nawaz (BE)

Mina Faisal (Cashier)

5 Sub Members (vacent)

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Corporate Information:

Board of Directors
Chief Justice (Retd.) Mahboob Ahmed Mr. Ahmed Goolam Mahomed Randeree Mr. Ali Raza Siddiqui Mr. Hasan A. Bilgrami Mr. Hisham Hammoud Mr. Mohamed Amiri Mr. Shabir Ahmed Randeree Chief Executive Officer Chairman

Sharia'h Supervisory Board

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

Audit Committee
Mr. Hisham Hammoud Mr. Ali Raza Siddiqui Mr. Shabir Ahmed Randeree Member Chairman Member

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Executive Committee
Chief Justice (Retd.) Mahboob Ahmed Mr. Ahmed Goolam Mahomed Randeree Mr. Hasan A. Bilgrami Mr. Hisham Hammoud Chairman Member Member Member

Risk Managemnt
Mr. Ahmed Goolam Mahomed Randeree Mr. Hasan A. Bilgrami Mr. Mohamed Amiri Chairman Member Member

Human Resource & Compensation Committee

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

Company Secretary
Syed Shah Sajid Hussain

Auditors
Ernst & Young Ford Rhodes Sidat Hyder Chartered Accountants

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Legal Adviser
Haidermota & Co. Barrister at Law

Management (in alphabetical order)

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

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Working of Various Divisions/Departments

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Working of Various Departments of A Branch:

The purpose of banks is to provide some services to the general public. And for this purpose different banks provide different services to the people in diverse forms.

For proper functioning and the overall bank has been divided in different departments. These departments handle different jobs so that division of work is there for improvement of functions and it also makes it easy to control the situation. The general divisions in the branch are as follows:

Operations Department Libality Department Trade Department Sales Department.

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Products & Servicves

Before discussing the working of various devesions and department lets have a look at the products and services that Bank Islami offers to its customers. Consumer Banking Investment Banking
MUSKUN Home Financing Islami Auto Ijarah-New Vehicle Islami Auto Ijarah-Used/Imported Vehicle Advisory Private Placement Sukuk Arrangment Syndication

Retail Banking
Islami Current Account Islami Foreign Currency Account Islami Bachat Account Islami Dollar Bachat Account Islami Mahana Munafa Account Islami Amadni Certificate Rates & Weightages

Underwriting Trusteeship Structured Finance Listing on Capital Markets Project Financing Mergers & Acquisitions

Value Added Services

Online Banking Inter Bank Fund Transfer Internet Banking ATM/Debit Card Biometric ATM 24/7 Phone Banking eStatement Self Service Phone Banking Lockers

Corporate Banking
Account Services Trade Services Working Capital Finance Project Finance Musharakah Financing Mudarabah Financing

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Operations Department

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Operations Department consists of: Account Opening Department Remetance Collection Cash

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Account Opening Department

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Account Opening Department:

Borrowing funds from different sources has become an essential feature of todays business enterprises. But in the case of bank borrowing funds from outside parties is more vital because the borrowed capital of a bank is much greater their own capital. Bank deals in money and they are merely mobilizing funds within the economy. They borrow from one person and lend to another, the difference between the rate of borrowing and lending forms their spread or gross profit. Islamic banks do the same but in compliance with sharia principles.Banks borrowing is mostly in the form of deposits. These deposits are invested into different investment pools. Such deposit creation is done through opening an account in the bank.

As these deposits are the basis on which the bank lendds out funds therefore we can rightly state that deposits are the life blood of the bank which causes the body of an institution to work. Like without blood the body can not work the same way without deposit bank can not work irrespective of a conventional comercial bank or an islamic bank or any other form of bank. Without sufficient deposits no bank can survive. These deposits are the liability of the bank so from point of view of bank we refer to them as liabilities.

All types of accounts of customers are managed and maintained in this section. All the money deposited and withdrawn is properly recorded in a specific account number which is allotted to every account holder. Banks has different kinds of deposit schemes in order to induce deposits. Account opening is an agreement in which customer gives his funds and bank accepts these funds, therefore the nature of relation between a banker and customer is of contractual one and all the conditions applicable to this are applicable in the same way as the contract act.

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The department that is responsible for opening and closing an account assumes immense significance and holds a central place in the basic banking operations. The Account opening department was the very first experience of my practical life being working with a bank, during my internship with Bank Islami Pakistan Limited.

This department is the best way to start with the banking career or training. This is because the ways you deal with the customers give a lot exposure to you for the coming days in banking because the bankers are always in contact with customers as customers are the biggest source of assets for the bank. I really enjoyed my stay at this department as I got to interact with the customers directly for the first time. I was given under the supervision of Mr. Asad Mehmood Khan Ali Zai (Customer Services Officer), who is the Incharge of Accounts Opening.

The banking history is full of various examples of fraud largely due to incorrect opening of accounts. These frauds could have been avoided if the branch mangers and other designated officers had taken due care and exercised precautions at the time of opening of accounts.one of the most important thing that I learned during my internship was that account opening is the base of all frauds. As our branch manger said fraud starts when an account is opened. This is the reason that 3 out of 6 weeks of my internship were focussed on account opening department. I was introduced to each and every aspect of account opening and was thoroughly trained and tested. I focussed a lot on know your customer (KYC) form.

I also learned that at the time of opening of an account, officers should tactfully obtain as much information as possible about the integrity and character of the person, his correct name and address and occupation. This infect will be the only opportunity they will be able to talk to the prospective customers in a friendly and frank environment. This is the time when we have a slight edge over the customer. He/she at this point in time is willing to divulge as much information about his or her personal status and business etc. to the bank officer. It is therefore necessary that due care and proper procedure be followed for opening of any account for any customer.

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During my stay at this department I got to fill the forms of individuals who wanted to get their accounts opened at Bank Islami, fill the cheque and deposit slips of customers who were not literate enough or needed instructions, and I also got the opportunity to give advice to the customers regarding the type of account they should open requirements of account opening and the benefits of opening an account with Bank Islami Pakistan Limited.

I myself filled the Account Opening Forms of almost all the customers I encountered because many customers get confused when they see the huge form and many dont understand sevral things in the form. Another reason for me or the bank staff to fill the form was that no cutting or over writing is allowed in the AOF and incase of cutting or any over writing either the customer must sign at the place of the cutting or over writing with the stamp of cutting cunfurm or a new form has to be filled. Another reason for us filling the AOF is that customers are more relaxed and avoid the trouble of filling the form and expect a smooth service that is effortless.

This is important to avod any suspecian or ambiguity and to eliminate even the minutest chances for anyone to edit the customers AOF. We also stamp the empty parts of AOF with the stamp void to make sure that this part of the AOF should not be used to do any fraudelent transection. Although these things seem minute but as Mr. Hafiz Aqeel said small things, mistakes or neglegencies can become really big problums in the future. Thus we try to avoid even the minutest chance of fradulent alteration or transection. That is the reason that auditers pin pointed everything even the smallest mistake of an incorrect date.

Before filling an AOF and while filling an AOF we must somehow get all the required information from the customer in a detailed interview and it should be sufficient to fill his KYC Form accorately and realistically. This is the place where fraud starts. If you do not guess the right monthly and yearly ternover of the customers account then this may lead to a fraud or money londering. Banks today are more careful about money londering then anything ever before.

Money londering is the same like normal londering in which dirty clotes go into a londery

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and are cleaned the same way illigal or black money goes into the bank as a big laundry machine and then comes out clean. If someone is depositing more then the expected monthly deposit then we have to cunfurm to the head office about where the money came from.

Working with the Accounts Opening Department gave me a lot of courage and confidance as it taught me the way that you should deal with the customers of the bank.

Fatwa:
BankIslami's commitment to Shariah is strict and absolute. We have the distinction of being the only Bank to have a full time Shariah adviser as well as having a prestigious local Shariah board of global repute. All types of accounts and TDR Certificates are approved and verified by our Shariah Board. Please see Anaxture 2 to view our Shariah Board's approval.

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Types Of Accounts:
Bank Islami provides its customers mith four types of accounts and two types of Term Deposit Recipt (TDR) Certificates with a bonus of a lot of our Value Added Services.

Three Types of Accounts:

1. Islami Current Account 2. Islami Foreign Currency Account 3. Islami Bachat Account 4. Islami Dollar Bachat Account

Two Types of Term Deposit Recipt (TDR) Certificates:

1. Islami Mahana Munafa Account 2. Islami Amadni Certificate

Rates & Weightages

Value Added Services

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Islami Current Account

Features:
With our Islami Current Account, you can have complete peace of mind that your funds are safe and utilized in Halal avenues only. Islami Current Account is ideal for customers who have frequent transaction needs and require unlimited access to their account to meet their personal or business expenses. Also, you have access to our entire online network of 102 Branches in 49 Cities for convenience of instant and secure intercity transactions. So enjoy full control over your funds in a Shariah compliant manner.

The Islami Current Account offers you the following Key Salient Features:
A minimum balance of Rs. 1,000/- only to open the account Joint Account facility up to four joint account holders Access to the entire online branch network 102 Branches in 49 Cities Free unlimited online intercity transactions Free 1 Card, BankIslami's ATM & Debit card Access to all ATMs linked to MNET and 1 Link throughout Pakistan InterBank Funds transfer facility through ATM Facility of making instant payments at Orix terminals for grocery, fuel ,dining, etc. Free Internet Banking service Round the clock phone Banking through 111-ISLAMI (475-264) or 111-BIP (247)-111

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Personalized service from Customer Relationship Officers Free Account statement facility Hold mail and Stop payment facility Safe deposit lockers (subject to availability)

How It Works:
BankIslami's Islami current account is based on the Islamic principle of Qarz (loan) whereby you are the lender and the Bank is the borrower. These funds are invested in halal business ventures only so that you are 100% sure that your funds are managed in a Shariah compliant manner. The funds are payable to you on demand as and when required with neither any addition nor penalty.

Brochure

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Islami Foreign Currency Account

Features:
BankIslami Islami Foreign Currency account is ideal for businesses and individuals who would like to diversify their investment in different currencies to ensure security against

currency fluctuations or want to keep foreign currency account to meet their business needs. Also, you can have easy access to foreign currency with no hassles of foreign exchange conversion when you have to travel abroad or remit funds abroad to meet education, leisure or business needs.

Key Features:
Safe Deposit Lockers Hold Mail & Stop payment facility Available in USD, GBP & EURO A minimum balance of USD 100/-or equivalent in GBP or EURO to open the account Joint Account facility up to four joint account holders Free Account statement facility Free Internet Banking service Round the clock phone Banking through 111-ISLAMI (475-264) or 111-BIP (247)-111 Personalized service from Customer Relationship Officers

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How It Works:
BankIslami's Islami foreign currency account is based on the Islamic principle of Qarz (loan) whereby you are the lender and the Bank is the borrower. These funds are invested in halal business ventures only so that you are 100% sure that your funds are managed in a Shariah compliant manner. The funds are payable to you on demand as and when required with neither any addition nor penalty.

Islami Bachat Account

Features:
Our Islami Bachat account is a bundle of benefits. It helps you keep up with your tradition of savings with the convenience and safety of a professional and understanding bank. Also, you earn highly attractive profits on your savings with the flexibility of making as many transactions on your account as you want. Islami Bachat Account is ideal for customers who need to draw money for monthly expenses but would also like to earn on your hard earned savings. Corporate Employers can also avail this account to provide convenience, flexibility and halal profits to their employees by opening their salary accounts with us.

The Islamic Bachat Account offers you the following Key Salient Features:

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Monthly profit/loss payment on daily product basis Differential and specific pool allocation possible for large deposit holders Profit announcement at the end of every month A minimum balance of Rs. 5,000/- only to open the account Joint Account facility up to four joint account holders Access to the entire on line network of 102 Branches in 49 Cities Unlimited over the counter deposits and withdrawals, free of charge No restrictions on intercity transactions Free 1 Card, BankIslami's ATM & Debit card Access to all ATMS linked to MNET and 1 Link throughout Pakistan Facility of making instant payments at Orix terminals for grocery, fuel, dining, etc. Free Internet Banking service Round the clock phone Banking through 111-ISLAMI (475-264) or 111-BIP(247)-111 Personalized service from Customer Relationship Officers Free Account Statement facility Hold mail and Stop payment facility Safe deposit lockers (subject to availability)

How It Works:
BankIslami's Islami Bachat account is a profit bearing account developed on the basis of the modes of Mudarabah. This is how it works. You provide funds to the Bank on Mudaraba basis for investment in the Banks Shariah Compliant Assets. In this arrangement, you will function as a Rabbul Maal (investor in Mudaraba) and the Bank will act as the Mudarib (Manager of the Mudaraba). The Bank will form a pool of customers funds. The pool provides financings to various individuals, corporate, government and other entities based on various Islamic modes of finance such as Murabaha, Ijarah, Musharakah, Mudaraba and other modes and would generate income.

This income will be calculated on monthly basis and shared between the Bank and the Depositors as per a pre agreed profit sharing ratio. The profit share of the Bank is called the

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Mudarib's share. This profit sharing ratio between the Bank and the Depositors is determined at the beginning of each month.

The profit share of the depositors is based on the predetermined weightages assigned at the beginning of the month. A weightage based profit distribution mechanism ensures that the return paid to any Customer in a Profit & Loss sharing contract is proportionate to the risk taken. In the case of a loss, as per the rules of Mudaraba, the loss will be borne solely by the Rabbul Maal. The loss will be distributed between various categories of customers on a pro rata basis. Bank also suffers loss as no income is generated against its efforts.

Brochure

Islami Dollar Bachat Account

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Features:
The Islami Dollar Bachat account is ideal for individuals and businesses who are eager to save in US Dollar. This saving scheme is both for Residents and Non residents who need to either save in US Dollars or remit money from or abroad for personal or business transactions. The Islami Dollar Bachat account is a profit/loss bearing account in USD based on the principle of Mudaraba where the Bank invests your funds in a Shariah compliant manner. The profit and loss from the investment is then shared between you and the Bank.

The Islami Dollar Bachat Account offers you the following Key Salient Features:
Free Internet Banking service Safe Deposit Lockers facility available 100% interest free Monthly profit/loss payment on daily product basis A minimum balance of USD 100/- in cash or through USD clearing cheque or valid instructions of remittances from abroad No Zakat or Withholding tax applicable Joint Account facility up to four joint account holders Access to the entire online branch network 102 Branches in 49 Cities No restrictions on intercity transactions Round the clock phone Banking through 111-ISLAMI (475-264) or 111-BIP (247)-111

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Personalized service from Customer Relationship Officers Free Account statement facility Hold mail and stop payment facility

How It Works:
BankIslami's Islami Dollar Bachat account is a profit bearing account developed on the basis of the modes of Mudarabah. This is how it works. You provide funds to the Bank on Mudaraba basis for investment in the Banks Shariah Compliant Assets. In this arrangement, you will function as a Rabbul Maal (investor in Mudaraba) and the Bank will act as the Mudarib (Manager of the Mudaraba). The Bank will form a pool of customers funds. The pool provides financings to various individuals, corporate, government and other entities based on various Islamic modes of finance such as Murabaha, Ijarah, Musharakah, Mudaraba and other modes and would generate income.

This income will be calculated on monthly basis and shared between the Bank and the Depositors as per a pre agreed profit sharing ratio. The profit share of the Bank is called the Mudarib's share. This profit sharing ratio between the Bank and the Depositors is determined at the beginning of the month.

The profit share of the depositors is based on the predetermined weightages assigned at the beginning of the month. A weightage based profit distribution mechanism ensures that the return paid to any Customer in a Profit & Loss sharing contract is proportionate to the risk taken. In the case of a loss, as per the rules of Mudaraba, the loss will be borne solely by the Rabbul Maal. The loss will be distributed between various categories of customers on a pro rata basis. Bank also suffers loss as no income is generated against its efforts.

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Islami Mahana Munafa Account

Features:
Long term investments yield high returns but delayed profit payment. With our Islami Mahana Munafa Account you don't compromise on any. Now you can enjoy the freedom of halal monthly gains for a prosperous present while building your wealth for a secure future. Also, Islami Mahana Munafa Account will provide you with security, convenience and flexibility of investment tenure to suit your needs.

The Islami Mahana Munafa Account offers you the following Key Salient Features:
Free Internet Banking Service Hold Mail & Stop payment facility Safe Deposit Lockers 100% interest free Available in Pak Rupees Tenure of investment are 1, 2, 3, 5 & 10 years Minimum amount of investment is Rs. 10,000/- only Profit/loss payment on monthly basis until the maturity date Payment of amount of investment on the maturity date Differential and specific pool allocation possible for large deposit holders Profit announcement at the begining of every month

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Facility of premature encashment available. In such a case, the corresponding period rate would apply, unless stated otherwise Free facility of transfer of profit and invested funds in nominated Islami Current or Islami Bachat Account Monthly profit/loss payment on daily product basis Round the clock phone Banking through 111-ISLAMI (475-264) or 111-BIP (247)-111 Personalized service from Customer Relationship Officers Free Six monthly Account Statement facility

How It Works:
BankIslami's Islami Mahana Munafa Account is a profit bearing account developed on the basis of the modes of Mudarabah. This is how it works. You provide funds to the Bank on Mudaraba basis for investment in the Banks Shariah Compliant Assets. In this arrangement, you will function as a Rabbul Maal (investor in Mudaraba) and the Bank will act as the Mudarib (Manager of the Mudaraba). The Bank will form a pool of customers funds. The pool provides financings to various individuals, corporate, government and other entities based on various Islamic modes of finance such as Murabaha, Ijarah, Musharakah, Mudaraba and other modes and would generate income.

This income will be calculated on monthly basis and shared between the Bank and the Depositors as per a pre agreed profit sharing ratio. The profit share of the Bank is called the Mudarib's share. This profit sharing ratio between the Bank and the Depositors is determined at the beginning of each month.

The profit share of the depositors is based on the predetermined weightages assigned at the beginning of the month. A weightage based profit distribution mechanism ensures that the return paid to any Customer in a Profit & Loss sharing contract is proportionate to the risk taken. In the case of a loss, as per the rules of Mudaraba, the loss will be borne solely by the Rabbul Maal. The

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loss will be distributed between various categories of customers on a pro rata basis. Bank also suffers loss as no income is generated against its efforts.

Brochure

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Islami Amadni Certificate

Features:
Why take interest when you can earn Halal profit on your investment. Certificate With your Islami hard Amadni earned

investment works harder to yield high expected profits so you can build your wealth for a prosperous future. You get the best of both worlds in a safe, secure and flexible package to perfectly meet your needs.

If you are a salaried individual, a businessperson or a corporate entity with some long term investment funds to spare, our Islami Amadni certificate is an ideal solution for you. With our Islami Amadni Certificate, the higher your investment the higher will be your return and that too in a Shariah compliant manner. Also, you have the flexibility to choose amongst various investment tenures to suit your personal or business needs.

Islami Amadni Certificate offers you the following Key Salient Features:
Available in Pak Rupees Investment can be done for 1, 3, 6, 12, 24, 36 or 60 months Minimum amount of investment is Rs. 10,000/- only Payment of profit/loss and amount of investment on the maturity date Quarterly profit payment for investment of 12 months and above

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Differential and specific pool allocation possible for large deposit holders Profit announcement at the end of every month Facility of premature encashment available. In such a case, the corresponding period weightage would apply, unless stated otherwise Free facility of transfer of profit and invested funds in nominated Islami Current or Islami Bachat Account Free Internet Banking service having free Term deposit enquiry facility Round the clock phone Banking through 111-ISLAMI (475-264) or 111-BIP (247)-111 Personalized service from Customer Relationship Officers Free Account statement facility

How It Works:
BankIslami's Islami Amadni Certificate is a profit bearing account developed on the basis of the modes of Mudarabah. This is how it works. You provide funds to the Bank on Mudaraba basis for investment in the Banks Shariah Compliant Assets. In this arrangement, you will function as a Rabbul Maal (investor in Mudaraba) and the Bank will act as the Mudarib (Manager of the Mudaraba). The Bank will form a pool of customers funds. The pool provides financings to various individuals, corporate, government and other entities based on various Islamic modes of finance such as Murabaha, Ijarah, Musharakah, Mudaraba and other modes and would generate income.

This income will be calculated on monthly basis and shared between the Bank and the Depositors as per a pre agreed profit sharing ratio. The profit share of the Bank is called the Mudarib's share. This profit sharing ratio between the Bank and the Depositors is determined at the beginning of each month.

The profit share of the depositors is based on the predetermined weightages assigned at the beginning of the month. A weightage based profit distribution mechanism ensures that the return paid to any Customer in a Profit & Loss sharing contract is proportionate to the risk taken. In the case of a loss, as per the rules of Mudaraba, the loss will be borne solely by the Rabbul Maal. The

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loss will be distributed between various categories of customers on a pro rata basis. Bank also suffers loss as no income is generated against its efforts.

Brochure

Historical Deposit Rates & Weightages

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Rates: Islami Bachat Account

Tiers 0 - 999,999 1,000,000 - 9,999,999 10,000,000 - 49,999,999 50,000,000 - and above

Feb' 10 5.01% 5.01% 5.01% 6.48%

Jan' 10 5.00% 5.00% 5.00% 6.47%

Dec' 09 5.01% 5.01% 5.01% 6.48%

Nov' 09 5.00% 5.00% 5.00% 6.47%

Oct' 09 5.00% 5.00% 5.00% 6.47%

Sep' 09 5.00% 5.00% 5.00% 6.48%

The above rates are applicable only from the month of August 2009 to January 2010. The above rates should not be taken as a prediction, projection or forecast as to the future or likely performance of the accounts.

Islami Dollar Bachat Account

Feb' 10 USD 0.01%

Jan' 10 0.00%

Dec' 09 0.00%

Nov' 09 0.00%

Oct' 09 0.00%

Sep' 09 0.01%

The above rates are applicable only from the month of August 2009 to January 2010. The above rates should not be taken as a prediction, projection or forecast as to the future or likely performance of the accounts.

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Islami Amadani Certificate

Term Deposits with Quarterly profit payments Tiers One Year Rs. 1-9,999,999 Two Years Rs. 1-9,999,999 Three Years Rs. 1-9,999,999 Five Years Rs. 1-9,999,999 Feb' 10 9.62% 9.71% 10.15% 11.06% Jan' 10 9.61% 9.70% 10.14% 11.05% Dec' 09 9.62% 9.71% 10.15% 11.06% Nov' 09 9.61% 9.70% 10.14% 11.05% Oct' 09 9.61% 9.70% 10.14% 11.05% Sep' 09 9.62% 9.71% 10.15% 11.07%

Term Deposits with profit payments at Maturity One Month Rs. 1-9,999,999 6.48% 6.47% 7.42% 7.96% 9.97% 10.06% 6.48% 7.43% 7.97% 9.98% 10.07% 10.55% 6.47% 7.42% 7.96% 9.97% 10.06% 10.54% 6.47% 7.42% 7.96% 9.97% 10.06% 10.54% 6.48% 7.43% 7.97% 9.98% 10.06% 10.55%

Three Months Rs. 1-9,999,999 7.43% Six Months Rs. 1-9,999,999 One Year Rs. 1-9,999,999 Two Years Rs. 1-9,999,999 Three Years Rs. 1-9,999,999 Five Years Rs. 1-9,999,999 7.97% 9.98% 10.07%

10.555% 10.54% 11.53 %

11.52 % 11.53 % 11.52 % 11.52 % 11.52 %

The above rates are applicable only from the month of August 2009 to January 2010. The above rates should not be taken as a prediction, projection or forecast as to the future or likely performance of the accounts.

