MONEY AND BANKING

SUBMITTED BY:
| M. SHAKEIB | FAHAD ASHRAF |

SUBMITTED TO:
SIR TARIQ

Acknowledgements

We are heartily thankful to our mentor, Sir Tariq, whose encouragement, guidance and support from the initial to the final level enabled us to develop an understanding of the subject. We are also grateful to our Institute who is providing us with opportunities to improve our skills at proficient level and perform them to have efficiency at organizational level.

We owe our deepest gratitude to our class mates Moiz Khan and Mustafa Saleem, who helped us morally and practically in completion of this report, in short they have made their support in number of ways.

Lastly, we offer our regards and blessings to all of those who supported us in any respect during the completion of the project.

Executive Summary

Bank AL Habib Limited provides various financial products and services in Pakistan. It offers commercial banking products and services, which comprise current and deposit accounts for corporate and individual clients; foreign currency accounts; finance through loans, and other credit facilities to the corporate, private, and public sectors; short term finance of foreign trade through letters of credit and negotiation of bills of exchange; issuance of guarantees, bid bonds, and performance bonds; acceptance and placement of funds in the inter-bank market; purchase and sale of foreign currencies; trade information and research; remittances and transfer of funds; purchase and sale of government securities; and MCB Rupee traveler checks.

The company also provides consumer banking products and services, such as auto loans; home financing to buy, construct, and improve their homes; and a range of services, such as online banking, safe deposit lockers, automated teller machine cards, debit cards, tele-banking, electronic fund transfers, remittance, life insurance, and cash management services. In addition, it offers investment products and services, which consist of PLS savings accounts and monthly profit plans; term deposit accounts; AL Habib Growth Certificates; and super savings accounts. Further, the company provides deposit schemes and Islamic financing for

individuals/traders/industries, which are based on Islamic Shariah principles. As of December 31, 2006, it operated through a network of 152 branches. Bank Al Habib was incorporated in 1991 and is headquartered in Multan, Pakistan

Index
1. Introduction ....1 2. History ....2 3. About BAHL...5 4. Services...7 5. Investment...9 6. Islamic Banking.....11 7. Home Remittances....14 8. Bank Al-Habib Branches.........16 9. ATM networks..18 10. Market Updates....19 11. Conclusion....20 12. Suggestions...21 13. Bilbiography.19 14. Appendix..20

INTRODUCTION

The Bank AL Habib Limited run by the Dawood Habib family group of companies is one of the growing banks in Pakistan. It was selected as one of the top 200 Best under a Billion companies by Forbes Asia in their annual review of 2005. The bank's head office is located in the city of Multan in Punjab, but its principal office is located in Karachi. Presently, the Bank has a network of more than 270 branches in all the major cities of Pakistan.

Habib Group was pioneers in introducing banking to Pakistan. Their involvement in banking services dates back to 1930s. They successfully launched Habib Bank, which was nationalized in 1971 and is still one of the largest banks in Pakistan; since 2002 it has been jointly owned by the government and with the Aga Khan Fund for Economic Development. After the privatization scheme announced in 1991 by the Pakistani Government, Habib Group were the first to be granted permission to start a private bank, the Bank AL Habib Limited.

HISTORY

The original Habib Bank began modestly in Bombay in 1941 when it commenced operations with a fixed capital of 25,000 rupees. Impressed by its initial performance, Qaid-e-Azam Mohammed Ali Jinnah asked the Habib Bank to move its operations to Karachi after the independence of Pakistan. Habib Bank Limited established itself in the Karachi in 1943 and became a symbol of pride and progress for the people of Pakistan. It was nationalized in 1974. During October 1991, this company, Bank AL Habib was incorporated as a public limited company and began banking operations as a new private bank in 1992; it was granted membership to be part of the Clearing House. In 2005, Bank AL Habib began offering internet banking so accounts and records could be viewed online. In 2006, Bank AL Habib became partners with MasterCard allowing them to issue credit cards for the first time.