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Islami Mahana Munafa Account

Feb '10 1 Year 2 Year 3 Year 5 Year 10 Year 9.54% 9.63% 10.07% 10.96% 12.48% Jan '10 9.53% 9.62% 10.06% 10.95% 12.47% Dec' 09 9.54% 9.63% 10.07% 10.96% 12.48% Nov' 09 9.53% 9.62% 10.06% 10.95% 12.47% Oct' 09 9.53% 9.62% 10.06% 10.95% 12.47% Sep' 09 9.58% 9.69% 10.21% 12.01% 12.49%

The above rates are applicable only from the month of August 2009 to January 2010. The above rates should not be taken as a prediction, projection or forecast as to the future or likely performance of the accounts.

Weights:
Weightages of March 2010 Customer's Share Islami Bachat Account 0 50,000,000 Islami Amadni Certificate Profit Payment At Maturity One Month Three Months Six Months One Year Two Years Three Years Five Years Profit Payment Quarterly 49,999,999 - & above 0.388 0.502

0.502 0.576 0.618 0.774 0.781 0.818 0.894

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One Year Two Years Three Years Five Years Equity Islami Mahana Munafa Account One Year Two Years Three Years Five Years Ten Years Islami Dollar Bachat Account Customer's Share Bank's Share

0.746 0.753 0.787 0.858 0.968

0.740 0.747 0.781 0.850 0.968

0.282 1.000

The Bank and the Depositors will have equal share in income of the Mudaraba pool. The share of the Depositors will be distributed based on the above weightages. Profit will only be paid on deposits which remain with the Bank for a period of at least one month.

Attention: Special Deposit Holders,

We are pleased to inform all special deposit holder that the profit calculation mechanism has been changed from Musharakah based system to Mudarabah based system with effect from September 01, 2009. The process will simplify profit calculation mechanism with no major impact at customers' end.

Weighatges of the corresponding deposit tenure will applied to the special deposit from September 2009 onwards.

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Requirements For Account Opening:

The general procedure for account opening is same but the document required to open the account is different according to the types of accounts. The bank officer must assure that the customer has the following characteristics:

The customer must have the the age of maturity The customer must be of sound mind The customer must not be insolvent and bankrupt The customer must not be in the prohibited list of SBP/NAB etc.

Account Opening Form (AOF):

A person who wants to open an account has to fill an account opening form which is provided by the bank, free of cost. It is a form that contains the account number, date, title of the account, applicant name and address, special instructions (if any) information about zakat deduction, and any other information about whether the person wants to get online facility or ATM Card etc.Then this filled form is submitted to bank, the bank officer verifies the signatures of the applicant and while another bank officer admits the signature of the applicant.

Then these forms are fead into the system and then scaned and photocopied and then they are sent to the headoffice which after doing the world check, issues the account number to the applicant. In case of any discripency or some documents missing or any ambiguity the head office sends the form back with the objections sheet (sheet is enclosed in anaxture 2). Then that discripency has to be removed or the required documents are to be added and then sent again to the head office. Till the time the head office is satisfied and letter of thanks has been delivered to the customer the account remain debit blocked.

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The signatures of the applicent are admited by an officer of the bank with the stamp of Signature Admited. Two signatures of the CSM (Customer Services Manager) are done on the AOF with his stamp one signature of CRO (Customer Relationship Officer) and Branch Manager is also done with their stamps. The empty spaces of the AOF are marked void with the stamp of VOID.

Specimen Signature Card:

This card contains the account number, title of the account, and the specimen signature of the account holder. It is card on which specimen of applicants signature are taken for future reference. Every time a cheque is presented for payment, the signature on the cheque is verified by comparing it with S.S Card. In case of joint account two applicants can sign on one SS card. In case of more than two joint account holders more than one SS card are required.

Two copies of this card are required one is kept with the branch inside the branch in a fire proof cabinet and the other sent to the head office for record and signature scanning purpose. It is a centralized activity. The scanned signatures are recorded in the database of the system and are promptly considered for future transactions of the customer. When this form is submitted in bank, the bank officer admits the signatures of the applicant with the stamp Signature Admitted and signs and CSM signes the SS Card with his stamp.

Terms And Conditions:

Applicant signs are taken on each and every page of Terms and Condition Form before opening an account. A total of 7 signatures are taken 6 signatures on the 6 pages of the Terms and Condition Form and one on the Authorised Signatories Section which is part of the Terms and Condition Form. (Form is enclosed in appendix 1)

The signature on the Authorised Signatories Section is/are admitted by the officer of the branch and are stamped with Signature Admitted while the 6 signatures on each page of the Terms and Condition are varified by the bank officer with the stamp Signature Varified.

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Attested Copy of Computarized National Identity Card (CNIC) of the Customer:

While opening an account the first thing we ask the customer to provide us in the Attested copy of Computarized National Identity Card (CNIC). The first thing we check on the CNIC is the expiry date. For expired CNICs, customer has to submit copy of expired CNIC and a NADRA receipt in evidence of having applied for renewal of CNIC. The bank officer checks the number of CNIC is correctly recorded in the AOF and a Attested copy of Computarized National Identity Card (CNIC) of the Customer is kept in record by the bank.

Third Party Mandate:

This form is used when a applicant wants to authorize any third party to sign and deal transactions with the bank. The customer signes it and authorises the bank to allow the therd party to operate the account deal transactions with the bank while indemnifying the bank from any loses the customer bears due to the third party.

Confidential Customer Profile Form (KYC Form):

At the time of opening of an account, officers should tactfully obtain as much information as possible about the integrity and character of the person, his correct name and address and occupation. This infect will be the only opportunity they will be able to talk to the prospective customers in a friendly and frank environment. This is the time when we have a slight edge over the customer. He/she at this point in time is willing to divulge as much information about his or her personal status and business etc. to the bank officer.

Before filling an AOF and while filling an AOF we must somehow get all the required information from the customer in a detailed interview and it should be sufficient to fill his KYC Form accorately and realistically. This is the place where fraud starts. If you do not guess the right monthly and yearly ternover of the customers account then this may lead to a fraud or money londering. This form is filled for checking the credibility of the applicant by the bank officer. The CRO and CSM have to sign this form with their stamps.

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Undertaking For Difference In Signature On CNIC And AOF:

In case of difference in signature on NIC and AOF an undertaking is taken from the applicant so that the customer has changed his signature and bank is not and will not be liable for anything or any loss incured to customer due to his change in signature.

Biometric Thumb Impression:

In all types of accounts thumb impression is taken from the applicant. Thumb Impression is used for ATM.

Verisys NADRA:
The CNICs of the customers are verified through the NADRAS specialized software which is called as VERISYS. This software is being used in BIPL, for all type of account, for the purpose of verification of NIC number, place of birth, mother name, and for checking validity of NIC. In case of any variation we have to ask the customer to provide us with a correct CNIC. If the date of expiry or issuance does not match on the CNIC and the NADRA Varisis then the customer is asked to provide the CNIC in which the date matches perfectly.

Zakat Declaration Form

If the customers do not want the deduction of the zakat charges from his account then he will provide the bank officer zakat declaration form stamped with Registrar Notary Public.

Cheque Book Requisition Slip:

This is the request made by the client to the bank to issue him a cheque book containing number of leaves mentioned (25, 50, 100). It enables a customer to make a withdrawal from their account or make payments of various parties by issue of cheque. Customers signature on the face of the Cheque Book Requisition Slip are varified by the bank officer with his signatures and the stamp of Signature Varified and signatures at the back of the Cheque Book Requisition Slip are admitteded by another bank officer with his signatures and the stamp of Signature Admitted.

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Source Of Income
The following Source of income is taken from applicant: In case of agriculturist Visit report Fard-e-malkiat In case of shop Source of income Visiting card Letter Head In case of salaried person (Pvt or govt) Salary slip Appointment card Service card In case of housewife/student/retired officer without pension On whom they will be dependent, that persons source of income is required. In case of retired officer with pension Retirement letter Pension book In case of petroleum station/CNG/Industry On letter Head their proof of source of income is taken

Letter Of Thanks:
Letter of thanks is the letter issued by the head office of the bank to the customer for two purposes: First purpose is to say thanks to the customer for opening the account in their bank. Second purpose is to confirm the address provided by the customer while opening the account.

Photo Account:

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Photo account is opened for the following reasons: Urdu Signatures Shaky Signatures Illiterate Person (Thumb Impression)

Extra Documents Required Incase Of Photo Account Are: Vernacular Form:

In case of shaky sign this form is filled and signed by the applicant. This way customer indemnifies the bank from any loses the customer bears due to shaky signature.

Photographes:
3 photographes of the customer are to be obtained with the account opening form for a photo account.

Application for Urdu Signatures:

An application for opening an photo account due to urdu signature must be signed by the customer.

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Type of Relationship Account:

Individual account Joint account Sole proprietorship account Partnership /Club/Society/Association/NGO/Trust account Limited company accounts Minor account

Opening of Individual Account/Joint Account:

When a single man or woman opens an account in his or her own name and has the right to operate, it is called individual A/C. When two or more persons neither partners nor, trustees, open an account in their name is joint account." When different people want to or need to share a single account it is called joint account. The names of persons are written on the title of A/C and on S.S. card. Joint A/C cannot be opened by single person. Both persons have to sign on cheque.

Documentation: Filled Account Opening Form Computerized National Identity Card (CNIC) Passport (for Non-residents only) Employment proof (Pay slip, Employment letter etc) Letter Head (if doing business of any type.)

Operation: The person place in the type of account and type of operation required in the account opening form.

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He/she fills in part 1 of the form, a fix his/her either two of four similar signature (or thumb expression in the signature space) The person fills his or her father, mother, husband/wife or any other relatives name, his/her address, phone number, his or her sign to certify this requirement. This requirement is needed because in his/her absence bank can have correspondence with a specific person. The person deposits the initial amount for opening account onto the cash counter. The person put his signature on form on two places in authorized Signature and fills in the Title of Account space by writing his name. The person fills the Part-1 and Part-II (In case of joint account) In the title of account space names of all persons maintained (In case of joint account) Account holders specified in the form that they will operate the form singly or jointly (In case of joint account) The next day is opening of account

Opening of Sole Proprietorship Account:

When the owner of the firm operating singly, open an account in his firm name.

Documentation: Filled Account Opening Form Computerized National Identity Card (CNIC) Passport (for Non-residents only) NTN Certificate Letter Head

Operation: All operation remains the same, except that the firm name is written in title of account area and Signature of the proprietor in the specified area.

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Opening of Partnership/Club/Society/Association/NGO/Trust:
The account is opened in the firm name and all partners designate one or two persons to act behalf of the partnership firm all acts of the firm jointly and severely.

Documentation: Certified Copy of Partnership/ Trust Deed Certificate of Registration Signatures of all Partners on letter of Partnership Certified copy of rules Certified copy of resolution Minuts of Meeting Letter Head Copy of by-laws Copy of NTN Certificate CNICs of all Partners Passports (for Non-residents only)

Operation: All other requirements are same except that all partners dully sign the form, cards are signed by all of those partners who will act on behalf of the firm.

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Opening of Limited Company Account:

Limited company account includes the private limited and public limited companies

Documentation: Certificate of Incorporation Certificate for Commencement of Business (PLC only) Memorandum of Association Articles of Association Current list of Directors Copy of Board Resolution Minuts of Meeting Letter Head CNICs of all Directors Copy of NTN Certificate and Form 29

Operation: The person authorized in the resolution of the board of directors put their signature on the S.S Card. Next of Kin requirement is not need in a case of Private Limited Company. Other procedure is same. After completing each and every formalities are signed by all partners who will act on behalf of the firm.

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Minors Account
In respect of an account opened in the name of a minor, the bank shall be entitled to act on the instructions received from the guardian name on the account opening form, irrespective of whether the minor account holder continues to be a minor or not unless the bank receives written instructions from the guardian or a notice to the contrary from an appropriate authority. The title of the account will be Minerss Name (M) Gardians Name (G). source of fund of the gardian are required with the attested copy of his CNIC and incase of blood relative a court certificate. B form of the miner is also required.

Dorment Account:
If there is no debit transection in an account for 12 montes then that account is autimatically marked dorment by the centralized operating system. We will keep the SS Cards of the dorment accounts seprate from other cards with the words Dorment A/c Last transection dated . a letter is sent to the customer informing him that his account has become dorment.

Deceised Account:
When bank receives intemation from an authentic and reliable source of the death of an account holder then bank imediately deceases the account.

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Account Number:
Bank Islami has acquired a new centralized banking system named iMal where all the branches are directly connected to Head office. When customers give all the information about him, this information is entered into centralized data base. When this procedure is completed, the system automatically generated the account number of that customer. Due to this system the process of account opening becomes fast and also there is no chance of any mistake.

The account no of any bank islami branch starts with its 4 digit numarical branch code like the branch code for bahawlapur branch is 2019. Then comes the 7 digit numarical account no that can be for example 0000001 and then the last part is the Sufex Code that tells about the type of the account like for current account it is 0001 and savings account it is 0201. So if I use the example I geve an complete account no can be 2019-0000001-0001. This is a pakistani rupees current account.

The Sufix Code of various types of accounts of BIPL are as follows:

Account title
Current account Saving account

Sufix Code
0001 0201

Account title
Dollar (US$) Pound (GBP) Euro (EU) 0031 0252 0065

Sufix Code
Current Account Savings Account 0231

0999

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Issuance of Cheque Book:

Cheque book is issued to the customer after sending the letter of thanks when the customer comes with the letter of thanks the requests for the issuance of the cheque book which he had signed earlier is separated from the rest of the requests. A cheque book (usually having 25 leaves) is issued to the customer. The customer can also ask for a 50 leaves or 100 leaves cheque book. The cheque book is charged @ Rs. 2/for every leaf. Every cheque book also contains one leaf that is used for another issue of a Cheque book

The procedure in this manner is to complete the cheque book requisition containing title of account, account number, type of currency and signature of the customer. Signature of the customer on the cheque book requisition is verified through the system. Particulars are entered in the cheque book issuance register. After verifying signatures from the system, the account opening person signs and stamps the cheque book requisition and hands over the cheque book after taking signatures of the account holder on the cheque book acknowledgement as a proof that he/she has taken the cheque book.

Entry Of cheque book: Before issuance of a chequebook, the employee performs certain functions. They include:

Stamping every leaf with specific A/C number. Stamping every leaf with stamp Payable at any BIPL Branch. Enters it in the chequebook issue register. Check whether or not a senior officer has verified the signatures, if no then first he gets them verified. If the check book is of photo account then be sure that each and every leaf of cheque book should carry photo account stamp After entry in the manual register, the employee issues the chequebook to the A/C holder after taking his/her signature on the acknowledgement leaf.

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Stop Payment Of Cheques:

Here the bank stops the cheque of their own branch because of following reasons: The customer does not want to make the payment due to any reason. If the cheque book is lost or stolen. If the customer has lost a few or one cheqe.

So the bank stops the payment of the cheque on the request of customer. In this turn around time is 5 minutes and it is not done in the given time, then there will be the problem in the audit committee and its charges are Rs. 200. After the payment is stopped, the concerned client is informed about that through a letter of stoppage of payment.

Closing of Account:
Here the customer gives the application of closing the account. Its charges are Rs. 200. The bank takes back the cheque book. If there is some money in the account, the bank makes pay order and then courier to that persons address. If the person has left her house and bank is unable to approach that person then the amount is transferred to the unclaimed deposit accounts. Usually those accounts are closed that have a cash balance of Rs. 0. In prectice bank askes the customer to draw a cheque of the total amount except the account closing charges and then closes the account. Procedure Followed In Order To Close An Account:

Now, coming towards the procedure for the closing of an account at Bank Islami, the following steps will be followed.

The client who wishes to close an account first has to give an application, duly signed on the pre-printed application of the bank. The client can also give an application on a plain paper, but correct signatures are very necessary.

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If a client wishes to close a account then the bank charges Rs.200, so at the time of closing the balance should be Rs.200. Along with the application to close the account clients Chequebook and ATM Card are also received from him and then they are destroyed in order to prevent any misuse in the future. All the cheques are first stamped Account Closed then torn from the center. The ATM Card is also broken from the middle. the account opening department then enters in the system and markes it as account closed. One thing has to be taken into immediate consideration that the account number allotted to the client (who has closed his account), after closure of the account becomes useless and is not allotted to any one in the future.

the specimen signature card are brought to the account-opening department and are stamped Account Closed and the AOF and related documents are also stamped Account Closed.

Then all these documents along with the cheque book and the ATM Card are sent to the head office.

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My Experiences During Internship In Accounts Opening Department:

During my internship at Bank Islami Pakistan Ltd, Bahawalpur Branch, my experience was outstanding while working in the Accounts Opening Department. This was the first ever experience of my life regarding working in any professional environment with practical people working around me. I was young and new so I also did make mistakes an my seniors corrected me and helped me a lot. Mr. Asad Mehmood Khan Ali Zai (Cusmomer Service Officer and Incharge of Account Opening) was very much fanatical in giving me indepth insight of all the workings of that Accounts Opening Department. I was being supervised by Mr. Asad Mehmood at all times. He was a very ebullient person and made me feel easy and relaxed to a greater extant. He was a very hardworking and supportive type of a colleague, menter, trainer and teacher to me. He taught me each and every situation that one can face while being in the accounts opening department. He also directed me about the procedures of other banks dealings. Whenever he was busy in doing a work regarding the accounts opening things he never forgot to tell me what he is doing and what is the purpose of doing that thing.

During my stay at the accounts opening department, I got a chance to open some accounts after the approval and due verification from my supervisor Mr. Asad Mehmood Khan Ali Zai. He showed and explained the purpose of each of the stamps which have to be incorporated in the Account Opening Form. I did mistakes as well while opening of accounts regarding writing account titles but my stamping was perfect always. But he never ever said a word to me regarding that. I observed that employees at Bank Islami are very cooperative and supportive. This is the reason why the customer satisfaction is provoking in all the branches of the bank.

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VALUE ADDED SERVICES

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Features:
BankIslami's has a wide network of 102 Branches in 49 Cities all of which provide Online Banking services. Online Banking means that all our 102 Branches in 49 Cities are connected with each other so that you can instantly access your account and make transactions at any BankIslami Branch. The following are the key benefits that you get out of using our Online branch network:

Cash Deposit for immediate credit to a remote branch. Remote Cheque Encashment from any Online branch. Instant Funds Transfer between any 2 Online branches. Balance Enquiry and Statement of Account from any Online branch.

Branch Timing:
Monday - Thursday Friday Saturday 9:00AM-5:00PM 9:00AM-12:30 PM & 3:00-5:00PM 9:00AM-12:30 PM

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Features:
Do you want to provide ease and convenience to your friends, family, colleagues and business associates. With our Interbank funds transfer (IBFT) facility you can easily transfer funds in their accounts via your ATM. Now, when dealing with you they can ensure hasslefree funds transfer in their accounts. No nuisance of waiting for Cheque clearance or going to the branch to deposit Cash or Cheque.

IBFT facility enables you to send and receive funds Online from and to any Account holder of 1Link IBFT participating member Banks. Following are the key benefits that you will get out of using our IBFT facility:

Convenience Easy to use Instant Transfer i.e. Online Secure 7x24 Facility- Round the Clock IBFT totally eliminates the use of cheques and the transactions can be processed Online

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How To Use:
Insert the Card in the ATM Wait for Authentication - using Biometric or PIN Select "Funds Transfer" from Main Menu Select "IBFT" from Funds Transfer Menu Select the From Account from which Funds will be transferred. Select Bank where Funds are to be transferred Input the Beneficiary Account Number Input the Amount to be transferred Verify the Beneficiary Name retrieved Online from the Beneficiary Bank Confirm the Transaction

Banks Linked to Inter Bank Fund Transfer Facility:

Allied Bank Limited Askari Bank Limited Bank Al-Habib BankIslami Pakistan Limited Habib Bank Limited Soneri Bank United Bank Limited NIB RBS - Royal Bank of Scotland Tameer Micro Finance Bank Standard Chartered Bank Bank Al Falah

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Features:
Now you can access your account information and view your transactions history at home or office on your personal computer/Laptop. BankIslami Internet Banking provides you the facility to access and manage your accounts and transactions securely via Internet 24 hours a day, 7 days a week.

BankIslami Internet Banking provides you the following Key Features:

Access to your Account mini/full statement Funds transfer from one BankIslami account to another Access to transaction history. Transaction enquiry by Cheque No., transaction amount or date. Complaint registration. Request feature for updating contact information. Activity log to track your transactional activities performed on Internet Banking Personalization of Internet Banking Term Deposit enquiry.

How It Works:
Please provide your email address at the given location on your Account Opening form. Your email address acts as your login ID. This ensures that your login details are unique and hence cannot be copied. You will receive a system-generated email at your assigned address. The email will contain a URL which will take you to BankIslami's Internet Banking website. You will be asked to log in by entering your User ID, which is your email address (in full). You will be prompted to

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set your password. You can do so by choosing at least 6 alphanumeric characters. Once password has been specified, you will be able to log on to BankIslami Internet Banking.

Registering For Internet Banking:

New Customer: You will have to provide your email address at the given location on your Account Opening form. Your email address acts as your login ID. This ensures that your login details are unique and hence cannot be copied. You will receive a system-generated email at your assigned address. The email will contain a URL which will take you to BankIslami Internet Banking website. You will be asked to log in by entering your User ID, which is your email address (in full). You will be prompted to set your password. You can do so by choosing at least 6 alphanumeric characters. Once password has been specified, you will be able to log on to BankIslami Internet Banking. Existing Customer: Please contact our Phone Banking at 111-ISLAMI to help you register for this service. You will need to provide your customer details and email address. You will get an email that will help you generate your password.

The System Requirements To Use Internet Banking:

All you need to start Banking on line is a BankIslami's account and a PC with Internet access. In a continued effort to safeguard on line Banking transactions, BankIslami requires full 128-bit encryption for Personal Internet Banking use. The following are BankIslami -supported browsers that offer this highest level of encryption: Internet Explorer - versions 5.5, and 6.0 Netscape - versions 7.1, and 7.2

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Safari version 1.2 Mozilla/FireFox version 1.0 If your browser does not support 128-bit encryption, you will need to download the latest version in order for you to use Personal Internet Banking. You should also be sure your browser options are set to accept cookies and is JavaScript enabled. There is no special software needed to access Internet Banking. Once you sign up, you will be able to access Internet Banking anytime from BankIslami's Internet Banking.

The Precautions That Should Be Taken While Using The Internet Banking Service:
Your Internet Banking account can be misused if your password and login id are compromised. the the following precautions must be taken to avoid any fraudulent activity on your account:

DO NOT reveal your ID and password to anyone, write down or use it where someone else can see. Change your password IMMEDIATELY, using the 'Change of Password' service, if you suspect it has been revealed. DO NOT use easily recognized numbers such as your telephone number etc. as your password. REMEMBER TO LOG OUT of the system and close your browser whenever you leave your computer, even for a short while. Clear your browser's cache on regular basis so that your account information is removed. This is particularly important if you are using a shared PC. You should clear it after each session. Always use the latest recommended Internet browser so that you are using the most updated security features available. Call our Phone Banking immediately if you notice any unusual transactions on your account.

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Features:

OneCard is a Shariah compliant ATM/Debit card, all in one, which acts as a complete
replacement for cash. Now you have the freedom to access your Bank account 24 hours a day to make instant and cashless payments at a multitude of shops, outlets and restaurants in addition to its use on our ATM network.

OneCard - Your ATM Card:

You can withdraw cash anytime and anywhere from around 2,500 ATMs countrywide linked to both the M-Net and 1-Link switches.

OneCard - Your Debit Card:

You can buy grocery, fill fuel, dine-out and make purchases at over 3,600 retail outlets linked to the Orix Network countrywide. Fund Transfer: ATM: You can carry out three kinds of instant fund transfers through BankIslami ATMs & Kiosks from your BankIslami account: Into any of your own BankIslami Account Into any other BankIslami Account Into any participating I Link Bank through BankIslami's interBank funds transfer facility Phone & Internet Banking: You can carry out two kinds of instant fund transfers through Phone and Internet Banking from your BankIslami account:

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Into any of your own BankIslami Account Into any other BankIslami Account Self Service Phone Banking:You can carry out instant fund transfer into any of your own BankIslami account No Interest: You do not entail any interest or credit on the payment of your transactions on because you spend from the money available in your BankIslami account. Security: You have maximum security with

OneCard

OneCard since it uses finger or thumb impression for

identification purposes apart from PIN code. (see anaxture 2, card holder SBP guidlines.) Free Balance Enquiry & Mini Statement: You can avail free Balance enquiry and Mini statement service to help you make fund management simple and effective and maintain a formalized record of all the purchases and payments you have made during a month. No Liability: You are protected against fraudulent transactions made on your

OneCard, in case your

card is stolen or lost. Simply report your card as lost or stolen immediately by calling our 24 hour Phone Banking service at 111-ISLAMI (475-264). 24 Hour Customer Assistance: You can contact our 24 hour Phone Banking service at 111-ISLAMI (111-475-264) if you need any assistance.

The Transaction Limit on a One Card:

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Currently, BankIslami offers two card variants to its customers, namely, Blue and Gold Card. Following are the various transaction limits as per delivery channel

Delivery Chanel

Transaction Blue Cash Withdrawal Fund Transfer - Own Account 20,000 Unlimited

Card Type Gold 50,000 Unlimited 250,000 150,000 Unlimited Unlimited Unlimited 250,000 150,000

ATM

Fund Transfer - Trird Party BIPL Account 150,000 Inter Bank Fund Transfer (IBFT) Fund Transfer - Own Account 150,000 Unlimited Unlimited Unlimited

Phone Banking

Fund Transfer - Own Account

Internet Banking Fund Transfer - Own Account KIOSK Inter Bank Fund Transfer (IBFT)

Fund Transfer - Trird Party BIPL Account 150,000 150,000

TPIN:
Your Telephone Personal Identification Number (TPIN) is your identification for Phone Banking services and therefore should remain confidential. Please do not share it with anyone. If you think someone has discovered your TPIN, change it immediately. It is a good idea to change your TPIN at regular intervals.

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Features:
Enjoy secure and safe ATM transactions with BankIslamis Biometric ATM based on BankIslamis One Card, which provides maximum security since it uses the most authentic way to verify your identity. How? Apart from a pin-code, you can also use your finger or thumb impression for identification purposes. After all, your fingerprints are yours and they cannot be copied. Amazing! Isn't it? Built with the state-of-the-art technology, these ATMs are the first of its kind in Pakistan.

How to get your Biometric Registration:

While opening an Account with BankIslami, customer will be asked to register his Biometric identification against his/her CNIC. As per BIP standard, customer's left & right Thumb will be used for registration purposes. Once customer's Account opening request gets approved, his/her Biometric record will be linked with his/her account through CNIC.

How to get One Card:

One Card will be mailed to your address in your "Welcome Pack". Personal Identification Number "PIN" will be mailed to you at your preferred mailing address given in the account opening form. You will call 111-ISLAMI (475264) to activate your One Card.

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How to Use Biometric ATM:

Insert your One Card in the Biometric ATM machine Place your Right/Left thumb impression on the space provided at the right side of the machine. Select the type of account from which you want to withdraw funds Select the amount to withdraw Take your One Card Take your Cash Take your Receipt

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Features:
We are just a call away!!! We are there for you 24 hours a day, 7 days a week. We don't even take breaks on Holidays and Sundays. If you need any information on any of our Products & Services, If you need to lodge a complaint or if you just need to give feedback on any of our Products or Services, just dial 111-ISLAMI (475-264).

We promise you will get the same level of personalized service and attention that you would expect from our branches.

You may choose to speak to us at anytime, Just Dial 111-ISLAMI (475-264).

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Features:
eStatement is a facility that not only helps you in viewing their statements whenever and wherever required but also brings an end to filing the Statements and keeping a paper stack. It is a convenience that offers you ease of use along with a worldwide access to your banking transactions.

How to Register?
Call 111 ISLAMI (111-475-264) Speak to a Phone Banking Officer Request for eStatement Activation Specify the Account Specify the Statement Frequency

Available Statement Frequencies:

Daily Weekly Monthly Semi Annually

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Features:
BankIslami offers Banking at your finger tips. Forget about rushing off to the Bank during office hours or waiting in queues - switch to Banking that's quick, secure and so very convenient. BankIslami Self Service facility provides you the convenience and ease of making transactions or getting your account details by just making a call to 111-Islami (475-264). You can avail the following Phone Banking self service facilities by following a series of simple menu choices. Balance Inquiry Transaction details Pak Rupee Fund transfer

How To Use:
Call 111-ISLAMI For Services in Urdu Press 1 For Services in English Press 2 For Self service banking Press 1 You will be asked to enter the following to proceed: 16 DIGIT 1 Card number 4 Digit TPIN (Telephone Personal identification Number) For Balance enquiry Press 1 For Transaction details Press 2 For Pak Rupee fund transfer Press 3

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Features:
Let us make this world safer and secure for you and your family. Our Safe Deposit Locker facility enables you to store your valuables in strong heat resistant steel lockers with 24 hour security. Be it jewellery, passports, share certificates or title deeds, you can rest assured that your valuables are not prone to loss, fire or theft. You can also nominate/authorize your dear and loved ones to operate the Locker. Now you can live a carefree & stress free life while we take care of your valuables while retaining your privacy. Following are the key benifits that you will get out of using safe deposit locker facility: Utter privacy to operate your locker in a comfortable, centrally air-conditioned environment. Protection against weather conditions & power failures with smoke-sensor's, backed by fire fighting equipment and 24 hour manned security. A Locker custodian to offer friendly and personalized assistance. Maximum of four (4) deposit operators per Locker. Safety of your valuables from loss, fire and theft. Unlimited free visits to your Locker.
Availability of different Locker sizes (Small, Medium and Large) to suit & accommodate your needs.

Takaful coverage of up to Rs. 25,000 for medium Lockers and Rs. 100,000 for large Lockers. Locker Rent payable annually and in advance (as per schedule of charges). Key Deposit payable in advance as a condition for Locker facility.

Eligilibility:
Individuals, firms, limited companies, associations, clubs, trusts, societies, etc may hire a locker.

An account must be maintained with the Bank.

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Remetance Department

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Remetance Department:
Remittance means transfer of funds from one place to another this department perform the function of transfer of money. The need of remittances is commonly felt in todays business. The main function of remittance department in a bank is the transfer of funds. Mr. Asad Mehmood Khan Ali Zai in BIPL is the officer for Remittances Department.

Parties To A Remittance:

Remitter One who make a remittance. He comes to the issuing or originating branch, ask for a remittance to be made, and deposits the money to be remitted. The bank charges him for the remittance. He may or not be the banks customer.

Remitee Also sometimes called the beneficiary, or the payee (the person to whom the remittance is made/ the one who receives the payment.)

Issuing Bank The bank that affect the remittances, through the Demand Drafts, Telegraphic Transfer, or Mail Transfer.

Paying Bank Also known as the drawee branch (The branch on which the instrument is drawn. It has to make the payment). Usually located in a different city or country.

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Types of Remittance:

Local Remittance When funds are transferred within the country from one city to another city or within the same city it is called local remittance.

Foreign Remittance When funds are transferred outside the country it is called foreign remittance.

Modes of Remittance:
Demand Draft (D.D.) Pay Order (P.O.) Internal Transfer (I.T.) Foreign Demand Draft (F.D.D.) Foreign Telegraphic Transfer (F.T.T.) Travlers Cheques (T.C.)

Pay Order:
A pay order is a written order issued by a bank, drawn upon & payable by itself, to pay a specified sum of money to or to the order of a specified person. In simple words payorder is an order to pay. Pay order abbreviated as P.O is a negotiable instrument (such as a draft) which instructs a payer bank to pay a certain sum to a third party within the city. It is a payment instrument which is used by the banks to settle payment obligations on behalf of their customers. This instrument is guaranteed by the bank for its full value and is similar to a demand draft. pay order can only be paid at a branch of BIPL and is not payable at non BIPL Branches. pay order is payable at any BIPL Branch all over PAkistan. At BIPL pay order is made free of cost to customers.

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Payment through pay order is a confirmed payment. The reason is that when pay order is made, the applicant who has an account with the Bank Islami is debited and the amount is added to the pay order account. And from that account, the beneficiary account is credited for the amount of pay order. BIPL only issues Payee Account Only pay orders.

Validity: Pay order is valid for 6 months after the date of issue. If the customer does not claim the payment within 6 months of the issue then the amount of the pay order is included in the Unclaimed Account and the amount stays there for 10 years.

Demand Draft
Demand Draft is issued at customers demand for perticular city. Demand Draft is drawn on a specific city and on a specific branch. A demand draft referred to as DD is a bankers own draft drawn upon another banker as per agency arrangement. BIPL issue Demand Draft only for that city in which there is no branch of BIPL. Then BIPL will link in that city to other banks for example HBL. BIPL will issue demand draft to the name of HBL and then the funds will transfer through HBL to beneficiary account. BIPL DOES NOT ISSUE Demand Drafts as Pay Order and Demand Draft are same in BIPL so a Pay Order is issued instead of Demand Draft. Demand Draft is only issued for clearance purposes for the settlement of funds between the cities.

Procedure for the Issuance of Pay Order / Demand Draft:

The procedure for dealing with all these under local as well as foreign currency in BIPL is that according to bank Islami pay order and demand draft concept is same. It is an online transfer of funds. When a customer comes for the issuance of pay order, the processing steps are: The customer is given the Funds Transfer- Application Form. The customer fulfills the application form which includes the following details: Transaction Details. It includes Amount in Figures and Words. The desired Currency.

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Mode of Payment. Beneficiary Details (In whose favor P.O is issued). Applicants Detail (Who Requests for P.O).

The filled form along with the cheque is given to the remittance officer who verifies the form through the following stamps: Sign Verification (Where the customer has done the Signatures) on the application form. Transfer Posted (Means amount is transferred from the Applicants account to the Beneficiaries Account). Time Stamp (Contains the Date and the Time of Receiving of Application).

Application form is given to the applicant to fill. Account Application form is then given to the Remittances Incharge for issuance of instrument. He enters all the particulars of the application form in the system and computer gives an Auto Control Number to the instrument. Printout is taken on the block of payment Order. Two authorized officers of the branch then sign it. Instrument is then protect graphed, and given to the customer. After filling the application form bank will issue the pay order/demand draft to the applicant. Funds will transfer to the applicant banks Pay order general account and then the customer handover that pay order or demand draft to the third party in whose name he made the pay order/ demand draft. Then that third party will present that pay order/demand draft in his correspondents branch form where this will present to the nearest BIPL branch from where the funds will transfer to the beneficiary account.

BIPL issue demand draft only for that city in which there is no branch of BIPL Then BIPL will link in that city to other banks for example HBL Ahmedpur branch. BIPL will issue demand draft to the name of HBL and then the funds will transfer through HBL to beneficiary account.

Internal Transfer:

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This type of transfer is simple in which funds are transfer from one account to second account may be of same branch or other branch of same bank. One cheque can be credited in more then one one accounts. The form is more then enough to transfer funds without any cheque. There are two ways for this transfer:

With Cheque: If money transfer by cheques and transfer in the account of concerned person then he will bring the cheque from that branch

Without Cheque: In which customer give a request for funds transferring from his account to the concerned person.

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Foreign Demand Draft (FDD):

Foreign currency demand drafts are issued in BIPL. Foreign DD is the bankers own draft drawn upon another bank/ correspondent bank in a country other than the country from where it is issued and drawn and payable in currency of the country in whose bank/ branch it is drawn. For this purpose, the bank has maintained its Nostro A/c with different banks world wide for demand draft Purposes. BIPL does its remittance in abroad with HBL. Through Nostro account, outward remittance in FDD takes place. I will explain the term Nostro A/C for outward and Vostro A/c for inward remittances as follows:

Nostro A/c To best remember it is Our account with them in their currency. Nostro accounts are usually in the currency of the foreign country. This allows for easy cash management because currency does not need to be converted.

Vostro A/c To best remember it is Their account with us in our currency. These accounts are maintained by the correspondent banks in the currency of the country in which the account is opened. These accounts are also known as Loro Account.

Telegraphic Transfer Through SWIFT:

It is largely the obsolete method of transferring funds through a telegraph or telex link from one country to another. With the help of this service a customer can transfer money to the bank account of a beneficiary in most foreign countries of the world also called wire transfer; it has been replaced by secure cable and wireless telecommunications networks. In BIPL, the transfer of funds through this medium is implemented through SWIFT which is the standard in all banks of the industry. The telegraphic transfer is of two types: Local TT. Foreign TT.

Local TT:

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In local Telegraphic Transfer, the funds are transferred from one city to another. The local transfer system is not been used in BIPL. The method was that the customer who wanted to avail this facility was given the funds transfer application. The person who wanted to remit the money used to provide the details of the receiving person. The transaction was done between the banks. The bank remitting the money used to credit the account of the person sending the money and the paying bank used to debit such account and made payment to the receiving person. The payments were done on the counters. The NIC of the persons were taken in that kind of transactions. This system is not in use today because the SBP has started restricted the counter payments due to the fraudulent nature of the transaction.

Foreign TT:
The foreign telegraphic transfer means the transfer of funds to a foreign country. Both inward and outward is done at BIPL. The Foreign Telegraphic Transfer is done through SWIFT which is acting as a quickest mode for the transfer of funds to abroad. The FTT is only done account to account in BIPL. The procedure for the Foreign Telegraphic Transfer followed by the remittance officer is explained as: The customer comes to the bank for the purpose of FTT. The customer is given the Funds Transfer Form on which the customer provides these details: Amount of the Transaction in Words and Figures. The Desired Currency. Beneficiary Details to whom the funds are to be transferred. Beneficiary Banks details in the abroad. Applicants Details. After filling out the information, the customer signs the form and hands it over to the remittance officer along with the cheque. The remittance officer makes sure that the purpose of remittance is provided by the customer. The charges of TT are deducted from the account which is flat 10 US dollars. The stamping is done on the form and the remittance officer signs the form. The form also gets signed by the operations manager.

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The completed form along with the cheque is sent to the BIPL Head Office where all the SWIFT operations are taken place. The Head Office makes all the dealing with the correspondent banks in abroad for the purpose of FTT.

The Role of SWIFT In Telegraphic Transfer:

SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication, a member-owned cooperative through which the financial world conducts its business operations with speed, certainty and confidence. Over 8,300 banking organizations, securities institutions and corporate customers in more than 208 countries are the members of SWIFT and every day exchange millions of standardized financial messages.

Its role is two-fold. They provide the proprietary communications platform, products and services that allow its customers to connect and exchange financial information securely and reliably. They also act as the catalyst that brings the financial community together to work collaboratively to shape market practice, define standards and consider solutions to issues of mutual interest.

SWIFT enables its customers to automate and standardize financial transactions, thereby lowering costs, reducing operational risk and eliminating inefficiencies from their operations. By using SWIFT customers can also create new business opportunities and revenue streams. SWIFT has its headquarters in Belgium and has offices in the world's major financial centers and developing markets. SWIFT is solely a carrier of messages. It does not hold funds nor does it manage accounts on behalf of customers, nor does it store financial information on an ongoing basis. As a data carrier, SWIFT transports messages between two financial institutions. This activity involves the secure exchange of proprietary data while ensuring its confidentiality and integrity. Services Provided by SWIFT

SWIFT Network Provides The Following Services To The Banks:

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The exchange of real-time messages using XML standards. The exchange of bulk messages (e.g. non-urgent and low value payments). A secure browser for accessing account information.

Joining SWIFT:
In Pakistan banks get the membership of SWIFT through State Bank of Pakistan. The Financial documents along with the registration application are submitted to SBP and from there they are transferred to the SWIFT. After verification, SWIFT gives the membership to the Bank. Following are steps to join SWIFT, connect to the SWIFT network and become fully operational.

Procedure: Every client has its own SWIFT BIC code, in order to identify Financial Institutions. BIC stands for Bank Identifier Code. To transfer messages securely and efficiently, the client bank connects through SWIFTNet network by the assigned SWIFT BIC code. SWIFT clients can configure their existing email infrastructure to pass email messages through the highly secure and reliable SWIFTNet network instead of the open Internet. SWIFTNet Mail is intended for the secure transfer of sensitive business documents, such as invoices, contracts and signatories, and is designed to replace existing telex and courier services, as well as the transmission of securitysensitive data over the open Internet.

SWIFT Code: The SWIFT code is 11 characters made up of: 4 characters: Bank code (only letters). 2 characters: 3166-1 alpha 2 country code (only letters). 2 characters: location code (letters and digits). 3 characters: Branch code, optional (xxx for primary office) (letters and digits).

Procedure For International Clearing:

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Outward Transfer For the purpose of outward transfer, as the foreign bank branch receives the SWIFT message, the Nostro account is debited for the banks record. The transferee has account with the foreign bank, the funds simply transfers to the transferees account.

Inward Transfer For the purpose of inward transfer, as the domestic bank branch receives the SWIFT message, the Vostro account is debited for the banks record. The transferee has account with the domestic bank, the funds simply transfers to the transferees account.

Travelers Cheques:
Traveler cheques (TC) is form of currency cheques for travelers which is convenient to carry and incase of misplace or lost one can easily have their cash again. In previous years businessmen were mostly carrying their cash in form of currency notes, usually they were worried about their cash, and it shouldnt be stolen or lost by them. For those reasons and for the comfort of the business community internationally countries decided to issue them travelers cheques, and now a days business community could use it easily without any fear of lost and steal. This is not a product of BIPL. These are the banks instruments issued to only major account holders of a bank. TCs are issued to the facilities the customers during the travel. Travelers Cheques are just like cheques which contains 2 counter signatures of the customer who made these cheques and one authorized signature name. They can be made in local as well as foreign currency. Travelers Cheques can be made for Rs. 1,000, Rs. 5,000, Rs. 10,000 and Rs. 20,000. Withholding tax of 3% is charged for encashment of Travelers Cheques and are payable at any branch of any bank.

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Collection Department

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Clearing Department

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Clearing Department:
Clearing is a system by which bank exchange cheques and other negotiable instruments drawn one each other within specified area and securing the payment for their clients through the clearing house. Clearing stands for mutual settlement of claims made in among member banks at an agreed time and place in respect of instruments drawn on each other. Clearing is the way through which Bank Islami clears cheque of other banks and clear the cheques of its own bank from other banks. Every bank acts in two ways: Paying Bank Collecting Bank A large part of this work is carried out through the bankers clearing house wherever it is established.

Functins of Clearing Department:

To accept transfer, clearing and collection cheques from the customers and to arrange for their collection. Transfer Cheques: are the cheques, which are collected and paid by the same branch of the bank. Clearing Cheques: are those cheques which are drawn on the branches of some other bank of the same city or of another city which are covered by a particular clearing house. Collection Cheques: are those cheques which are drawn on the branches of other banks for the cities which are not coming in their clearing house.

Clearing House:
Clearing house is the place where representatives of all the banks of the city get together for the purpose of settlement of payments and receipts of cheque drawn on each other. Clearing House is an arrangement under which member banks agree to meet, through their representatives, at the appointed time and place to deliver instruments drawn on the other and in exchange to receive

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instruments drawn on them. Normally clearing is carried out in State Bank of Pakistan but in the areas where there is no branch of SBP National Bank work as subsidiary of SBP. Clearing cheques received from other banks are sent to branches, which will clear the cheques and instruments to respective amount. The net amount payable or receivable as the case may be is settled through an account kept with the controlling bank, in pakitan it is the State Bank of Pakistan.

For a bank, following are the requirement of being a member of clearing house: It must be scheduled Bank i.e. It is registered is State Bank of Pakistan. 50 cheques per day must be drawn on it for continuously three months. It must have account with State Bank of Pakistan. Sufficient balance should be in this account.

Types of Clearing:
Inward Clearing In inward clearing the cheques received from other banks are collected and sent to branches for their payment. It means the instruments received by a bank of its own branch for clearing from other banks. When a particular branch receives instruments, which are on themselves and sent by other member bank for collection are treated as Inward Clearing of that branch. This branch is known as paying branch. Outward Clearing It is an instrument that is sent by the originating bank to the other banks for the collection of funds. As the customer deposits cheques and other instruments of other banks for collection from other bank, the bank sends the cheques in outward clearing. When a particular branch receives instruments drawn on the other bank within the clearing zone and sends those instruments for collection through the clearing arrangement is considered as Outward Clearing for that particular branch. This branch is known as collecting branch.

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Instruments Used In Clearing: Demand Draft/Pay Order Call Deposit Receipt (Same City) Cheques Bills for Collection(All types of cheques of SBP and Treasury cheques)

Role of NIFT in Clearing:

NIFT stands for National Institutional Facilitation Technologies Pvt. Limited. The institution was incorporated in September 1995 as joint venture between a consortium of six banks and entrepreneurs from the private sector. All banks in Pakistan, a total of 42, are participating members of NIFT with branches spread throughout the country. Six equity holder banks are: Habib Bank Limited. MCB Bank Limited. National Bank of Pakistan. United Bank Limited. Allied Bank Limited. First Women Bank Limited.