ABOUT BAHL

Vision and Mission Statement:

To be a quality financial service provider maintaining the highest standards in banking practices. Mission is to be a strong and stable financial institution offering innovative products and services while contributing towards the National economic and social development.

SERVICES

Bank AL Habib is one of the eleven partners of 1-Link system, an inter-bank ATM sharing system which allows customers to transact on ATM of any partner bank. Bank AL Habib is the third largest ATM service provider in Pakistan, having 188 ATMs while having the largest number of ATMs in the city Karachi. Bank AL Habib Limited in affiliation with the Arab Financial Services offers two types of Master Cards

CASH MANAGEMENT
To provide value added services and solutions is part of our mission statement. We understand the complex requirements of corporate when it comes to effectively manage their liquidity/cash flows. Our Cash Management suite of services/products is geared towards addressing these business and operational complexities with the objective to streamline a company's receivables and payables.

With our real-time/online branch network of 263 branches, robust systems and experienced back office, we can add significant efficiencies in streamlining a company's cash flows. Our Cash Management systems are capable of generating rich customized reports/MIS which enables a company to closely monitor its cash cycle and effectively manage its funds.

ONLINE BANKING
Bank AL Habib offers Online Banking Facility to its account holders at branches all over Pakistan. Cash may be accepted at a branch for crediting accounts at another branch; Cheques can be paid by a branch by debiting the customers account at another branch. Following facilities are available at Bank AL Habibs Online Program for its customers: 1. Payments of Cheques. 2. Cash Receipts. 3. Transfer of Funds through Cheques or Cash between Branches. The Deposit and Withdrawal Limit for Online Banking Facility is PKR 5,000,000 and 1,000,000 respectively. Charges of Rs. 50/- Per transactions are applicable per transaction for using Online Banking Facility.

ATM CARDS

Now your Bank AL Habib ATM Card is not just an ATM Card Its much more

Bank AL Habib is a founder member bank of 1 Link, the largest shared ATM network countrywide, giving you 24-hour access to your account from any ATMs. This network will keep on expanding to give you unmatched and most convenient services.

Useful Information for ATM Card holders:

Available denominations in Bank AL Habib ATMs are Rs.500 & Rs.1000.

Maximum withdrawal per day is Rs.25, 000

Maximum withdrawal per transaction is Rs.10, 000

The Mini Statement provides last 8 transactions as of last business day.

If card/cash is not removed from the slot within limited time the machine will retain your card/cash.

Three unsuccessful attempts to enter PIN will disable your Card.

Incase your card is captured, please contact the acquiring branch within 2 working days or collect from Issuing Branch within next 8 working days.

Incase cash is not properly dispensed please contact the branch where the transaction took place.

DEBIT CARDS
In keeping with Bank AL Habib's tradition of bringing you the quality services, we now move one step further, to add more convenience to your banking. Your Bank AL Habib ATM Card can also work as a Debit Card at thousands of outlets and shops all over Pakistan, displaying the ORIX Network logo for a maximum of 25000/= per day.

TELEMARKETING
AL Habib Telebanking Service:

Round the Clock Banking

Anywhere Anytime

At Bank AL Habib, customer convenience comes first. After successfully launching FREE ATM Cards and Online Banking. We now introduce yet another facility for all our customers.

AL Habib TeleBanking Service is a fully automated telephone banking service that brings banking at your finger tips, giving you instant access to the information you need. Now you can have access to your account without going to the bank 24 hours a day, 7 days a week, 365 days a year absolutely free! Its so Easy! All you need is your AL Habib ATM Card and a touch tone or mobile phone to dial into our state-of-the-art voice response service.