As of June 2007, 40 commercial banks and their 4500 branches in 100 major cities utilize NIFTs services. NIFT has signed an agreement with the central bank for provision of automated clearing services to all banks and their branches; SBP has a monitoring role in the clearing operations of NIFT. NIFT has setup elaborate data centers geared to provide automated services for document processing particularly in the payment arena.

NIFT is responsible for the establishment and management of automated clearing house facilities in Pakistan. NIFT is actively involved in the modernization of payment systems in the country. All commercial banks in Pakistan are members of NIFTs clearing system and bank plays monitoring role on the clearing operations of NIFT.

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Payment and settlement systems are crucially important to the smooth functioning of the economy. It is the responsibility of a central bank to promote sound and efficient payment and settlement systems.

Financial institutions use payment systems to settle financial market transactions. State Bank of Pakistan has made incredible efforts for improving the efficiency of the payment system. Being an operational arm, the SBP facilitates in maintaining an efficient, safe and reliable payment and settlement system. During the period under review, payment instruments of commercial banks have been standardized to facilitate the automated clearing facilities provided by the National Institutional Facilitation Technologies (NIFT).

In major cities, the functions of the SBP clearing house have been handed over to NIFT to the extent of sorting of payment instruments and preparing clearing schedules. The agent of NIFT directly collects the cheques from each branch of the bank instead of collecting from head office. Now the process of segregation and sorting the cheques is done by the NIFT rather commercial banks through the automated system. NIFT also keeps the record of cleared cheques and also provides the net position to the banks.

Services Provided by NIFT:

Its main responsibility is to pick and drop instruments from one bank and realize it from other banks and report to State Bank of Pakistan. NIFT deduct charges of its duty. The services provided by NIFT includes collection and delivery, inter-branch settlement, reconciliation, return (un-paid) cheques processing, the same day clearing (express) two-hours, clearing services and inter-city clearing to all commercial banks and their branches in Karachi, Lahore, Rawalpindi, Islamabad, Hyderabad, Faisalabad & Peshawar. NIFT services cover over 90 percent of all cheques clearing transactions that take place in the country.

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Explaining the procedure, the NIFT collects the outward clearing directly from every branch and arranges processing, presentment and processing of returns, providing the net position, etc to the banks and their branches.

Procedure of Clearing:
Before 9.00 am authorized representatives of all the bank of the city get together in State Bank of Pakistan for 1St clearing, where in clearing house register bank wise entry is made and exchange of cheques takes place, here 1st clearing ends.

In outward clearing if customer want to transfer his funds from Bank Al-Falah to Bank Islami then the customer will make a cheque from Bank Al-Falahs chequebook and cross this cheque and deposit this cheque in Bank Islami. After receiving, instruments should be crossed with the
banks Crossing Stamp immediately. The Bank Islami will make a deposit slip against the cheque

deposited and paste its crossing stamp with its clearing stamp and an endorsement stamp behind the cheque that reads Payees Account Will Be Credited upon the cheque. Deposit slip is handed over to customer as a proof then Bank Islami will handover that instrument to NIFT as outward clearing for Bank Islami at almost 3:00 pm that day. The Bank Islami will fulfill three requirements: Bundle cover Summary/delivery receipt Manual statement of list of instruments

Now NIFT role come into existance. NIFT member will received these above things from Bank Islami and will go to SBP for exchange of instruments where members of NIFT for each bank sit together and each member receive the instruments of his concerned bank and in the next day before 9.00 am, after recording it in their computer systems, NIFT will handover the cheque of Bank Al-Falah to its respective branch. Bank Al-Falah will receive these instruments as inward clearing for itself.

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After 2:00 pm all the representatives again get together for second clearing where payment & receipt of passed cheques takes place and dishonored cheques are delivered back to the representatives of respective banks. No physical payment or receipt of cash takes place, actually every clearing house agent (bank) have account with SBP which is debited or credited or debited respectively; with an amount equal to the diffrence in payments and receipts of each bank.

Before 2.00pm Bank Al-Falah will pass the entry in the system and check the account of that person, will clear it and report to NIFT of nill returns. Incase the instruments or cheques are reeturned/dishonoured then a memo showing the reason of dishonor is attached with them and are reported to NIFT. At this time Bank Al-Falah will also hand over those cheques of other banks, which it has collected during the day for clearing, to NIFT as outward clearing for itself. Then NIFT will go to SBP and then after feeding it in system the cheque is returned to the respective bank with the cheques drawn on that bank for clearing.

In inward clearing if Bank Al-Falah received a cheque of Bank Islami during the working day then it would be crossed with the banks Crossing Stamp immediately. The Bank Al-Falah will make a deposit slip against the cheque deposited and paste its crossing stamp with its clearing stamp and an endorsement stamp behind the cheque that reads Payees Account Will Be Credited upon the cheque. Deposit slip is handed over to customer as a proof then Bank Al-Falah will handover that instrument to NIFT as outward clearing for Bank Al-Falah at almost 3:00 pm that day. The Bank Al-Falah will fulfill three requirements: Bundle cover Summary/delivery receipt Manual statement of list of instruments

Now NIFT role come into existance. NIFT member will received these above things from Bank Al-Falah and will go to SBP for exchange of instruments where members of NIFT for each bank sit together and each member receive the instruments of his concerned bank and in the next day before 9.00 am, after recording it in their computer systems, NIFT will handover the cheque of

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Bank Islami to its branch. Bank Islami will receive these instruments as inward clearing for itself.

After 2:00 pm all the representatives again get together for second clearing where payment & receipt of passed cheques takes place and dishonored cheques are delivered back to the representatives of respective banks. Before 2.00pm Bank Islami will pass the entry in the system and check the account of that person, will clear it and report to NIFT of nill returns. Incase the instruments or cheques are reeturned/dishonoured then a memo showing the reason of dishonor is attached with them and are reported to NIFT. At this time Bank Islami will also hand over those cheques of other banks, which it has collected during the day for clearing, to NIFT as outward clearing for itself. Then NIFT will go to SBP and then after feeding it in system the cheque is returned to the respective bank with the cheques drawn on that bank for clearing.

Types of Returns:
Outward Return: Clearing returns (outward) include those cheques that are presented to us by other banks but we have to return them unpaid to the collecting banks due to various reasons. Inward Return: Clearing returns (inward) consists of those instruments which are presented by us to other banks for payment but have been returned and unpaid by them due to specified reason through the clearinghouse.

Advantages of Clearing:
1. Since clearing does not involve cash and all the transactions take place through entries in the computer, the number of transactions can be unlimited. 2. No cash is needed as such the risk of robbery and embezzlement is totally eliminated. 3. Systematic arrangement for collection and clearance of cheques. 4. Speedy and economic collection and clearance of cheques. 5. Clearance of cheques and other instruments of different branches of different banks in a systematic manner without any flaw and mistake. 6. The collection and clearance of government bills, instruments and cheque.

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7. The collection of government revenue through cheque, pay orders and drafts payable through State Bank of Pakistan and National Bank of Pakistan. 8. It avoids the difficulties and cumbrances faced by the branches if they collect the instruments directly from branch to branch. 9. Confidence among the clearing members is produced.

Stamping on the Cheques and Deposit Slips:

For Cheques, Two Stamps Are Affixed: Payees Account Will Be Credited on the back of the cheque. Clearing Stamp on the front of the cheque. For Pay Orders, Two Stamps Are Affixed: Disbursement Guaranteed on the back of the cheque. Clearing Stamp on the front of the cheque. For Deposit Slips, Only One Stamp Is Used: Clearing Stamp. The stamps are duly signed by the authorized officer of the bank. The date on the clearing stamp is always one day ahead, because the cheques are presented in the concerned branches the next day for payment.

Same Day Clearing:

The practice of issuing SBP cheque on behalf of the customers for the purpose of same day adjustment adopted by the banks have been dis-continued and a system has been introduced for same day clearing through NIFT.

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Pre- Requisites for Same Day Clearing: The following are the requirements for availing this facility: Same day clearing is restricted to instruments valued at a minimum of Rs. 100,000/- and above and received by 10:00 AM. The depositor must make specific request to the branch for Same Day Clearing. The Same Day Clearing is restricted to the branches that are designated only, which will ensure that the timings in this respect are strictly followed.

Cheques Returned in Outward Clearing: The cheques which are sent for local clearing may be returned for the following reasons: Funds Insufficient Signatures Differs Dormant Account Stop Payment by the Drawer etc. The returned cheques are entered in the separate register called Returned Cheques in Outward Clearing the day when they received. After making the entries, the client is called for the collection of such cheques. If the client does not come to the bank after the reasonable time period, the cheque is then dispatched to the customer along with the letter containing the details of the cheque like cheque date, cheque number and the reason for return of the cheque. The photocopy of both the cheque and the letter is kept in a file called Returned Cheques Dispatched.

If the client comes to collect the cheque, photocopy of the cheque and the return memo is also kept and then receiving of the client is taken on the cheque return register and the photocopies of both the cheque and the return memo are kept in a file named as Returned Cheques.

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OBC:
OBC stands for Outward Bills for Collection. The instrument out of station i.e. beyond clearing house area are called Outward Bills for Collection (OBC). A schedule is prepared for OBC where mentioned the proceed remitted. OBCs instrument must always be endorsed. The endorsement of the instrument is always endorsement 3. OBCs are recorded in a register with date, serial number, drawees bank, amount. It is done through the following 3 ways:

Inter City Clearing Through Our Branch Direct To The Relevent Bank

IBC:
IBC stands for Inward Bills for Collection. The instrument sent to us from the outstation branches of the banks for collection are called Inward Bills for Collection (IBC). Such instruments may be drawn on us or on other branches /banks of the city. On receipt of the IBC the same is to be inserted in the IBC register and IBC No. is to be written on the forwarding letter of the same by fixing rubber stamp. It is done through the following 3 ways:

Inter City Clearing Through Our Branch Direct To The Relevent Bank

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Inter City Clearing:

Other checques of another city are called Inter City Clearing and is delt under OBC/IBC. It is also done by NIFT.

Stamping for OBC: On The Face: Clearing Stamp With the Date of Next Day Inter City Clearing Stamp OBC Stamp On The Back Payees A/C Will Be Credited For Cheque Disbursement Garanteed For DD or PO

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Cash Department

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Cash:
This is very important department because cash is the most liquid asset and mostly frauds are made in this department. Here the individuals that are authorized to go in this department have to be very careful because when at the end of day the cash is balanced, a little more or little less balance can cause problem and then they have to see where they have made mistake. So extra care is taken in this department and nobody is allowed to enter in this department except authorized persons only.

When cash is received at the counter, this entry is recorded in the computer by the cashier. At the close of the day, these entries are balanced with each other and cash shown in system is balanced with physical cash.

When the cheque or any negotiable instrument is presented at the counter for payment, the cashier at first ask for the photocopy of CNIC of the person who has come, instead of actual account holder, with the cheque and then they record the transaction in the computer and then payment is made to the payee. At the end of the day, the entries the cashier has made are balanced with the entries that have been made by the assistant manager.

The consolidated figure of the receipt and payment of the cash is entered in the cash balance book (in the computer) and drawn closing balance of cash.

Opening Balance + Receipts Payments = Closing Balance

Here they have to maintain the cash regulatory requirement (reserve) that a maximum cash reserve requirement that a bank should possess is 50 millon and at every day end the cash details are e-mailed to the head office which uses this information to insure the cash at a branch.

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Utility bills are also accepted at this department while unsorted, reissuable notes, defective (numbers mismatch) or soiled notes etc are also accepted at this department. The bank is also authorized by the State Bank of Pakistan to replace these notes with the new ones i.e. Fresh Cash or Sorted Cash. Here the online charges, consisting of only withholding tax, are charged from those who want to avail the facility of online banking for a amount more then Rs. 25,000.

Things used at the Cash Departmnet are:

1. Counting Machine This machine is used to count cash. It is helpful in counting large sums of money instently thus reducing service time.

2. Binding Machine It is used to bind cash into bundles of 100 Notes.

3. Ultravoilet Rays Or Note Detector It is a machine that uses ultravoilet rays to detect that the note is orignal or fake.

4. Boards These are boards suplied by the State Bank of Pakistan to the bank to display near the Cash Counter. These bords include the Mohtasib Board and the Cash Bords that describe the feachers in the currency notes that are used to check that the currency note is orignal or fake.

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Liability Department

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Consumer Banking

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MUSKUN Home Financing

Features:
Do you Dream of providing your loved ones a home of their own but don't have the funds? Don't stop dreaming, Let us make your Dream a Reality with BankIslami MUSKUN Home financing where you can avail financing for any of the following facilities:

Home Purchase:
Just point your finger at the Bungalow or Apartment of your choice and we'll help you buy it. Financing Tenure Financing Range Bank Investment Ratio 2 to 20 years Rs. 200K 10M Maximum up to 80% for salaried / selected SEPs * Maximum up to 70% for Businesspersons/NRPs (* Doctors, Engineers, Architectures, Chartered Accountants) No Penalty apply after one year. In case Customer applies for purchase of early units or pre-payment within 12 months after disbursement, additional Musharakah Units will be revalued at 5% higher than face value.

Prepayment Option available

Home Construction:
So you want to build your Dream home rather than buy a ready made one? You make the design, we''ll help you build it. Construction Tenure Financing Tenure Financing Range Maximum 2 Years Minimum 2 Years (excluding construction period) Maximum 20 Years (including construction period) Rs. 200K 10M

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Bank Investment Ratio

Salaried / Selected SEPs*: Up to 80% for financing upto Rs. 10M. Up to 70% for financing > Rs. 10M. Businessmen/NRPs: Up to 70% for all financing amounts. No Penalty apply after one year. In case Customer applies for purchase of early units or pre-payment within 12 months after disbursement, additional Musharakah Units will be revalued at 5% higher than face value.

Prepayment Option available

Home Renovation:
Thinking of remodelling your kitchen to fulfill your wife's long awaited wish, or build a study area for your kids, or a cozy library for your parents, or just want to give your home a new look? you plan it, we'll help you renovate it.

Construction Tenure Financing Tenure Financing Range Bank Investment Ratio

Maximum 6 months 2-7 Years Rs. 150K 10M Maximum 50% for Salaried / Selected SEPs* Maximum 50% for Businessmen/NRPs (* Doctors, Engineers, Architectures, Chartered Accountants) No Penalty apply after one year. In case Customer applies for purchase of early units or pre-payment within 12 months after disbursement, additional Musharakah Units will be revalued at 5% higher than face value.

Prepayment Option available

Home Replacement:
Don't lay the foundation of your Dream home on interest. If you already have a Conventional Mortgage loan and want to switch to Shariah compliant means of Financing, we'll help you transfer it. Financing Tenure Financing Range 2-20 Years Rs. 200K - 10M

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Bank Investment Ratio

Salaried / Selected SEPs (Doctors, Engineers, Architectures, Chartered Accountants): Up to 80% for all financing Businessmen/NRPs: Up to 70% for all financing amounts. No Penalty apply after one year. In case Customer applies for purchase of early units or pre-payment within 12 months after disbursement, additional Musharakah Units will be revalued at 5% higher than face value.

Prepayment Option available

The MUSKUN Home financing facility is based on the principle of Diminishing Musharakah and Ijarah. The Diminishing Musharakah transaction is based on Shirkat-ul-Milk where you and the Bank participate in ownership of a property. The share of the bank is then leased to you on the basis of Ijarah and is divided into a number of units. It is then agreed that you will buy the units of the bank periodically, thereby increasing your own share till all the units of the Bank are purchased by you which will make you the sole owner of the property. Till that time, you pay the Bank rent for its units leased to you. The rent keeps on decreasing as your ownership in the property increases and that of the Bank decreases.

Benefits:
Quick Processing Financing up to 50% of the value of the property Financing limit Rs. 10 Million Tenor up to 20 years No pre payment additional price charged after one year Flexible & Affordable installments with Sahulat payment schedule Clubbing of family income No Negative Area

How It Works:

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You will approach BankIslami and inform about your needs of financing for Home Purchase, Construction, Renovation or Balance transfer facility. You will then submit the filled Application Form along with the required documents and a cheque for processing fee. Our Business Executive will guide you during the whole process. The Bank will conduct verification of your residence & office addresses as well as those of the references provided by you. The Bank will then conduct your Income estimation to determine the maximum financing that can be provided to you. In case you are Self Employed, our agent will approach you for the necessary income details and documents. In case you are Salaried, we will approach your employer for this purpose. A legal opinion is then obtained by the Bank on the property documents submitted by you.

Valuation of the property is done to determine its Market value. The Bank then issues you an offer letter for the financing amount you qualified for based on your evaluation. After your acceptance, a Shirkat-ul-Milk (Musharaka) Agreement is signed between you and the Bank, whereby, the Bank and you will become joint owners (partners) in the Musharakah property.

A Pay Order is issued in the name of the seller in case of MUSKUN Home purchase by the bank. Your Business Executive and our in house / Externa lawyer will accompany you for the transfer of property in your name. The Pay Order is then handed over to the seller. In case of MUSKUN Home Construction / Renovation / Replacement Cases, the financing amount is simply credited to your account. It is ensured through Shariah-compliance checks that the funds are utilized only for construction/renovation/replacement.

You and the Bank now jointly own the home. You and the Bank also execute a Monthly Payment Agreement whereby you agree to pay a monthly payment to the Bank for the use of the bank's ownership in home. Undertaking to Purchase is given by you, under which you undertake to purchase the Musharakah Units (representing Bank's undivided ownership share in the property) from the Bank periodically. On monthly basis, you purchase Musharakah units from the Bank. When you have purchased all units of Bank, you become the sole owner with a free and clear title to your home.

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Fatwa:
BankIslami's commitment to Shariah is strict and absolute. We have the distinction of being the only Bank to have a full time Shariah adviser as well as having a prestigious local Shariah board of global repute. Muskun Home financing products are approved and verified by our Shariah Board. To view our Shariah Board's approval of Muskun Home Financing products please see Anaxture: MUSKUN Property Purchase MUSKUN Replacement MUSKUN Property Construction & Renovation

Eligibility:
Citizenship Cities Pakistani Karachi , Lahore and Islamabad/Rawalpindi Salaried/Businessmen/Selected Professionals: Primary Applicant: 25-65 Years Co- Applicant: 21-70 Years NRPs: Primary Applicant: 25-60 Years. Co- Applicant: 21-70 Years. Salaried: Minimum 6 months at current employment and 2 years continuous employment experience in the same industry/field. Businessmen:3 years of business / practice. Salaried: Rs. 35,000/Business man: Rs. 50,000/NRPs: Rs. 100,000/-

Age Limit

Employment Tenor

Minimum Income

An NRP needs to have a Co-applicant residing in Pakistan as an Authorized Additional Criteria Person on behalf of the NRP. for NRPs Only Salaried NRPs can avail MUSKUN Home Financing.

Documents Required:
General:

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Copy of CNIC (Applicant and Co-applicant) 2 passport size photographs (Applicant and Co-applicant) Completely filled Application form with Applicant's Profile Report Copies of Last 6 months paid utility bills Property Documents: Copy of chain of all title documents Approved Building plan Public notice For Salaried Persons: Employment certificate issued by employer Last three Salary Slips Bank Statement of last 12 months Detail of other financing along with its repayment For Businessmen: Income tax return for last three years , Proprietorship Letter/Partnership ded/ Memorandum and Articles of Association Company Bank Statment of last 12 months Detail of other financing along with its repayment For NRPs: We offer NRPs (only Salaried segment) purchase/construct/renovate/balance transfer facility of a House/Property only in Pakistan only Last three months Salary Slip Copy of Passport Copy of NICOP VISA/residential status proof Tax deduction details Employment Certificate and Contract Copy Bank Letter and Banks Statement of last 12 months 2 passport-sized colored Photographs of Applicant / Co-Applicant All the above mentioned documents relating to NRP should be duly attested by Pakistani Consulate

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bros hure

Brochure

New Vehicle

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Features:
Drive your Dream Car-the right way with Islami Auto Ijarah. Now you can avail Auto finance facility for a Car of your choice in a completely Shariah compliant manner.

BankIslami's Auto Ijarah facility is based on the concept of Ijarah. It is a Shariah compliant alternative to Conventional leasing where Bank acts as a Lessor and you act as a Lessee. The Bank requires you to pay a monthly rent for the use of the Vehicle. In this while, the ownership of the vehicle remains with the Bank, only the rights of use is transferred to you. At the end of the Ijarah Agreement, you will be given a choice whether to return the vehicle to the Bank and receive back the initial security deposit you paid* or to purchase it at a price as low as the security deposit.

Ijarah facility for Tenure of Ijarah

New Vehicles Min- 3 Years, Max-5 years

Minimum Cost of Vehicle Rs. 250,000 Security Deposit Processing Charges Tracker Installation Takaful
*conditions apply

Min -30%, Max-50% Rs. 4,500/- (Rs. 1,000 Pre Processing is part of the Rs. 4,500/Amount) All Vehicles costing above Rs. 600,000 are required to be installed with tracker Takaful coverage on all vehicles is compulsory and is provided by Takaful Pakistan

Concept of Ijarah:

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Ijarah means 'to give something on rent'.It is a Shariah compliant alternative to Conventional leasing where Bank acts as a Lessor and you act as a Lessee. The Lessor (Bank) allows the Lessee (You) to use the vehicle owned by the Lessor in return for a monthly rent. The following are rights and responsibilities of the Lessor and Lessee in an Auto Ijarah arrangement:

The Lessee has the right to use the vehicle whereas the ownership rests with the Lessor. All liabilities resulting from the ownership (Islamic insurance, transportation, duties etc) shall be borne by the Lessor and all the liabilities relating to use of the vehicle shall be borne by the Lessee. The vehicle will remain in the risk of the Lessor throughout the lease period. Any damage or loss caused by factors which are beyond the control of the Lessee shall be borne by the Lessor. The Lessee is liable for any damage to the vehicle caused by any misuse or negligence on his/her part. The period of lease must be determined in clear terms and the vehicle must be fully identified and quantified by both parties. The Lessor cannot increase the rent unilaterally. The Lease period will commence from the date on which the vehicle is delivered to the Lessee whether the Lessee has started using it or not. If the leased vehicle has lost its function and no repair is possible, the lease shall terminate on the day on which such loss occurred. However, if the loss is caused due to misuse or negligence of the Lessee, he/she will be liable to compensate the Lessor at a value that was prevailing in the market immediately before loss. The Lessee will bear the maintenance and operating costs of the vehicle during the lease period. The Lessor will bear the cost of Takaful of the vehicle and its annual renewals during the lease period. All ownership related expenses (registration, Takaful) shall be borne by the Lessor. Rent will start after delivery of vehicle to the Lessee.

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After completion of the tenor of lease, the Lessor will go for any of the four options with the mutual consent of the Lessee: Give an option to the lessee to purchase the vehicle at a pre agreed price. Take the vehicle back from the Lessee Renew the Lease contract for another tenure. Lease it out to another party.

The Differences between Conventional Lease & Auto Ijarah:

Conventional Lease Auto Ijarah

Lease commences the very day on which the At BankIslami, rentals start after the delivery of price is paid by the Bank, whether the Customer asset, not from the day the price has been paid has taken the delivery or not by BankIslami Expenses incurred in the process of purchase of BankIslami is the owner of the asset therefore it asset are paid by the Customer is liable to pay all expenses incurred in the process of its purchase Lease does not differentiate between wear & The Customer is responsible only for misuse and tear or losses caused by the negligence of negligence, but not for events beyond control. In Customer and Customer is liable for cost Auto Ijarah, each situation is treated separately incurred due to natural disasters Penalty charges are taken from Customer on If the Customer fails to pay rental on due date, a late payment. They are taken as income by the certain amount will be taken from the Customer Bank and given to charity by BankIslami In a lease agreement it has been noticed that unrestricted power has been given to Bank to terminate the lease unilaterally whenever it wishes If the Customer breaks any term of the agreement, BankIslami has a right to terminate Auto Ijarah unilaterally. However, if there is no contravention at Customers end Auto Ijarah cannot be terminated without mutual consent

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How It Works:
You will approach BankIslami and identify the vehicle you want on Auto Ijarah. You will fill in the Application Form and submit the required documents. BankIslami will process your application and approve or reject the credit application, depending on how you fit the banks risk criteria. If the application is approved, you will sign an Undertaking to Ijarah whereby you will undertake to lease the vehicle. This document is signed in booking cases only once it arrives at the dealer. After the vehicle arrives at the dealer and is purchased by the Bank, you will sign an Ijarah agreement with the bank, whereby the Bank will rent out the vehicle to to you subject to the terms and conditions of the Ijarah Agreement.

Under the Ijarah Agreement, you will undertake to pay a monthly payment for the right to use the vehicle in line with the Terms & Conditions of the Agreement. Under the Ijarah Agreement the customer also signed the undertaking to purchase document. Under the Agreement, all the cost associated with the ownership of the vehicle will be borne by the Bank, while you will be responsible for all usage-related expenses of the vehicle. At the end of the Ijarah period, you will be offered to buy the Vehicle at a pre-agreed value from the Bank or get your security deposit refunded to you by returning the vehicle to the Bank.

Elijibility:
Citizenship Cities Income Pakistani Karachi, Lahore and Islamabad/Rawalpindi Minimum Rs. 20,000 (Net Disposable) For Salaried: Minimum 23 Year (at the time of Maturity) Maximum 60 Years (at the time of Maturity) For Self employed: Minimum 23 Years (at the time of Maturity) Maximum 65 Years (at the time of Maturity)

Age Limit

Fatwa:

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BankIslami's commitment to Shariah is strict and absolute. We have the distinction of being the only Bank to have a full time Shariah adviser as well as having a prestigious local Shariah board of global repute. Islami Auto Ijarah is approved and verified by our Shariah Board. To view our Shariah Board's approval of Islami Auto Ijarah please see Anaxture 2.

Documents Required:
Salaried Individual: Last six months Bank Statement Copy of CNIC 2 Photographs Copy of N.T.N Certificate( if available) Paid Utility/mobile/card bills-within last 2 months Salary Slip Employment letter ( should be from HR and should disclose the tenure of employment, designation, salary breakup)

Businessmen/Self Employed Professional: Last one year Bank Statement Copy of CNIC 2 Photographs Copy of N.T.N Certificate or Proprietorship letter Visiting Card 1 month current and paid Utility /mobile/card bill 3 years Business Proof

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Used / Imported Vehicle

Features:
Drive your Dream Car-the right way with Islami Auto Ijarah. Now you can avail Auto finance facility for a Car of your choice in a completely Shariah compliant manner.

BankIslami's Auto Ijarah facility is based on the concept of Ijarah. It is a Shariah compliant alternative to Conventional leasing where Bank acts as a Lessor and you act as a Lessee. The Bank requires you to pay a monthly rent for the use of the Vehicle. In this while, the ownership of the vehicle remains with the Bank, only the rights of use is transferred to you. At the end of the Ijarah Agreement, you will be given a choice whether to return the vehicle to the Bank and receive back the initial security deposit you paid* or to purchase it at a price as low as the security deposit.

Ijarah facility for Tenure of Ijarah

New Vehicles Min- 3 Years, Max-5 years

Minimum Cost of Vehicle Rs. 250,000 Security Deposit Processing Charges Tracker Installation Takaful
*conditions apply

Min -30%, Max-50% Rs. 4,500/- (Rs. 1,000 Pre Processing is part of the Rs. 4,500/Amount) All Vehicles costing above Rs. 600,000 are required to be installed with tracker Takaful coverage on all vehicles is compulsory and is provided by Takaful Pakistan

Concept of Ijarah:

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Ijarah means 'to give something on rent'.It is a Shariah compliant alternative to Conventional leasing where Bank acts as a Lessor and you act as a Lessee. The Lessor (Bank) allows the Lessee (You) to use the vehicle owned by the Lessor in return for a monthly rent. The following are rights and responsibilities of the Lessor and Lessee in an Auto Ijarah arrangement:

The Lessee has the right to use the vehicle whereas the ownership rests with the Lessor. All liabilities resulting from the ownership (Islamic insurance, transportation, duties etc) shall be borne by the Lessor and all the liabilities relating to use of the vehicle shall be borne by the Lessee. The vehicle will remain in the risk of the Lessor throughout the lease period. Any damage or loss caused by factors which are beyond the control of the Lessee shall be borne by the Lessor. The Lessee is liable for any damage to the vehicle caused by any misuse or negligence on his/her part. The period of lease must be determined in clear terms and the vehicle must be fully identified and quantified by both parties. The Lessor cannot increase the rent unilaterally. The Lease period will commence from the date on which the vehicle is delivered to the Lessee whether the Lessee has started using it or not. If the leased vehicle has lost its function and no repair is possible, the lease shall terminate on the day on which such loss occurred. However, if the loss is caused due to misuse or negligence of the Lessee, he/she will be liable to compensate the Lessor at a value that was prevailing in the market immediately before loss. The Lessee will bear the maintenance and operating costs of the vehicle during the lease period. The Lessor will bear the cost of Takaful of the vehicle and its annual renewals during the lease period. All ownership related expenses (registration, Takaful) shall be borne by the Lessor. Rent will start after delivery of vehicle to the Lessee.

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After completion of the tenor of lease, the Lessor will go for any of the four options with the mutual consent of the Lessee: Give an option to the lessee to purchase the vehicle at a pre agreed price. Take the vehicle back from the Lessee Renew the Lease contract for another tenure. Lease it out to another party.

The Differences between Conventional Lease & Auto Ijarah:

Conventional Lease Auto Ijarah

Lease commences the very day on which the At BankIslami, rentals start after the delivery of price is paid by the Bank, whether the Customer asset, not from the day the price has been paid has taken the delivery or not by BankIslami Expenses incurred in the process of purchase of BankIslami is the owner of the asset therefore it asset are paid by the Customer is liable to pay all expenses incurred in the process of its purchase Lease does not differentiate between wear & The Customer is responsible only for misuse and tear or losses caused by the negligence of negligence, but not for events beyond control. In Customer and Customer is liable for cost Auto Ijarah, each situation is treated separately incurred due to natural disasters Penalty charges are taken from Customer on If the Customer fails to pay rental on due date, a late payment. They are taken as income by the certain amount will be taken from the Customer Bank and given to charity by BankIslami In a lease agreement it has been noticed that unrestricted power has been given to Bank to terminate the lease unilaterally whenever it wishes If the Customer breaks any term of the agreement, BankIslami has a right to terminate Auto Ijarah unilaterally. However, if there is no contravention at Customers end Auto Ijarah cannot be terminated without mutual consent

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How It Works:
You will approach BankIslami and identify the vehicle you want on Auto Ijarah. You will fill in the Application Form and submit the required documents. BankIslami will process your application and approve or reject the credit application, depending on how you fit the banks risk criteria. If the application is approved, you will sign an Undertaking to Ijarah whereby you will undertake to lease the vehicle. This document is signed in booking cases only once it arrives at the dealer. After the vehicle arrives at the dealer and is purchased by the Bank, you will sign an Ijarah agreement with the bank, whereby the Bank will rent out the vehicle to to you subject to the terms and conditions of the Ijarah Agreement.

Under the Ijarah Agreement, you will undertake to pay a monthly payment for the right to use the vehicle in line with the Terms & Conditions of the Agreement. Under the Ijarah Agreement the customer also signed the undertaking to purchase document. Under the Agreement, all the cost associated with the ownership of the vehicle will be borne by the Bank, while you will be responsible for all usage-related expenses of the vehicle. At the end of the Ijarah period, you will be offered to buy the Vehicle at a pre-agreed value from the Bank or get your security deposit refunded to you by returning the vehicle to the Bank.

Elijibility:
Citizenship Cities Income Pakistani Karachi, Lahore and Islamabad/Rawalpindi Minimum Rs. 20,000 (Net Disposable) For Salaried: Minimum 23 Year (at the time of Maturity) Maximum 60 Years (at the time of Maturity) For Self employed: Minimum 23 Years (at the time of Maturity) Maximum 65 Years (at the time of Maturity)

Age Limit

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Fatwa:
BankIslami's commitment to Shariah is strict and absolute. We have the distinction of being the only Bank to have a full time Shariah adviser as well as having a prestigious local Shariah board of global repute. Islami Auto Ijarah is approved and verified by our Shariah Board. To view our Shariah Board's approval of Islami Auto Ijarah please see Anaxture 2.

Documents Required:
Salaried Individual: Last six months Bank Statement Copy of CNIC 2 Photographs Copy of N.T.N Certificate( if available) Paid Utility/mobile/card bills-within last 2 months Salary Slip Employment letter ( should be from HR and should disclose the tenure of employment, designation, salary breakup) Businessmen/Self Employed Professional: Last one year Bank Statement Copy of CNIC 2 Photographs Copy of N.T.N Certificate or Proprietorship letter Visiting Card 1 month current and paid Utility /mobile/card bill 3 years Business Proof Additional Docs required for Used & Imported Cars: Copy of Sales invoice & Sales certificate Copy of registration book Import documents if imported Copy of N.T.N Certificate or Proprietorship letter Visiting Card 1 month current and paid Utility /mobile/card bill 3 years Business Proof

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Brochure

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Is it permissible for an Islamic bank to impose penalty for late payment?

In Islamic law it is permissible to penalize a debtor who is financially sound but delays payment of debt without any genuine reason. Such act of the debtor is unjust as the Prophet (PBUH) has said, "A rich debtor who delays payment of debt commits Zulm".

A heavy non-performing portfolio and default on part of the clients is a serious problem confronting the financial institutions all over the world including Pakistan. This problem could be a threat to success of Islamic banking system. If clients do not honor their commitment in respect of timely payment of a debt created in installment sale, Murabaha, leasing or do not pay banks share of profit in participatory modes or do not deliver goods at stipulated time in Salam and Istisnaa, it could cause irreparable loss to the system, the banks and financial institutions and ultimately to savers and the economy.

The jurists allow punishment (Tazir) to such borrower in the form of fine. In the opinion of some Maliki jurists a delaying borrower would be obliged to pay for charitable activities. In view of the severity of the problem, all Shariah bodies like Islamic Fiqh Academy of the OIC, Shariat Appellate Bench of the Supreme Court of Pakistan, etc. have approved the provision of penalty clause in the contractual agreements that keeps a balance between the requirement in view of severity of the problem and that of the Shariah conditions/principles to keep the fine difference between interest and Murabaha profit intact. However, the penalty proceeds would be used for charity because penalty on default in repayment cannot become an automatic source of income for the creditor.

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Corporate Banking

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What We Offer:
You are the major drivers of our economy and we are glad to be at your service. All of your financial needs are within the reach of our highly qualified professionals who are fully capable and committed to understand your business and provide timely and effective financial services on an on going basis.

We offer the following products and services to help you achieve your business objectives:
Account Services Trade Services Working Capital Finance Project Finance Musharakah Finance Mudarabah Finance Ijarah

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Account Services:
BankIslami offers all basic banking services to suit your routine business needs. Current Accounts with zero account maintenance fees Choice of currency-PKR, EURO, USD, GBP & JPY Transfer of funds with lowest transaction fees Access to quick and timely foreign exchange services Access to the entire online branch network 102 Branches in 49 Cities Unlimited within city and intercity online transactions Free Deposit and Withdrawal over the counter services at all BankIslami branches

Trade Services:
BankIslami offers a wide range of export and import services designed to assist you in building on your strengths, so that your company can seize new business opportunities around the world. These include:

Bank Guarantee

Services for Exporters Export Bills for Collection L/C Advising & Confirmation services Islamic Export Refinance facility Financing against Export Sight and Usance Bills (Shariah-compliant alternative for Bill Discounting) Pre-Shipment and Post-Shipment financing on Islamic modes of financing

Services for Importers Letter of Credit Import Financing (by way of Murabaha/Ijarah)

Financing:

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Working Capital Finance: for your short term financing needs.

At BankIsami, we understand that your business needs constant access to low cost and flexible financing, in order to meet day-to-day funding needs. Our team of experienced Relationship Managers with wide sector experience offer you effective cash flow management by way of financing arrangements suitably structured to your needs and your risk profile.

Cash is the lifeline of your business. Let your business have a blooming & prosperous life with our Working capital finance facility. To fulfill your working-capital financing requirements, BankIslami offers a wide range of products as follows:

Murabahah Financing: Murabahah is a type of sale in which the seller discloses the cost of goods and profit to the buyer. Through this short-term financing mode, BankIslami can finance the 'asset-purchase requirement' of the Corporate Customers.

The Customer, intending to utilize the Murabahah facility, identifies the commodities ('assets') it needs to purchase through Murabahah facility. BankIslami purchases the assets from Supplier and then sells the same to the Corporate Customer against an agreed price (including disclosed profit portion) on deferred payment basis.

Istisna Financing: Istisna is a contract of sale of specified items to be manufactured/constructed, with an obligation on the part of the manufacturer/seller to deliver them to the buyer upon completion.

Istisna can be used for made-to-order commodities where the buyer (BankIslami) would order a specific good with some specifications to be manufactured by the Corporate Client in a particular period of time and deliver to BankIslami after completion.

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Salam Financing: Salam is a sale, whereby, the seller undertakes to supply some specific commodity to the buyer at a future date in exchange for an advanced price fully paid on the spot. As a matter of principle, the sale of a commodity which is not in the possession of the seller is unlawful. Thus, the practice of Salam is legalized as an exception and is allowed under certain terms and conditions.

Salam is allowed for commodities only which are homogeneous and fungible in nature i.e. every unit of the commodity should be identical and substitutable in nature e.g. sugar, rice, wheat etc. Therefore, Salam is an ideal mode for financing for agricultural concerns. Salam financing can also fulfill all working capital requirements of manufacturers/traders dealing in homogeneous commodities.

Project Finance: for your Medium & Long term financing needs.
BankIslami offers medium and long-term financing facilities for infrastructure, BMR and industrial projects in all sectors directly or on syndication basis.

Ijarah: Ijarah is a contract, whereby, BankIslami will lease out an asset to the Corporate Client and receive periodical rentals from the Client for the use of that asset. The asset will remain in the ownership of the Bank throughout the term of Ijarah. At the end of the Ijarah term, the asset can be purchased by the Client at an agreed price.

Ijarah is mainly used for long and medium term fixed asset financing for infrastructure, BMR and industrial projects.

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Diminishing Musharakah: The product of Diminishing Musharakah is offered on the basis of 'Shirkat-ul-Milk'. Shirkat-ul-Milk means partnership of persons in an undivided property. Process of Diminishing Musharakah financing involves BankIslami taking share in the ownership of a specific asset along with the Corporate Client and then gradual purchase of the Client of BankIslami's ownership share in the asset through out the term of Diminishing Musharakah. At the end of the Diminishing Musharakah term, Client becomes the sole owner of the asset.

Diminishing Musharakah is mainly used for long and medium term fixed asset financing for infrastructure, BMR and industrial projects. Diminishing Musharakah is also an ideal mode for Real Estate Financing.

Musharakah Finance:
In Musharakah, a joint enterprise is formed for conducting some business in which all partners share the profit according to a mutually agreed pre-determined ratio, whereas, the loss is shared in the ratio of capital investment. From Shariah perspective, Musharakah is one of the preferred modes of financing.

The scope of Musharakah is broad. Musharakah can be applied to fulfill project financing needs as well as working capital financing needs of Corporate Clients. Since Musharakah transactions are based on pure profit and loss sharing arrangement, therefore, the risks associated with such transactions are greater as compared to other financing modes. Due to this reason, Musharakah transactions are executed subject to satisfactory review of feasibility of the proposed transaction/project.

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

The scope of Mudarabah is broad. Mudarabah can be applied to fulfill project financing needs as well as working capital financing needs of Corporate Clients. Since Mudarabah transactions are based on pure profit and loss sharing arrangement, therefore, the risks associated with such transactions are greater as compared to other financing modes. Due to this reason, Mudarabah transactions are executed subject to satisfactory review of feasibility of the proposed transaction/project.

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InvestmentBanking

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What We Offer:
The external and internal market conditions have had a major impact in certain sectors of the economy, yet their impact lies short term only. The overall market share of the Investment Banking activities has remained robust and intact. The Bounce Factors in the equity markets is seeing improvements which are likely to see activity in IPO offerings and mushrooming of Mutual Funds. A good pipeline of Capital raising opportunities exists, particularly in Infrastructure, Textile and Services industry. Amiable investment opportunities for the medium term may provide leverage into credit and marketing activities. BankIslami Pakistan Limited takes deep pride in providing Investment Banking to its valued customers, as its core business, revolving around the concept of Wealth Management.

Products & Services:

BankIslami's Investment Banking Division offers a full range of the comprehensive, innovative and uniquely structured customer centric advisory solutions to its clients. After classifying the products and services of low, medium and high risk the product is structured on the guidelines of Shariah.

Following are the Products and Services:

Advisory Fund Raising Corporate Restructuring Mergers & Acquisitions Infrastructure Development Project Financing Trusteeship Trusteeship for SUKUKs etc Fiduciary Roles in Mutual Funds Specialized Roles Private Equity Special Projects Ijarah and Musharkah Syndications

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Structuring Securitizations Distressed Assets Sales Structured Finance Initial Public Offerings

Underwriting SUKUKs' Equity Musharakah Certificates

Clients:

Shahmurad Sugar Mills Pak Elektron Limited

Three Stars Hosiery Mills (Pvt.) Limited

New Allied Electronics Industries (Pvt.) Limited

Eden Housing Limited

SSGC

Pace (Pakistan) Limited

AMTEX Pvt. Limited

Haq Bahu Sugar Mills (Pvt.) Limted LESCO (Lahore Electricity Supply Corporation) Limited Fatima Sugar Mills Limited Al Noor Sugar Mills Limited

Optimus Limited

Transections:
Privately Placed SUKUK Issue of Shahmurad Sugar Mills Limited amounting to Rs.500,000,000/(rated A- by JCR VIS)

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Privately Placed SUKUK Issue of Pak Elektron Limited amounting to Rs.1,200,000,000/(rated A+ by PACRA) Privately Placed SUKUK Issue of Amtex Limited amounting to Rs. 650,000,000/(rated A+ by JCR VIS) Privately Placed SUKUK Issue of New Allied Electronics Industries (Private) Limited amounting to Rs. 750,000,000/- (rated A by JCR VIS) Privately Placed SUKUK Issue of Eden Housing Limited amounting to Rs.1,630,000,000/(rated A by JCR VIS) Privately Placed SUKUK Issue of Eden Developers (Private) Limited amounting to Rs.200,000,000/(rated A- by PACRA) Privately Placed SUKUK Issue of Sui Southern Gas Company Limited amounting to Rs. 5,000,000,000/(rated AA by PACRA) Privately Placed SUKUK Issue of Eden Housing Limited amounting to Rs.730,000,000/(rated A by JCR VIS) Privately Placed SUKUK Issue of Pak Elektron Limited amounting to Rs.1,100,000,000/(rated A+ by PACRA) Privately Placed SUKUK Issue of Pace (Pakistan) Limited amounting to Rs.2,000,000,000/(rated AA- by PACRA) Privately Placed SUKUK Issue of Lahore Electric Supply Corporation Limited amounting to Rs. 5,000,000,000/- (backed by GoP Guarantee) Privately Placed SUKUK Issue of Optimus Limited Amounting to Rs. 250,000,000/(Rated A - by JCRVIS) Privately Placed SUKUK Issue of Haq Bahu Sugar Mills Limited Amounting to Rs.295,000,000/Privately Placed SUKUK Issue of Three Stars Hosiery Mills (Pvt.) Limited Amounting to Rs. 400,000,000/(Rated A + by PACRA)

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I.T. Department

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IT Department
The rapid advancement in Information and Communication Technology (ICT) has had a profound impact on the banking industry and the wider financial sector over the last two decades and it has now become a tool that facilitates banks organizational structures, business strategies, customer

services and other related functions. The recent IT revolution has exerted far-reaching impacts on economies, in general, and the financial services industry, in particular.

Within the financial services industry, the banking sector was one of the first to embrace rapid globalization and benefit significantly from IT development.

Bank Islami is one of the leading banks of the world and it is completely dependent on the use of technology i.e. it is doing the paperless banking.

Information Technology Department (ITD) is responsible for management and support of the technology architecture, hardware, software, and the respective resources throughout the country. The IT department of Bank Islami is one of the most sensitive departments as the working of the bank is completely dependent on the computer based and the web based technology and any problem at any part can negatively impact the whole working of the bank. Thus, great care is taken in the management of IT Department.

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The whole system of Bank Islami is using two lines of electricity. One is provided by the WAPDA and the other is the use of UPS. In case the electricity is powered of, the UPS is started which causes the computers not turn off and in this case there is no case of data loss and keeps the important systems on for 10-15 seconds after which the generators are powered on which provides the electricity to the whole bank.

The IT Department of the Bank Islami Bahawalpur Branch consists of the following: 1. Server of HP Company. 2. Router of CISCO Company 3. Dish With Switche of I-Direct Company 4. Switches 5. Biomatrix System 6. DTU Loop 7. Line Condetioner 8. UPS (Uninterrupted Power Supply)

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Duration of My Internship Program

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Duration of My Internship Program: 1st Week:

My internship started on Monday 28th June 2010. I went to the branch and met the branch manager Mr. Hafiz Aqeel. He told me the basics of banking the structure of the organization the way recruitment is done the systems used and introduced me to the staff of the branch. He also told me that the cash counter is the most important part of the bank and it acts as the brain of the bank. He also told me that we should always remember the past and learn from it and thus he told me about the doomed fate of BCCI Bank. Then he told me the importance of clearance department. Then he told me that we are using two system parallel PIBAS and IMal as we are shifting from PIBAS to IMal. He taught me how to fill a deposit slip. He also took me for a ride to the cent where he had to collect some deposit of a charitable organization.

The next day Mr. Hafiz Aqeel introduced me to Mr. Asad Mehmood Khan Ali Zai the Customer Service Officer. I was told that he would be my menter and gide for the next one week. He gave me the glosery of islamic banking and the policies and procedures manual to read. I read them for quite a long time. He told me how to fill a deposit slip, a Know Your Customer Form (KYC)and an Account Opening Forn (AOF). I made a lost of mistakes in them mostly doubling or cutting mistake and I was asked to fill them again and again. I learned how to get customer biomatrix and the requirements for account opening. In short I learned the whole process of account opening. They gave me a complete set of aof to study and Mr Hafiz Aqeel gave me my Internship Letter.

The third day was a surprise for the whole branch as the auditors had come on a surprise visit. I met the auditors and then they left the branch and told that they would come for a thorough audit on Monday. As it was the end of the fiscal year we kept on collecting government cheqes. The next day was a holi day and the manager told me take a leave for the next day.

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The next day that is the forth day today I studed the zakat exemption form or the declaration that a person gives us to not deduct zakat from his account. I studied the policies and procedures manual. As NADRA Varisis was down so we could not open accounts.

2nd Week:
The 2nd week was the auditors week so we did not to much then sit observe the auditors and see what they are doing and then clearing their objections. I learned how to brake a deal and do premature encashment of islami mahana munafa account. 2 signatures of the customer at the back is enough to brake the deal. I learned the whole process. I also learned how to issue a cheque book. We entered the zakat exemption forms on the register and then we kept on coordinating with the auditors.

I learned how to calculate profit to tell a customer how much profit will he get. I also dispatched letters to the dormant account holders. I made fresh entries of zakat exemption stam papers. i also arranged the forms and informed mr asad about the missing stam papers. I learned how to make entries in IMal. I learned how to issue a TDR(Term Deposit Recipt). I lso lerned how to stamp an AOF and related documents. I wrote dormant account on back of the dormant account SS Cards.

3rd Week:
This 3rd week was of full working and learning. The new internee from my class Ms. Freeha Nazeer had joined in at the internship. I learned about the majour islamic banks and the way all types of accounts work at bank islami. I studied how profit was given and how accounts are opened as the new internee was here so everything had to start from a scratch. Learned aboud withholding tax. I learned the different staff positions in a branch. We again discussed in detail how to brake a deal. Learned how to make entry on IMal for deal brake.

We received the profit rates for this month from head office through e-mail. We made fresh calculations on the basis of new rates. We learned about high risk accounts and how to fill a KYC

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(Know Your Customer) form. Discussed how islamic banking is intrest or riba free. We also discussed what are the main activities of bank islami and how financing is done in ijarah, murabha and musharka. We discussed the requirements for each of them. We learned what is product based financing. Another person from commerce department joined us at internship named Mr. M. Anise.

We studied the products of bank islami and the value added services. We discussed account types in deatail and the requirements for each of them. We discussed foreign currency accounts and the Scedual Of Charges (SOC). We also discussed the requirements for foreign currency accounts. We learned how accounts are declared deceased or dormant or credit block and the requirements for re opening or payment of funds and closure of accounts. We learned about stop payment. We discussed miners account and disabled persons account like blind, etc. we learned about BB Accounts and (CDR) Call Deposit Recipt and with this another week ends.

4th Week:
In the 4th week we started off with money londering. We studied the Money Londering manual and then discussed it in detail leraned how money londring is done and how bank tries to prevent money londering. Learned how to stamp a tdr form. We started remetance department. We Learned what is a Demand Draft (D.D.), Pay Order (P.O.), Telegraphic Transfer / Foreign Telegraphic Transfer (T.T / F.T.T.), Internal Transfer (I.T.), Foreign Demand Draft (F.D.D) And Travlers Cheques (T.C.); how they are made; what are the requirements for them; how are they cleared and how they work at bank islami and other banks.

We also studied the clearing department. We learned how clearing is done and what is the process of clearing. Learned about nift and the controle and administration policies of clearing at bank islami. We read clearing from the policies and procedures manual. Learned about inward and outward clearing, same day and inter city clearing, and 1st and 2nd clearing.we studied Outward Branch Clearing (OBC) and all the stamps related to clearing. With this ends the 4th week.

5th Week:

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This 5th week was of full working and learning. On the 1st day we studied ATM. I was late for the cash replanishment of the atm and the other 2 internees had seen how cash replanishment is done. Then we theoratically studied all the aliments for the ATM including how replanishment is done. We also studied the functions and working of the letter of credit (LC) for export and inport purpose.

I discussed the organogram with the Branch Manager Mr. Hafiz Aqeel.we also studied the cash boards by the SBP. We examined the notes for the 12 signs on the board and we saw the notes under the ultravoilet light and saw the counting machine. We studied the instructions on the cash counter and discussed the stamps that are used at the cash counter with the Cashior Mr Mian Faisal. We also studied the types of cash; sorted reissuable cash and fresh cash are reissuable while unsorted cash, soil cash and defective cash are not issuable.

We also learned concept and prectical application of mudarbha, ijara, musharka, istisna,guarantee, letter of credit (LC) and Mudarba. I studied in depth the way these things of financing are done, what are the requirements for each of them and the situation they are applicable in.

6th Week:
In the 6th and last week of my internship. During this last week we studied the it department and the accounts department and their working. I learned how cash is handed over to pheonix armer and how it is received. I also learned about Service Quality Coordinators (SQC) duties and responsibilities.

I also saw the cash replanishment of the ATM. I was shown the cash cassets reject bin and the system that operates the ATM Machine. And thus my traning was completed. For the rest of the days of my internship I studied the policies ad procedures manual. I also filled a lot of Account Opening Forms. I saw one of the bussiest day in the bank on the 2nd last day of my internship and it

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taught me how to work in such a busy situation and how to give time to all the customers equally and how to assign priority to the tasks.

To put it in a nutshell I would lik to say that this internship experience at the Bank Islami was a uniqe and life changing one. It has taught me a lot about banking and life itself. My experiences ar unforgetable. I loved the job and the people at the branch. The auditors visit proved as a bonus for my internship. I learned a lot of things about banking through out my internship. I also learned how to deal with customers. I have gained in-depth insight into the banking operations of an islamic bank.. Its been fun working at Bank Islami. I love it. I have gained in-depth insight into the banking operations of an islamic bank. My experience so far has been fabulous and I hope what so ever I have learned helps me to develoup my career in future. My experiences have been splendid and I hope that I would serve my country the Right way!

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Financial Analysis

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Financial Analysis:
1. Break Up Value:
Years Break Up Value (Rs) 2006 10.01 2007 12.01 2008 9.83 2009 8.98

Interpretation: The combined market value of a firm's assets if each were sold separately, as contrasted with selling the firm as an ongoing business. Analysts look for companies with a large break-up value relative to their market value to identify potential takeover targets. Investors can calculate a breakup value on a perfectly healthy company as a way to determine a potential floor for the stock, or a potential entry point for a prospective buyer. In order to accurately calculate a company's breakup value, detailed data is needed on the revenue, earnings and cash flows for each distinct operating unit of the company. Companies considering taking over another use the breakup value, among other metrics, to determine whether a takeover is worth the time and expense. It is also called the private market value. The Brake-up Value of Bank Islami increased from 2006 to 2007 but since then it is on a constant decline in 2008 and 2009. This is the result of the banks corporate strategy of expention. The expention to 102 branch network cost increased the loss to many times the total accumilated loss thus resulting in a decrease in brakeup value.

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2. Market Value Per Share:

Years Market Value Per Share (Rs) 2006 10.55 2007 16.20 2008 7.25 2009 5.89

Interpretation: Market Value of Share in which price the share is available in the market. Market value of the share is the current price at which the share is being traded in stock markets. The market price is determined by the demand and supply forces in the market. If demand for a particular stock is more than its supply (volume of trading) then the price of the share will go up and vice-versa. The Market Value Per Share of Bank Islami was improved from 2006 to 2007 but then it plunged to a very low of Rs. 7.25 in 2008 and it is on a continuous decline ever since. This is the result of the banks corporate strategy of expansion. The expansion to 102 branch network cost increased the loss to many times the total accumulated loss thus resulting in a drop off in Market Value per Share.

3. Earnings Per Share:

Earning Per Share of Comman Share = Net Income Weighted Average Number of Shares Years Earnings Per Share (Rs) 2006 (0.04) 2007 (0.13) 2008 (0.12) 2009 (0.91)

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Interpretation: The portion of a company's profit allocated to each outstanding share of common stock. Earning per common share is the amount of income earned on a share of common stock during an accounting period. Earnings per share serves as an indicator of a company's profitability. It applies to common stock and to corporate income statement. Earnings per share is generally considered to be the single most important variable in determining a share's price. It is also a major component used to calculate the price-to-earnings valuation ratio. The earning per sharefollowing an overall decreasing trend from 2006 to 2009. The overall treind shows a decrease in earnings per share from -0.04 in 2006 to -0.91 in 2009. But in year 2008 percentage of net loss decreases due to increase in operating expenses and number of common shares increased due to which earning per share decreased. While the overall decresing Earnings per share is the result of the banks corporate strategy of expention. The expention to 102 branch network cost increased the loss to many times the total accumilated loss thus resulting in a crash off in Earnings per share.

4. Net Spread To Gross Return:

Years Net Spread To Gross Return 2006 81.34% 2007 49.5% 2008 50.3% 2009 44.3%

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Interpretation:
The chart shows an overall dclining net spread to gross returns. The main reason for this is the branch network expention strategy.

5. Financing To Deposit Ratio ADR:

Years Financing To Deposit Ratio ADR 2006 53.94% 2007 40% 2008 52% 2009 47%

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Interpretation:
The graph shows that the ratio first declined in 2007 from 2006 but then it increased again in 2008 and fell a bit in 2009 this trend is also due to the branch network expention strategy that the bank had adopted to increase the branch network of the bank.

6. Capital Adequacy Ratio:

Capital Adequacy Ratio = Total Equity Total Assets Years Capital Adequacy Ratio 2006 61.83% 2007 2008 2009 37.92% 39.83% 20.39%

Interpretation: Capital Adequacy Ratio (CAR) is a ratio that regulators in the banking system use to watch bank's health, specifically bank's capital to its risk. Regulators in the banking system track a bank's CAR to ensure that it can absorb a reasonable amount of loss. Capital adequacy ratio is the ratio which determines the capacity of a bank in terms of meeting the time liabilities and other risk such as credit risk, market risk, operational risk, and others. It is a measure of how much capital is used to support the banks' risk assets. This ratio is used to protect depositors and promote the stability and efficiency of financial systems around the world.

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The ratio signifies the banks contribution of equity in total assets. Strong equity base indicates the low risk factor. A measure of a bank's capital. It is expressed as a percentage of a bank's risk weighted credit exposures. In usual practice of banks, they emphasize more on deposits than injecting new equity in the business. In case of the BIPL there is an overall decreasing trend in the ratio from 2006 to 2009. Only in the year 2008 we saw a minute increase in percentage of Capital Adequacy Ratio because number of common shares increased due to which Capital Adequacy Ratio increased.

7. Cash Flow Margin:

Cash Flow Margin = Cash Flow From Operating Activities/Cash Flows Net Sales 2006 -73.43% 2007 879% 2008 75.54% 2009 204%

Years Cash Flow Margin

Interpretation: The Cash Flow Margin Ratio is an important ratio as it expresses the relationship between cash generated from operations and sales. The company needs cash to pay dividends, suppliers, service debt, and invest in new capital assets, so cash is just as important as profit to a business firm. The Cash Flow Margin ratio measures the ability of a firm to translate sales into cash. The numerator of the equation comes from the firm's Statement of Cash Flows. The denominator comes from the Income Statement. The larger the percentage, the better. The chart shows that in 2006 the

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Cash Flow Margin Ratio was negative. It hiked up in year 2007 but then it plunged down again in the year 2008 the reason was that the branch network expention strategy was showing its impact. It improved in 2009 and it is a good percentage.

8. Cash Return on Assets:

Cash Return on Assets = Cash Flow From Operating Activities/Cash Flows Total Assets 2006 -1.83% 2007 36.63% 2008 5.81% 2009 13.05%

Years Cash Return on Assets

Interpretation: The Cash Return on Assets Ratio is generally used only in more advanced profitability ratio analysis. It is used as a comparison to return on assets since it is a cash comparison to this ratio as return on assets is stated on an accrual basis. Cash is required for future investments. The numerator is taken from the Statement of Cash Flows and the denominator from the balance sheet. The higher the percentage, the better. The chart shows that in 2006 the Cash Return on Assets Ratio was negative. It hiked up in year 2007 but then it plunged down again in the year 2008 the reason was that the branch network expention strategy was showing its impact. It improved in 2009 and it is a good percentage now.

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9. Return On Investment:
Net Income Return on Investment = ( L.T.D+Equity ) 100 Years Return on Investment 2006 -0.21% 2007 -0.26% 2008 -0.28% 2009 -2.7%

Interpretation: A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. Return on Investment (ROI) analysis is one of several commonly used approaches for evaluating the financial consequences of business investments, decisions, or actions. ROI gives an indication that how efficiently debt and equity sources of the bank are contributing towards earning ability of the bank. This ratio indicates the profit earned by the bank on the resources employed. ROI analysis compares the magnitude and timing of investment gains directly with the magnitude and timing of investment costs. A high ROI means that investment gains compare favorably to investment costs. A consistent increasing loss trend can be noted in the ROI of the bank from 2006 to 2009 this is again the result of the banks corporate strategy of expention. Thee abrupt fall of ROI in 2009 is the direct result of the strategy. The expention to 102 branch network cost increased the loss to many times the total accumilated loss thus resulting in a drop off in Return on Investment.

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10.Return On Equity:
Net Income Return on Total Equity = ( Avg.Equity ) 100 Years R.T.E Ratio 2006 -0.42% 2007 2008 -0.096% -0.012% 2009 -0.096%

Interpretation: One of the most important profitability metrics is return on equity (or ROE for short). This is the amount of net income returned as a percentage of shareholders equity. Return on equity reveals how much profit a company earned in comparison to the total amount of shareholder equity found on the balance sheet. This ratio i.e. return on equity shows the return the owners of the business enjoy after paying all the financial expenses and other liabilities of the business. A business that has a high return on equity is more likely to be one that is capable of generating cash internally. For the most part, the higher a company's return on equity compared to its industry, the better. The ratio got better in the year 2007 followed by 2008 and then worsened abruptly and drastically in 2009. This was also due to the large capital funds accumulation of the bank for expansion of the branch network of the bank.

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11.Due To Banks To Total Deposits:

Formula = Due To Banks Total Deposits 2006 2.81% 2007 0.70% 2008 1.97% 2009 .56%

Years Due to banks to Total deposits

Interpretation: This ratio signifies the financial mix of bank. In ideal situations, there should be decreasing trend or consistency in this ratio. In case of BIPL, although there is a tremendous increase in deposits but borrowing is also increasing considerably. The ratio has dropped dramatically in the year 2007. The hasty increase in bank borrowing may be due to the expansion in branch network, where more funds are required in initial years. A minor decrease shows good management. The significant fall in 2009 is a proof of Bank Islamis efficient management. This ratio is better in comparison to other banks.

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12.Return on Deposits:
Return on Deposits = Net Income After Taxes Total Deposits 2007 -0.37% 2008 -0.42% 2009 -1.71%

Years Return On Deposits

2006 -0.47%

Interpretation: This ratio indicates to what extent deposits which represent funds mobilization on the part of the bank contribute towards income generation. At BIPL this ratio shows a decreasing low trend through out the year 2007 to 2008 as compare to year2006. This is again because of increase in banks setup and expansion all over the Pakistan. The grate drop in the return on deposit ratio is also the result of the banks expention in branch network strategy. So far bank had to bear lot of expenses as compare with its income till 2008, the year of expention in branch network. These costs earned a huge loss that is many times then the loss of last year and the deposits just almost doubled. Thus that the gigentic increase in net loss resulted in a grate fall in return on deposit. It is still better if we compare it with other well established banks. The bank is expected to have a great rise in these ratios in years to come.

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13.Advances To Deposit Ratio:

Formula = . Advances . Total Deposits 2006 54% 2007 40% 2008 53% 2009 48%

Years Advances To Deposit Ratio

Interpretation: This ratio, a comparison of funds generation and its funds mobilization, indicates the total loans sanctioned by the bank in relation to total amount of money deposited with the bank. In simple words it is how much they have coming in (deposits) vs how much they have going out (loans). The more money the bank has loaned out generates more profit income provided the loans are to secure borrowers. The bank has high advances to deposits ratio in the year 2006. In the year 2007 the advances to deposits ratio decreased but it was still even better as compared to other banks. It took Bank Islami no time to regain its old advances to deposits ratio in the year 2008 but it then fell again a bit in 2009 because of the branch network expention strategy which reduced the banks capacity to lend but still this is a good ratio and demonstrates good performance and grate governance of the bank.

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14.Advances to Deposits+Borrowing Ratio:

Formula = . Advances . Deposits+Bank Borrwings

Years Advances to Deposits + Borrowing Ratio

2006 52.5%

2007 39.6%

2008 51.3%

2009 47.19%

Interpretation: As continuous increase has been observed in borrowing from other banks because of expansion in branch network the ratio has firstly decreased in year 2007 as compared to 2006 and then it regains strength in year2008 but this is due to increase in deposits as the branch network grew. It plunges down a little in 2009 because of the full cost impact of the branch network expansion strategy which reduced the banks capacity to lend.

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15.Deposit to Total Liability Ratio:

Formula = . Deposits Total Liabilities .

Years Deposit to Total Liability Ratio

2006 87.9%

2007 2008 93.7% 89.8%

2009 94.72%

Interpretation: This ratio is used to see that banks deposits are what percentage of its total liabelities. A There is an overall cyclical trent which is quite hard to explain because there is no clear patren but an consistint increasing patren can be identified in the deposits to total liability ratio from 20062009. The ratio increased in the year 2007 as compared to 2006 but then it droped off a bit in 2008 but it was still higher then the year 2006 and then it again jumped to a highest of 94.72% in 2009. It shows that bank is increasing its borrowings from the people. The ratio is better as compared to other banks.

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16.Cash to Deposit Ratio:

Formula = . Cash . Total Deposits

Years Cash To Deposit Ratio

2006 2007 2008 2009 63.49% 40.37% 35.13% 22.43%

Interpretation: This ratio shows that how much cash is available to meet the demand liabilities of depositors. Here we can clearely notice a decreasing trend because of the higher expenditure of the bank on its expansion and branch setup. This is not a good trend and the bank should try to stabilize this ratio at a higher level then in the year 2009 or it will have to face severe conciquences incase the trend continues.

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17.Investment to Total Assets Ratio:

Formula = . Investments . Total Assets

Years Investment to Total Assets Ratio

2006 2007 2008 2009 12.25% 26.75% 26.3% 19.87%

Interpretation: The Investment to Total Assets Ratio is an important ratio because it measures the efficiency with which the company is managing its investment in assets and using them to generate profit. Investment to total asset ratio has been continuously increasing from year 2006 to year 2008. Although 2008 saw a little fall in the ratio but this decrease was much grater in 2009 it is due to the fact that investments are increasing but assets are also increasing at a much faster speed as compare to the investments. This is another impact of the branch network expention strategy.

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18.Cost of Borrowings Ratio:

Formula = Return on Deposits Deposits

Years Cost of Borrowings Ratio

2006 1.05%

2007 3.05%

2008 5.85%

2009 4.37%

Interpretation: There is increasing trend of the ratio from the year 2006 till 2008 due to increase in the deposits and as the bank Islami is offering variable profit rate and conducting Halal business so number of customers are increasing due to which deposits are increasing and bank investments are increasing as a result of that cost of borrowing ratio is showing increasing trend. This ratio declined in the year 2009 as a result of the banks branch network expention strategy, due to investing heavily in branch network expention the bank had less to invest in sakouk and thus the return on deposits decreased.

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19.Current Ratio:
Formula = . Current Assets . Current Liabilities

Years Current Ratio (Times)

2006 2.13

2007 1.17

2008 1.025

2009 0.84

Interpretation: This ratio shows that how many times the banks most lequid current assets can be used fulfil its payoff current liabelities. A constently declining trend can be observed for the Current Ratio. The banks current libelities are increasing and current assets are decreasing. This is not a good indecater. Although the ratio was good till year 2008 but the bank must try to increase the ratio by reucing its current liabelities and should atleast have a current ratio of 1.

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20.Liquid Ratio:
Formula = . Current Assets (Inventory + Prepaid Expenses) . Current Liabilities

Years Liquid Ratio

2006 2.08

2007 1.15

2008 1.00

2009 0.838

Interpretation: This ratio shows that how liquid the bank is. It means that is bank in a condetion to pay off its current liabelites now if it has to. A constently declining trend can be observed for the Liquid Ratio. The banks current libelities are increasing and current assets are decreasing. This is not a good indecater. This means the bank is not in a condetion to payoff its current liabelities if it has to pay them today. Although the ratio was good till year 2008 but the bank must try to increase the ratio by reucing its current liabelities and should atleast have a Liquid Ratio of 1.

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21.Debt Ratio:
Debt Ratio = . Total Assets . Total Liabilities

Years Debt Ratio (Times)

2006 1.99

2007 1.36

2008 1.37

2009 1.16

Interpretation: A ratio that indicates what proportion of debt a company has relative to its assets. The measure gives an idea to the leverage of the company along with the potential risks the company faces in terms of its debt-load. A debt ratio of greater than 1 indicates that a company has more debt than assets, meanwhile, a debt ratio of less than 1 indicates that a company has more assets than debt. Used in conjunction with other measures of financial health, the debt ratio can help investors determine a company's level of risk. There is a constently decreasing trent in Debt Equity Ratio which is not a good indecater of the banks financial health but still the ratio at Bank Islami is good and better then other banks.

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22.Debt Equity Ratio:

Debt Equity Ratio = . Long-Term Debt . Total Capitalization 2007 0.56 2008 0.56 2009 0.73

Years Debt Equity Ratio (Times)

2006 0.29

Interpretation: A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity. It indicates what proportion of equity and debt the bank is using to finance its assets. The Debt to Equity Ratio measures how much money a bank should safely be able to borrow over long periods of time. A high debt/equity ratio generally means that a bank has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense. If a lot of debt is used to finance increased operations (high debt to equity), the Bank could potentially generate more earnings than it would have without this outside financing. If this were to increase earnings by a greater amount than the debt cost (interest), then the shareholders benefit as more earnings are being spread among the same amount of shareholders. This means how many times the long term debt can cover total capetalization and the constently increasing trend at Bank Islami is not a good financial indicater it means the bank is using debt to finance the business more and more and is not focussing to use capital fo this purpose.

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23.Total Assets Turnover:

Total Assets Turnover = . Annual Sales . Average Total Assets

Years Total Assets Turnover (Times)

2006 0.036

2007 0.065

2008 0.088

2009 0.082

Interpretation: The amount of sales generated for every Rupee's worth of assets. It is calculated by dividing sales in Rupee by assets in Rupee. Asset turnover measures a firm's efficiency at using its assets in generating sales or revenue - the higher the number the better. It also indicates pricing strategy: companies with low profit margins tend to have high asset turnover, while those with high profit margins have low asset turnover. There is as constently increasing trend in total assets turnover from 2006 to 2008 but there is a slight decresi in the ratio for the year 2009. This is the impact of the banks branch network expention strategy although annual sales increased but the average total assets also increased but at a higher pace thus resulting in a decrease in total assets turnover.

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24.Net Profit Margin:

Net Profit Margin = . Net Profit Sales 2007 -6.15% .100

Years Net Profit Margin

2006 -8.35%

2008 2009 -3.60% -21.83%

Interpretation: Looking at the earnings of a company often doesn't tell the entire story. Increased earnings are good, but an increase does not mean that the profit margin of a company is improving. The Net Profit Margin calculated as net income divided by revenues or net profits divided by sales. It measures how much out of every Rupee of sales a company actually keeps in earnings. Profit margin is very useful when comparing companies in similar industries. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors. Profit margin is displayed as a percentage; a 20% profit margin, for example, means the company has a net income of $0.20 for each dollar of sales. The Net profit Margen was getting better from 2006 to 2008 but here has been a sharp fall in the net profit margen that is the result of the banks branch network expention strategy.

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25.Price-Earning Ratio:
Price-Earning Ratio = Years Price-Earning Ratio (Times) . Market Price Per Share . Earning Per Share 2006 -263.75 2007 -124.62 2008 -60.42 2009 -6.47

Interpretation: A valuation ratio of a company's current share price compared to its per-share earnings. In general, a high Price Earnings suggests that investors are expecting higher earnings growth in the future compared to companies with a lower Price Earnings Ratio. However, the Price Earnings Ratio doesn't tell us the whole story by itself. It's usually more useful to compare the Price Earnings Ratio of one company to other companies in the same industry, to the market in general or against the company's own historical Price Earnings Ratio. It would not be useful for investors using the Price Earnings Ratio as a basis for their investment to compare the Price Earnings Ratio of a technology company (high Price Earnings Ratio) to a utility company (low Price Earnings Ratio) as each industry has much different growth prospects. The Price Earnings Ratio is sometimes referred to as the "multiple", because it shows how much investors are willing to pay per Rupee of earnings. If a company were currently trading at a multiple (Price Earnings Ratio) of 20, the interpretation is that an investor is willing to pay $20 for $1 of current earnings. We can notice a continuously improving trend in Price Earnings Ratio.

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26.Earning Yield Ratio:

Earning Yield Ratio = . Earning Per Share . Market Price Per Share

Years Earning Yield Ratio (Times)

2006 -3.79

2007 -8.02

2008 -0.017

2009 -0.15

Interpretation: The earnings per share for the most recent 12-month period divided by the current market price per share. The earnings yield (which is the inverse of the Price Earnings Ratio) shows the percentage of each Rupee invested in the stock that was earned by the company. The earnings yield is used by many investment managers to determine optimal asset allocations. We can se that the earning yield ratio got worse in 2007 from 2006 but it improved in 2008 then droped a bit again in 2009. It is not a good indecatedr to judge financial posetion because fluctuations in the stock exchange can change the results entirely.

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SWOT Analysis

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t is always the desire of every banking corporation to launch stable, long lasting and robust strategies to compete and compare their competitors. Banks regulate the economy of country, through, self and market based monetary and credit polices, strong corporate

governance, liberalization of foreign exchange regime and effective control through prudential and other regulations. Strict compliances and competitiveness also enables to improve the quality of Information Technology, Human Resource Development, Statement of Internal Control, Credit Rating, Service Standards and automation of services.

All strategies must be capable, acceptable, flexible, compatible, reliable, stable, and bearable for borrowers of that specific institution. The strategies should work for improvement of assets, profitability, financial ratio, funds creation, long & short-term advances, shareholders, capital adequacy ratio standards and for reflection of the expanding network of branches. Strategies show the significant improvement in focus on the banks core business. All these important indicators show excellent base for the banks growth. Regular operational strategies, plough back for profits, strong position and generate capability of taking up increasingly complex and large transactions.

Deliberation for implementing potential synergies is a desire of management to create a very strong organization, which will be able to compete with the leading players in the financial sector. As far as Bank Islami Pakistan Limited is concerned, the banks performance is outstanding highlighting steady and continuous growth, due to prolong and strict compliance of regulations and its own standards.

Few strengths, weaknesses, opportunities and threats for the bank are appended hereunder:

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Strengths:
The gratest strength of Bank Islami was that it has created history by esteblishing 102 branches in 49 cities across Pakistan in just two years of its operations after being established in 2006. This is the fastest ever branch network growth by any bank in Pakistans banking history. Thus Bank Islami has shown a very competitive growth potential.

Bank Islami Pakistan Limited is conducting its business in an Islamic Shariah Compliant manner following puritan Islamic rules. As compared to conventional banks pure Islamic banking in total complience with Islamic Sharia gives Bank Islami an upper edge. This is Bank Islamis greatest strength. People who seek to avoid Riba (as it is prohebited in Islam and there is severe punishment for riba according to Quran and Hadis), prefer to open an account in Bank Islami. This gives them a feeling of satisfaction that their money is not being utilized in any interest related activity.

Bank Islami offers the most comprehensive and bonafide Islamic banking solutions to its customers; with a diversified portfolio of Shariah complaint products and state of the art technology. BIPL achieved A1 rating for the short term obligations and its long term rating stands at A.

Bank Islami Pakistan Limited offers services that magnetically attract customers toward the bank. Free online and internet bankinga along with free eStatements, Pay order issuance facility, ATM, cheque book issuance and 24/7 call center etc. gives BIPL diffrential advantage upon other banks.

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Bank Islami has Internationally renowened scholars as members of its Shariah Board. These members of the Shariah Board are serving on the boards of many Islamic banks operating in different countries as Justice (Retd.) Muhammad Taqi Usmani who closely supervises all the Islamic modes of the bank. This phenomenon enhances the banks goodwill and peoples trust in the bank.

Bank Islami Pakistan Limited uses a centralized network system. Operations of all the Bank Islami branches all over Pakistan are monitored by the head office in Karachi on daily basis. The Head Office keeps a close check and balance on all Bank Islami branches through the centralized system. This ensures that Bank Islami is providing reliable services to its customers.

The Bank has a well developed intra-net and internet communication network as well. Intranet provides the employs a chance to have access to that data that they can not access without the intranet. It provides data that helps the employs reduce the stress thye encounter during work.

Those customers who do not have time to personally visit the bank are delighted to use Bank Islamis Telephone and Internet Banking services. Banking through the use of phone line or though the use of internet saves the precious time of the customers.

The management of the bank believes in customer oriented banking rather than product oriented banking. Thus the customer is the center of all key activities and keen interest is taken while designing products and services for the customers and the element of flexibility is the key focus point so that customers needs are met effectively and efficiently. The products and services designed by the bank are specifically tailored to the individual needs of its customers.

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Bank enjoys a strategic competitive advantage over all domestic players by virtue of the leadership in technological innovations. Staff welfare has always been a priority as well.

The human resource philosophy at Bank Islami Pakistan Limited focuses on multi talented hiring, professional grooming on the job as well as off site training, and a meritorious reward system.

The management team in all the branches of Bank Islami Pakistan Limited is based on young graduates who are highly qualified and experienced in the field of banking. These young people are highly motivated and vigorous and thus they outperform the staff of many other banks in improving the purformance of the bank.

Bank Islami is also using Smart Marketing Ideas that resonate well with the public mind. Thus its marketing is very much successful.

There is a centralized safety system to look after any type of unusual situations in banking operations.

The Bank Islami Pakistan Limited staff is highly experienced in dealing with bank customers in friendly manner and developing good, strong and long lasting customer relationships. Banks customer relationship managers are well equipped and well trained to provide most efficient and personalized services to each and every customer at hand.

Gracious bonuses are offered to employees, which in turn keeps them motivated all year long. Increments in salary are also a part of motivation strategies applied by the bank, thus the staff is motivated all days a week, all weeks a month and all montes a year.

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Bank Islami Pakistan Limited has an efficient and effective human resource department that has responded well to the challenges of recruitment. Regular training sessions are held by the bank through which staff turnover remains one of the lowest in the industry. Bank Islamis instruments are Payable at any BIPL Branch all over the Pakistan which is its greatest strength as compared to other banks.

BIPL has a very reliable online network all over the country which is a greatest service for its customers.

BIPL is proud of the pioneering role in providing the latest modern technological services to its customers. BIPL is the only bank that provides biomatric thumb recognition in ATM Machines. Its the banks gratest strength!

All the forty five branches of Bank Islami Pakistan Limited are located at extremely crucial and vital locations in their respective cities, which is indeed a very significant factor towards earning more profit. Moreover all of the branches are very well furnished which is an integral characteristic of a good bank in this age of consumerism.

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Weaknesses:
Bank Islami Pakistan Limited offers its credit services in only a limited number of cities. Many branches of BIPL are not offering credit facilities and most of the financing is done in urban areas, while little attention is paid towards the rural areas, which have potential of a lot of customers.

The Bank is not giving any emphasis on the small scale businesses which are in abundance in Pakistan.

Bank is not offering financing schemes for farmers, especially in agrarian cities.

There is a single branch of BIPL in Bahawalpur City that is why the bank staff has to face a huge work load sometimes, and the staff gets heavily burdened along with customer dissatisfaction as its unavoidable twin.

Bahawalpur Branch of Bank Islami is not providing full fledged services to customers because it was established in 2008 and is chiefly focused on retail banking. So all the departments are not entirely operational in this branch yet.

Bahawalpur Branch of Bank Islami does not have a proper parking that causes trouble for customers and the staff in parking their vehicles.

Due to lesser number of branches as compared to other banks customers may prefer to go to the other feasible options instead of visiting the branches located at a greater distance as compaired with other banks branches.

The Bank needs a grieveance handling department that should be repsponsible for handling the internal problems of the employees.

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There is a dire need of more IT related personnel as the staff is not in touch with IT. Thus due to lack of a computer specialist, assistance from the head office is seeked time and again, which wastes time.

People have incomplete knowledge about Islamic banking and thus they can not easily diffrentiate it from conventional banking. They have no reason to switch to Islamic banking and the promotional activities of the BIPL are not as much effective. Under such conditions the promotional activities of the BIPL need to be improved. The bank should create awareness in people about how Islamic banking is different from conventional banking and what are the benefits of islamic banking instead of conventional banking.

BIPL is a newly established bank and its setup is only in Pakistan, so it is at a comparitive disadvantage with those banks that have overseas branch networks and huge number of investors.

Decision making is Centralized at BIPL, this can cause problems in the organization and it wastes time in many operations of the bank.

BIPL Bahawalpur Branch faces the problem of Lack of space and furniture facility. At rush or peek hours or busy days it causes inconvenience for staff, customers and internees as well.

The seating arrangement and the furniture of wating areas is not of such a good quality or design that the customer feels himself well accomodated or comfortable. This is the reason customers avoid to sit in the wating area.

Lack of staff is clearly noticed in BIPL Bahawalpur branch.

Bank has no grievance department for the internal problems of employees.

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There is no research cell in the bank, which should be engaged in gathering the information about the present actions of its competitors and demands of its customers.

Lack of female staff can be noticed in almost all BIPL Branches. This creates some problems for female (pardanasheen) customers. Women are reluctant to give their personal information to or in the presence of male staff.

BIPL has no marketing and HR department at the branch level.

The air conditioning units in the branch are not capable enough to cool the huge hall in scorching summer heat which is clearly expressed by many customers as a huge inconvenience. Thus there is a need for another aircondetioning unit in the hall.

Supplies do not reach the branch on time and as a result the customers suffer delays.

The computer systems in BIPL are very slow and another reson for the slow speed is that the router was damaged due to power fluctuations. The IT expert needs to find a way to speed up the system speed. Because of slow speed, customers have to wait to give their biomatrics and get their Pay Orders issued. Speed of the intra-net is too slow and thus employs dont use it and waste such a precious resource.

The Bahawalpur branch has no lockers facility for its customers.

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Opportunities:
BIPL provides its customers many services free of cost, its products promise customers maximum possible benefits and uses the latest technologies. These diffrential advantages give BIPL an edge over all other conventional and Islamic Banks.

BIPL is currently a local bank, it needs to go multinational. BIPL should start opening branches all around the world in the worlds biggest finacial markets like USA, UK and UAE. A large number of Muslim communities are living in these countries who are intrested in authentic Islamic banking.

Bahawalpur Branch of Bank Islami needs to have a proper parking for customers and the staff to park their vehicles.

Bank can offer special financing schemes for farmers especially in agrarian cities.

The Bank should increase its advertising programs by using all available Medias of advertising like TV, cable, radio and bill-boards to increase its business by providing more information to people about Bank Islami. It should also bring some new elements in its advertising campaigns like how Islamic banking is different from conventional banking, what are the unique features of Bank Islami and what are the benefits of islamic banking instead of conventional banking. BIPL needs to show its differential advantages to its current and potential customers through advertisement.

The trend of Islamic banking is on the way of tremendous popularity and spreading out to the whole world. If BIPL establishes a vast branch network through out the world then it can make progress in leaps and bounds as compared to other banks.

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Its an era of information technology and due to heavy competetion in the market, only the fittest will survive (survival of the fittest) only those organizations can survive that follow new technology and keep themselves up to date with the latest developments in technology. BIPL has all the competence and capabilities to avail maximum benefit out of the new technology that they are using for their banking setup.

Previously and even now many people were not in the favour of conventional banking system due to Riba. BIPL provides a chance to people to do Riba free banking. People are now switching from conventional to Islamic banking. This increasing trend towards Islamic banking is a grand opportunity for BIPL.

Pakistan is a country with Muslims in majority. Thus there is a strong potential of Islamic banking in Pakistan because it is already working at its peak in some Asian countries and many other Islamic countries. This proves to be another opportunity for BIPL to make sky rocketing progress.

BIPL has an opportunity to hire young highly qualified and talented candidates who do not prefer to work with those banks who deal in Riba. This is a great opportunity for BIPL to attract fresh minds and competitors Employees as well.

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Threats:
Many new Islamic banks and islamic sections of already existing banks are now being established in Pakistan. BIPL will face intense competition in the coming year.

Many other banks now a days are providing services based on latest technologies although they are not providing all latest services like free online banking, etc. These banks can prove to be a threat in the long run.

Now the world is a global village so competitors may arise from anywhere in the world at any time. Many commercial banks are now dealing in Islamic modes of financing and Islamic Banking like bank Al-Falah, etc. These banks have an established goodwill in the market and many customers would prefer these banks when they will deal in both conventional and Islamic banking. These banks can also attract BIPLs existing customers thus they are a great threat for BIPL.

Usually people have a mindset that there is no diffrence between Islamic banking and conventional banking and Islamic banks are deceiving under the name of Islam. These wrong perceptions need to be removed otherwise they can also cause problems for BIPL.

Meezan Bank Limited is the premier Islamic bank and providing its services nearly in the same way as BIPL is providing and it also has a strong network of branches all over Pakistan thus resulting in a reduction in overall market share of BIPL.

Due to the recent international financial crisis, terrorist activities in Pakistan and the recent severe floods in Pakistan has broght the economy of the country to an almost stand still. It means there is less investment and low financing demands in the banking sector.

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As bank does not posess a large branch network so customers face inconvenience in dealing with the bank.

Law and order situation in Pakistan is shoddier discouraging and is totally reducing invester confidence to invest anywhere.

High rate of taxes on banking companies. In the near future the world is going to be a free trade zone so the concept of survival of fittest will be in action.

Due to terrorist activities in Pakistan the economy is moving very slow. It means less investment and as a result low financing demand.

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Limitations:
The time period of internship was too short to get grip on all the aspects of banking.

The bank has recently been established in Bahawalpur, so all the departments are not practicing full fledged working capacity at Bahawalpur. Thus the internship experience was of limited areas only.

Due to the high security of the vault and the cash room I was unable to practice the cash department. Due to privacy of the account holders and the security of the banks information I was not allowed to operate I Mal and PIBAS by myself.

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Suggestions and Recomendations

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Recommendations & Suggestions:

It was an interesting experience to do an internship in Bank Islami Pakistan Limited. The staff was highly cooperative and due to their help I learned a great deal about modern banking.

I suggest that such an internship program be highly integrative for the students of business education so that the students should be imparted with the knowledge of practical world. I do summarize that it would be a great help to me in the selection of my job or my future field of work.

Here I am putting some suggestions and recomendations, which will in my point of view enable the bank to compete with other banks more effectively & efficiently.

The BIPL should expand its Branch network throughout Pakistan especially in rural areas and foreign countries as well.

To attract customers from competitors BIPL must provide some extra facilities and should diversify itself towards a wider range of products.

Bank can offer special financing schemes for farmers especially in agrarian cities.

Although bank has agency relations with the foreign banks but it should open its own foreign branches to compete with the competitors.

Enhancing promotional offers is must to stay competitive and to communicate effectively with its customers.

BIPL should have a Marketing, Human Resource and IT specialist in all its branches.

BIPL should conduct Annual functions for awarding and rewarding its hardworking

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employees for showing extra ordinary performance. This is a great way to motivate others to work harder. This also motivates employs in a positive manner toward greater performance and achievements. It is better if the CEO, Board of Directors and senior staff of the bank is also present at this function to backup and encourage the employs to work even harder.

BIPL Bahawalpur branch is currently doing retail banking only but its time now that it should start other departments as well, which are not functional as of yet, to capture even more customers in areas of consumer banking, investment banking, and corporate banking etc. the reason behind this is that although Bahawalpur Branch started in year 2008 but within these two years its a profitable branch and the deposits are quite much for a small and nonindustrial city like Bahawalpur.

Lockers facility should be provided to the customers at BIPL Bahawalpur branch.

BIPL Bahawalpur Branch needs to be at the very least refurbished or altogether changed as it is too small for its current operations. I advise that the vault, a new locker facility and the IT Room should be in the basement and the ground floor should have proper wating areas and sitting arrangements.

Bahawalpur Branch of Bank Islami needs to have a proper parking, on urgent basis, for the customers and the staff.

There is a need of a separate information desk of BIPL in each branch that is essential to provide complete information about Islamic banking and all the products, services and facilities provided by the Bank to potential or walk-in customers.

There should be a separate IT specialist in each branch for dealing with IT related issues and for the proper guidance of staff members for using the softwares like PIBAS and i-Mal.

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Speed of intra-net also needs to be improved so that the employs should take benefit of this precious resource.

There should be at least one female staff member in the BIPL Bahawalpur branch to deal with female customers.

It is observed that the employees were overburdened so they have to stay at branch till late at night. In this way their efficiency is affected and hiring more employees, although seemingly expensive at the banks part, can reduce their work and result in much more overall profit.

Internship should be started as a systematic regular activity in BIPL Bahawalpur branch and a proper and sufficient amount of stipend should be paid to the internees to create a positive and caring image of the bank.

Frequent Training programs should be provided to employees to enhance their skills.

Adequate furniture facility should be maintained within the bank.

Expenditures must be controlled, which are very high especially telephone and electricity bills.

There should be a research cell in the bank, which should be engaged in gathering the information about the present actions of its competitors and demands of its customers.

The computer systems in BIPL are very slow and another reason for the slow speed is that the router was damaged due to pawer fluctuations. The IT expert needs to find a way to speed up the system speed. Because of slow speed customers have to wait to give their biomatrics and get their Pay Orders issued.

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Suggestion box should be introduced in the bank. The suggestions of customers and employees should be welcomed.

There should be a supplies manager hwo should be responsible for providing essential supplies to the branches within 5 to 7 days of the request made by the branch.

Bank Islami should have a close look on regularity measures of anti-money laundering.

The air conditioning units in the branch are not enough to cool the huge hall in scorching summer heat. BIPL needs to install another aircondetioning unit in the main hall.

The Internship Incharge should be paid a bonus or incriment for giving traning to the students so that he should be more motivated to explain everything to the students and one incharge should not be over burdened by asigning him countless number of internees. One incharge should only give traning to a maximum of 3 students, traning more then three students makes the trained too exausted to purform his daily duties and the internees also dont get proper attention.

There must be some visits by the Internship Incharge in the organization during the time of students internship.

There must be a clear statement obtained from the bank about the activities of the student on weekly basis.

The institute must provide counselling in making the internship reports.

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Conclusion

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Conclusion
The whole period of my internship at Bank Islami and the preparation of this report have been really helpful in making me understand Islamic and conventional banking in theory and in practice and my experiences are so vast that I have no words to express them. Now after completing this internship report I am confident that I have practically experienced banking and this would help me a lot in my career. While making this report I got a chance to understand the concepts in depth and to throw light at the concepts I had not either understood or had forgotten till the end of my internship. Now after completing this report its time for me to conclude what I have learned through out.

A bank is a financial institution that accepts deposits and channels those deposits into lending activities. The Banks primarily provide financial services to customers while the main goal is enriching investors. Banks are important players in financial markets and offer services such as investment funds and loans. The first banks were most probably the religious temples of the ancient world, and were most likely established sometime during the third millennium B.C. After the fall of Rome, banking was abandoned in western Europe and did not revive until the time of the crusades. Today banks work in a hybrid fashion providing a variety of services to their customers to yield heavy profits. The days of conventional banking are long gone; its the era of customer oriented banking., said Mr. Hafiz Aqeel Ahmed (Branch Manager, Bank Islami Bahawalpur Branch).

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

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Interest free banking is a narrow concept denoting a number of banking instruments or operations, which avoid interest. Islamic banking, the more general term is expected not only to avoid interest-based transactions, prohibited in the Islamic Shariah, but also to avoid unethical practices and participate actively in achieving the goals and objectives of an Islamic economy.

"Those who benefit from interest shall be raised like those who have been driven to madness by the touch of the Devil; this is because they say: "Trade is like interest" while God has permitted trade and forbidden interest. Hence those who have received the admonition from their Lord and desist may keep their previous gains, their case being entrusted to God; but those who revert shall be the inhabitants of the fire and abide therein for ever." (275) Islamic Shariah prohibits interest (Riba) but it does not prohibit all gains on capital. It is only the increase stipulated or sought over the principal of a loan or debt that is prohibited. Islamic principles requires consideration of capital performance while rewarding the capital. The prohibition of a risk free return and permission of trading, as enshrined in the Verse 2:275 of the Holy Quran, makes the financial activities in an Islamic set-up real asset-backed with ability to cause value addition. The forms of businesses allowed by Islam at the time the Holy Quran was revealed included joint ventures based on sharing of risks & profits and provision of services through trading, both cash and credit, and leasing activities. In the Verse II:275, Allah Almighty did not deny the apparent similarity between trade profit in credit sale and Riba in loaning, but resolutely informed that Allah has permitted trade and prohibited Riba.

Islamic banking system is based on risk-sharing, owning and handling of physical goods, involvement in the process of trading, leasing and construction contracts using various Islamic modes of finance. Profit has been recognized as reward for the use of capital and Islam permits gainful deployment of surplus resources for enhancement of their value. However, along with the entitlement of profit, the liability of risk of loss on capital rests with the capital itself; no other factor can be made to bear the burden of the risk of loss. As such, Islamic banks deal with asset management for the purpose of income generation. They will have to prudently handle the unique

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risks involved in management of assets by adherence to best practices of corporate governance. Once the banks have stable stream of Halal income, depositors will also receive stable and Halal income. This is what Bank Islami is doing, rather it is quite sucessfully doing so.

Besides trading, Islam allows leasing of assets and getting rentals against the usufruct taken by the lessee. All such things/assets corpus of which is not consumed with their use can be leased out against fixed rentals. The ownership in leased assets remains with the lessor who assumes risks and gets rewards of his ownership.

The principles of Islamic finance are established in the Qur'an, which Muslims believe are the exact Words of God as revealed to the Prophet Mohammed. These Islamic principles of finance can be narrowed down to four individual concepts without even a single one of these principles financing will no longer be Islamic: 1. Prohibition of Interest or Usury 2. Ethical Standards 3. Moral and Social Values 4. Liability and Business Risk

In order to insure that these principles are followed, each Islamic institution must establish and provide itself with an advisory council known as a Sharia'a Board. The members of Sharia'a Boards can include bankers, lawyers or religious scholars as long as they are trained in the Islamic law, or Sharia'a.

A very common misconception regarding "deposit" is that it is a form of amanah (security/trust). However, according to Shariah definition, deposit has more resemblance to qard (loan) than amanah. Deposits cannot be termed amanah, as it does not bear all the features of amanah, and can be used by the bank for its business or benefit and the bank is liable in case of any damage or loss to the deposit resulting from circumstances beyond its control. The main intention

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of the depositors is not to put the assets in banks as amanah; rather as qard by having collateral security by appointing the bank as guarantor.

BankIslami Pakistan Limited (the Bank) was incorporated in Pakistan as a public limited company on October 18, 2004 under the Companies Ordinance, 1984 to carry out business of an Islamic Commercial Bank in accordance with the principles of Islamic Shariah. The registered office of the Bank is situated at 11th Floor, Dolmen City, Marine Drive, Block-4, Clifton, Karachi. The Bank commenced its operations from April 07, 2006. The shares of the Bank are quoted on the Karachi Stock Exchange The Bank is operating with one hundred and two branches including thirty two sub branches (2007: thirty six branches) as at December 31, 2008.

During the year 2008 the Bank has issued right shares representing 207.968 million ordinary shares. BankIslami Mudaraba Investments Limited (Subsidiary company) The subsidiary was incorporated in Pakistan on January 22, 1986 under the Companies Ordinance 1984. Later on it was registered as a Mudaraba Company with the Registrar of Mudaraba Companies and Mudaraba (Floatation and Control) Ordinance, 1980. The principal activity of the subsidiary is to float and operate Mudaraba. The subsidiary is managing its Mudaraba with the name of MODARBA AL-MALI. The principal place of business of the Subsidiary is situated at Tenth Floor, Progressive Square, Shah rah -e-Faisal, Karachi.

BankIslami is the Joint venture project of 3 groups with 18.75% equity each, namely Jahangir Siddiqui & Co. Pakistan, DCD Group UK, & Dubai Bank. Irrespective of stiff competition in the market the Bank has successfully managed to grow over 400% during last one year and all set to be a 102 Online Branch Network by the year end 2008. 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.

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BankIslami has been able to form a strong image of having authentic basis for its banking operations by using smart marketing ideas that resonate well with the public mind. For example, the calligraphy of the bank's name in Urdu is claimed to have been done by the same calligraphers who have done similar work in the Holy Mosque of Madina in Saudi Arabia. Marketing Department of the Bank was at the forefront of re-branding exercise and achieving greater standardization across the network. All branches of BankIslami have the same look and feel irrespective of location. BankIslami claims in its logo story, Do you think Authenticity will ever escape our attention in whatever we do?

The foremost achievement of the Bank during the year 2010 has been its emergence as a serious Islamic Bank which is increasingly being seen as the most authentic provider of Islamic Financial Solutions.

Another key achievement of bank Islami was the completion of branch expansion target of 100 branches and sub-branches. Bank Islami actually opened 102 branches and sub-branches covering 49 cities in all four provinces, Azad Kashmir and Northern Areas. Not only does BankIslami offer the best coverage compared with any Islamic Bank, but also this is the fastest expansion achieved by any Bank in Pakistan's Banking industry. Almost all branches are online, serviced with 247 Phone banking and offer the same standard facilities across the network. For year 2010, BankIslami intends consolidating its network and operations.

On the business, liability side first towards the end of the first quarter last year, it was decided to focus almost exclusively on the retail segment. As a result, institutional deposits were shed as and when they matured. This enabled bank management not only to deal with the liquidity crisis of un-parallel magnitude but also to develop a competitive depository franchise. At the end of the year 2008 more than 80% of the deposits came from this segment. Banks management confidence and competitiveness in this segment led management to successfully launch a 10 year depository product at the peak of the liquidity crisis. In 2009, management intends consolidating gains in this segment with new saving oriented products of varying tenors.

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Bank Islami core Banking system, iMal, was successfully deployed in the first branch in November 2008. The core banking module was completed deployment in nine largest branches towards end of the year2008. Now all the branches of Bank Islami are using iMal successfully. Deployment of iMal has made BankIslami the only bank in Pakistan to use Banking software that has been designed for Islamic Banking as well as the bank was the fifth largest net acquirer on the 1 Link ATM network.

Besides Systems and SOPs employees are the major contributor to success or failure of any organization. BankIslami has greatly emphasized on Islamic banking products to ensure Shari'ah compliance from their end. Human Resources Department responded well to the challenge of recruitment for 66 branches. Staff strength rose from 563 as on December 31, 2007 to 1,188 on December 31, 2008 to 1,471 0n December 31, 2009. In all, 2,500 interviews were conducted and 785 training sessions were held. Online recruitment was launched with success. Staff turnover remained one of the lowest in the industry at 1.9%.

With a handsome budget allocated for training program and state of the art Training Centers have been established in Karachi, Lahore and Islamabad, a detailed Training Calender was prepared to organize the sessions properly and to ensure that every employee gets proper training. Case study based Method of training was introduced which was found very useful by the participants. Training manuals for Murabahah, Ijarah and Diminishing Musharakah products were also developed.

BankIslami was the first Bank that has a full time Shariah Adviser the scope of the Shariah Department and the first Shariah Audit of the Bank was conducted in year 2008 and it reported that not even a single deviation was found. The affairs of BIPL have been carried out in accordance with rules and principles of Shariah, SBP regulations and guidelines related to Shariah compliance and other rules as well as specific fatwas and rulings issued by Shariah Adviser from time to time.

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Bank Islamis areas of working include Retail Banking which offers the customers a range of saving and investment alternatives to help them grow their money in safe and secure manner; Consumer Banking which offers the customers superior financing products and quality service to help them own their home or car for a better quality life; Corporate Banking in which we are the customers financial partners to help them meet their business needs with timely and cost effective financial solutions; and Value Added Services that provide state of the art banking services and channels to help customers access their funds with utmost ease and convenience.

BankIslami, capitalizing on its expanded outreach, experienced substantial growth in finances in 2008. This enabled BankIslami to register a significant increase in its net interest revenue. Other operating income witnessed an upsurge on account of higher fee and commission. Meanwhile, there was a sizeable increase in personnel and other expenses, owing to the ongoing network expansion. Moreover, BankIslami made a net provision of PKR 130mln, due to sizeable increase in the classified portfolio. This resulted in doubling the pre-tax loss of the bank. The performance trend remained the same in 1Q09 with a slight addition in NPLs.

Going forward, BankIslami intends to leverage its expanded outreach to enhance both its deposit base and finances portfolio. Although the bank has plans to penetrate the retail segment, no significant lending is expected over the near-term, owing to currently weak credit environment. BankIslami would continue with its recent strategy of focusing the corporate segment, though cautiously here as well. The bank, with a view to reduce its cost of funds, plans to focus more on demand deposits. BankIslami, to augment further its retail franchise, has entered into agreements with different organizations to launch new products and services. Meanwhile, BankIslami, with surplus liquidity and support of strong sponsors, eyes acquisition of banks as a strategy to achieve sizeable growth. These initiatives exhibit clarity of direction but the extent to which they materialize remains to be seen.

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The target is to take consumer financing, over the medium term, upto 10%-15% of the total advances. With expansion in outreach, the bank intends to rationalize its deposit mix by substituting a portion of term deposits with current deposits. Nevertheless, deployment of excess liquidity would remain a challenge in the absence of an active Shariah compliant money market. Earnings from investment banking business are expected to grow significantly.

The deal pipeline is currently healthy. Meanwhile, BIPL plans to lay down requisite infrastructure for offering wealth management services, going forward. BankIslami, due to initial stage of operations, maintains ample liquidity and has a very low deposit concentration, which clearly stands out among close peers. The banks investment portfolio is modest in size (end-08: PKR 207mln) mainly dominated by strategic investment (PKR 191mln). The bank recently expanded its exposure to the sukuk market. There is a revaluation surplus, though slight, available on this investment (PKR 16 mln).

BankIslami, mainly due to un-utilized resources, has a relatively high level of capitalization (CAR), which offers significant room for credit expansion. However, with restricted internal generation, the bank would remain dependent on its sponsors meeting

BIPL perceives the management of risk not to be limited to a department or a function, but rather should read into our daily business routine. Ideas and decisions are heavily based on the risk/ reward trade-off some of the ideas which never see the light of the day are usually the ones which have been shelved due to an unacceptable risk level. The risks when identified and analyzed are further weighed against the applicable risk weights and its impact reviewed on a periodic basis. This pro-active approach helps in outlining the organizations risk tolerance level vis-a-vis BIPL's risk appetite in relation to its size, current position and market standing, with a view to refine processes, controls and guidelines to not only mitigate, but also to effectively manage risk.

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A well formulated policy and procedure is critical for an effective risk management framework; it than needs to be reinforced through a strong control culture that promotes sound risk governance. Our Risk Management Framework has been developed keeping in mind 3 things 1) To be effective, strong monitoring and control activities should be integral to the Bank; 2) Critical Decision Making should be based on relevant research, proper analysis and effective communication within the Bank; and 3) Every loss or near miss event should provide some KLO (Key Learning Outcome), developing a better risk analysis ability.

At strategic level, the risk related functions are approved by the senior management and the Board. These include; defining risks, setting parameters, ascertaining institutions risk appetite, formulating strategy and policies for managing risks and establishing adequate systems and controls to ensure that overall risk remains within acceptable level and the reward compensates' for the risk taken.

It encompasses risk management within a business area or across business lines. Generally the risk management activities performed by middle management or units devoted to risk reviews fall into this category. Periodical sensitivity / scenario analysis, stress testing is performed, to review sensitivity and resilience of the portfolio.

Risk management at micro level, is of critical importance. This function if performed with diligence and understanding, can be of maximum benefit to the organization. Micro level risk management includes the business line acquisition, strong adherence to the credit and other related criteria. BIPLs objectives for a sound capital management are: 1) to ensure that the Group complies with the regulatory Minimum Capital Requirement (MCR) 2) maintain a strong credit rating 3) maintain healthy capital ratios to support business and to maximize shareholder value

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and 4) to operate with a Revolving Planning Horizon and be able to take advantage of new investment opportunities when they appear.

The State Bank of Pakistan through its BSD Circular No.07 dated April 15, 2009 requires the minimum paid up capital (free of losses) for Banks / Development Finance Institutions to be raised to Rs.10 billion by the year ending December 31, 2013. The raise is to be achieved in a phased manner requiring Rs.6 billion paid up capital (free of losses) by the end of the financial year 2009.

The paid up capital of the Bank (free of losses) as of December 31, 2009 amounts to Rs 4.706 billion. However, the Bank had been granted an exemption till March 31, 2010 to meet the Minimum Capital Requirement by the SBP, vide its letter BSD/BAI-3/608/191/2010 dated March 3, 2010. The Board of Directors, in order to comply with the enhanced capital requirement, is considering various options including but not limited to issue of right shares and acquisition options. In this connection, the Bank has already made an announcement to Karachi Stock Exchange about its decision to enter into a Memorandum of Understanding (MoU) with another Islamic Commercial Bank in relation to its merger/acquisition into/by the Bank. The Board is confident that it will meet the Minimum Capital Requirement within the stipulated time.

In addition, the Group was also required to maintain a minimum Capital Adequacy Ratio (CAR) of 10% of the risk weighted exposure of the Group. The Group CAR as at December 31, 2009 was 20.87% of its risk weighted exposures.

The requirements of the Code of Corporate Governance set out by the Karachi Stock Exchange in its listing regulation relevant for the year ended 31st December 2009 have been adopted by the Bank and have been duly complied with. A statement to this effect is annexed with the report.

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The Bank has been assigned a long term entity rating of 'A' and short term rating of 'A 1' by Pakistan Credit Rating Agency Limited (PACRA), reflecting BankIslami well conceived business strategy and establishment of an effective operating platform to execute the business strategy.

During the year under review efforts have been made for an effective and efficient internal control system. In accordance with SBP-BSD Circular No. 7 of 2004, the Bank formulated all the key policies and procedures for its different lines of business. While formulating such policies clear line of authority and responsibility have been established in order to ensure an effective internal control system. The Bank has established an audit function independent of line management. The control activities are being closely monitored across the Bank through audit group / compliance & control, which covers all banking activities in general and key risk areas in particular. The Audit Committee of the Board reviews the audit function quarterly which includes program as well as surprise audits.

Internal control system in the Bank is designed to manage, rather than to eliminate the risk of failure to achieve the business objective, and can only provide reasonable and not absolute assurance against material misstatement or loss. However, it is an on going process that includes identification, evaluation and management of significant risks faced by the Bank.

The vision of Islamic bank is to be recognized as the leading authentic Islamic bank the Mission of BankIslami is to create value for Stakeholders by offering Authentic, Shariah Compliant and technologically advanced product and services. With a diversified portfolio of Shariah compliant products and state-of-the art technology, bank Islami offers the most comprehensive and authentic Islamic banking solutions. With a network of 102 online branches in 49 cities and such as Biometric Atm, internet banking, 24/7 phone banking, interbank funds transfer, Deposit ATMs and estatement, Bank Islami is truly serving its customers in the right way. The products offered by bank Islami are following Islami Auto Ijarah, Islamic current account, Islami Mahana Munafa account, Islami Amdani certificate, Ijarah, Musharakah Financing, MUSKUN-Home financing, Islami

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Bachat Account, Murabahah Financing, Islamic Export re-finance, Istisna Financing, Deminishing Musharkah Financing. And value added services of bank Islami are 24 hours call center, free ATM, free online, free internet banking, free eStatement, and intra bank transfer.

Due to a heavy expansion last year, the full cost impact of which came this year, BIPL is reporting a loss of Rs. 563M before tax and Earning Per Share stood (0.91). This is approximately Rs. 250M more than what we had budgeted. Due to economic in-stability, we preferred to conserve the liquidity. At the same time, private corporate credit off take was slow there by drying up appetite for quality credit. While our closing ADR is still less than 50%, going forward the signs are very positive. Almost 30% growth came in the last quarter only.

The success story of the year was the growth in deposits, which came almost entirely from retail segment. BIPL is one of the few banks in Pakistan which has a genuine deposit franchise. Instead of targeting large, rate sensitive accounts, BIPL as strategy focused on retail customer which are stable, less rate sensitive and loyal. Current and Saving Accounts recorded impressive growth. Even growth in Fixed Deposits was propelled by our five and ten depository products which now accounts for 21% of the deposit base. Despite of 124% increase in deposits, cost of funds actually declined. BIPL will continue to follow the same strategy strong focus on retail deposits, a further 5% to 10% reduction in cost of fund coupled with at least 50% increase in the deposit base.

Our technology infra-structure was further strengthened during the year with full deployment of state of art sharia compliant core banking system, iMal. We remain the largest user of Linux in Pakistan which has helped us to have a stable, cost effective platform compared to our peers. Our market share in ATM transactions has improved to 11th position amongst 1-LINK members. We are aiming to complete deployment of the next phases of iMal during 2010. BIPL also continued with focus marketing initiatives. Our greatest asset today is probably our brand name 'BankIslami'. Going forward, we plan to maintain presence in selected media segments.

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As discussed earlier, the reason for our losses this year is non-absorption of operating costs due to lower asset volumes. Besides that, BIPL has all the right straits which a successful bank may wish to have. Our net-work is large and well spread out, deposit base is stable and cost effective, intermediation cost is within the top quartile in the industry, NPLs are low and that too contained and technology base is one of the best. With improving asset deployment, BankIslami achieved operating break from December. On full year basis, we will inshallah report a profit starting from first quarter. No large expansion in net-work is envisaged this year.

The departments that are currently in practice in Bahawalpur branch are Cash Department and Operations department that includes the Account opening department, remittance department, clearing department, accounts department, foreign exchange department.

The department that is responsible for opening and closing an account assumes immense significance and holds a central place in the basic banking operationsThis department is the best way to start with the banking career or training. This is because the ways you deal with the customers give a lot exposure to you for the coming days in banking because the bankers are always in contact with customers as customers are the biggest source of assets for the bank. I really enjoyed my stay at this department as I got to interact with the customers directly for the first time.

The banking history is full of various examples of fraud largely due to incorrect opening of accounts. These frauds could have been avoided if the branch mangers and other designated officers had taken due care and exercised precautions at the time of opening of accounts. As the branch manager once said fraud starts when an account is opened. If you do not guess the right monthly and yearly turnover of the customers account then this may lead to a fraud or money londering. Banks today are more careful about money londering then anything ever before. Money londering is the same like normal londering in which dirty clotes go into a londery and are cleaned the same way illigal or black money goes into the bank as a big laundry machine and then comes

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out clean. If someone is depositing more then the expected monthly deposit then we have to cunfurm to the head office about where the money came from.

Bank Islami provides its customers with four types of accounts 1) Islami Current Account, 2) Islami Foreign Currency Account, 3) Islami Bachat Account and 4) Islami Dollar Bachat Account; and two types of Term Deposit Recipt (TDR) Certificates 1) Islami Mahana Munafa Account, and 2) Islami Amadni Certificatewith a bonus of a lot of our Value Added Services i.e. Online Banking, Inter Bank Fund Transfer, Internet Banking, ATM/Debit Card, Biometric ATM, 24/7 Phone Banking, e-Statement, Self Service Phone Banking and Lockers.

Cash department is the major point of contact among the customer and the bank. All cash dealings are done through the cash department and the officer in this department is called teller. His main responsibility is to deal with the cash payment and receipts.

Clearing department is the way through which Bank Islami clears cheque of other banks and clears the cheques of its own bank from other banks. Every bank acts in two ways i.e. Paying bank and collecting bank. A large part of this work is carried out through the bankers clearing house wherever it is established.

Remittance department transfer funds from one place to another. This department performs the function of transfer of money. The need of remittances is commonly felt in todays business.

Bank Islami is one of the leading banks of the world and it is completely dependent on the use of technology i.e. it is doing the paperless banking. Information Technology Department (ITD) is responsible for management and support of the technology architecture, hardware, software, and the respective resources throughout the country. The IT department of Bank Islami is one of the most sensitive departments as the working of the bank is completely dependent on the computer based and the web based technology and any problem at any part can negatively impact the whole working of the bank. Thus, great care is taken in the management of IT Department.

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The SWOT analysis of the bank shows that the bank has a lot of strengths to maintain and a large no of opportunities which it must grasp. If the management focusses on my suggestions then it can easily grasp opportunities leaving behind the threats and it can reduce its weekneces to a minimum as well by concedering my suggestions.

Through out the Financial Analysis I noted that the bank is performing very well as compared to other bbanks although its performance has declined due to the expention of the branch network but it is recharging its batries once again to surprise all with another bold decesion. In my openion the overall financial posetion of the bank is quite strong.

The aforementioned discussion renders obvious that Bank Islami is a force to reckon with in the Industry. It shows all potential to continue its growth and expand its roots. It is definitely bringing some genious and generic solutions which can add more variety to the existing financial network. This emerging bank on the contrary is a sure shot going in giving a tough time to its competitors.

To my internship experience I would like to say that this internship experience at the Bank Islami was a unique and life changing one. It has taught me a lot about banking and life itself. The auditors visit proved as a bonus for my internship. I learned a lot of things about banking throughout my internship. I also learned how to deal with customers. I have gained in-depth insight into the banking operations of an Islamic bank.. My experience so far has been fabulous and I hope what so ever I have learned helps me to develop my career in future. I also wish to serve my country the Right way!

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To put it in a nutshell I would not like to miss an opportunity here without stating that the overall analysis of Bank Islami establishes clearly that bank Islami is performing at a more than satisfactory level. It is one of the best modern banks in the country and can be of the world even if taken to such heights of operations, because it is providing Shariah based products a rare mix in the banking sector, and modern facilities that use the latest technology in the banking sector like its I-Mall and PIBAS. Bank Islami is also constantly bringing forth innovative differentiated products to become highly competitive with its competitors. The customers are increasing day by day and the overall deposits of the bank are at an unbelievable increasing rate and the bank is robustly moving towards growth. Equity base of the bank is also increasing and total assets of the bank are also increasing. By the end of 2009 its assets were worth a phenomenal Rs. 34,286.77 Millions as for a private bank. Its human resource department is in full bloom too. The year 2010 will undoubtedly offer an increased competition in the secured assets business as more Islamic banks emerge in the market. But being the pioneer in its product base and with its well thought strategies and product development initiatives, Bank Islami is at a whole new level to be competing with. The bank enjoys an excellent repute in the market as well, when people tend to be hurt by the slightest of bad trust. Overall the bank is doing good business which shows all is well for now, but there are few problems for which I have tried suggest some points that in my humble view might help improve the company from the inevitable short falls. I wish a prosperous and succesful future to Bank Islami Pakistan Limited.

I can find no better words to sum-up and conclude Bank Islami in a few words then

Serving you, the Right way!

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