Facilities available on Telebanking:

1. Account balance of all accounts attached to ATM Card. 2. Last 5 transactions details 3. Mini statement (last 8 transactions) 4. New cheque book request 5. Fax-on-Demand Service 6. General Product Information 7. PIN Authentication & PIN Change 8. General Banking Information: Branch Information ATM Locations Foreign Currency Exchange Rates Product Information

ELECTRONIC FUNDS TRANSFER

The Interbank and Intra-Bank Funds Transfer IBFT is an electronic funds transfer EFT facility added to the list of our existing ATM Card services. It is an automated solution for bank to bank funds transfers who enable 1Link ATM Cardholders to avail real time funds transfer facility from their account to any other account in Bank AL Habib (BAHL) or to any 3rd Party Account in BAHL or participating 1Link Switch Member Banks customer account using their banks ATM. BAHL ATM Cardholder may avail this service without submission of any application, unless otherwise advised in writing by the cardholder to deactivate the service. PARTICIPATING BANKS: The list of banks currently participating in 1Link InterBank Funds Transfer services are:
y y y y y y y y y y y y

Bank AL Habib RBS ABL Askari Bank NIB HBL Soneri Bank UBL SCB Tameer Finance Bank Bank AL Falah Bank Islami

IBFT services are available for Individuals & Sole Proprietors having ATM/ Debit card relationships. The scope of IBFT services is:
y y y y

The Transfer of Funds from account(s) of an ATM Cardholder to: Any other account(s) maintained by him/ her at another Bank AL Habib branch. Any 3rd party account(s) held by any Bank AL Habib customer(s). Any account(s) maintained at a participating 1Link Bank listed above.

THE LIMITATIONS:

y y y y

Transfer of Funds can be done in PAK Rupees only. Transfer of Funds can only be affected from one of the BAHL ATMs. Transfer of Funds will be permitted only from an account linked with ATM Card. The maximum amount of transfers is limited to RS. 100,000 per day. There is no restriction on the number of transaction, however it should not exceed maximum transfer limit amount.

SERVICE CHARGES: Each Inter Bank Funds Transfer transaction will cost Rs. 24/- and will be charged to the transferor. However, for transfers within Bank AL Habib branches, there are absolutely no service charges.

REMITTANCES
Bank AL Habib Limited offers Funds Transfers in Pak Rupees (Inland Local Remittances) or in Foreign Currencies, (Foreign Remittances) on request of customer. Various Types of Remittance Facilities are available: 1) Payment Order 2) Demand Draft 3) Mail Transfer 4) Telegraphic Transfer Bank AL Habib also offers Travelers Cheques in collaboration with MCB which are encashable all over Pakistan. Along with this, Travelers Cheques in foreign currencies are also issued.

LIFE INSURANCE
Free Life and Disability Insurance Cover It gives us great pleasure to inform our valued customers that Bank AL Habib has arranged "Absolutely Free" Insurance Cover to our existing saving accountholders. Salient features of this insurance policy are as under:

The insurance cover is provided to the extent of average balance maintained in the account during last 90 days in case of Natural death and Permanent Disability, whereas in case of Accidental Death the coverage provided is double.

We are offering this service to our valued customers as a token of appreciation of their trust and confidence placed on us.

CASH MANAGEMENT
To provide value added services and solutions is part of our mission statement. We understand the complex requirements of corporate when it comes to effectively manage their liquidity/cash flows. Our Cash Management suite of services/products is geared towards addressing these business and operational complexities with the objective to streamline a company's receivables and payables. With our real-time/online branch network of 263 branches, robust systems and experienced back office, we can add significant efficiencies in streamlining a company's cash flows. Our Cash Management systems are capable of generating rich customized reports/MIS which enables a company to closely monitor its cash cycle and effectively manage its funds.

INVESTMENT

YOUNG SAVERS ACCOUNT

Young Pakistanis, Bank AL Habib has designed a new account especially for you, your own Young Savers Account. 1. This is an account for Young Savers of up to 18 years. Visit the nearest Bank AL Habib branch with your parent/guardian to open your Young Savers Account. You can open an account with as little as Rs. 5/=.

2. Rate of return on Young Savers Account is expected to be well above the return on normal savings accounts. Currently indicative rate of return on balances up to Rs. 500,000 is 10% P.A and for balances over Rs. 500,000 is 5% P.A, payable six monthly.

3. Young Savers Account will have Internet Banking facility and ATMlDebit Card available to your parent/guardian.

4. Young Savers of 16 years and more will also be eligible to receive ATM Cards and can withdraw money through ATMs, if specifically authorized by their parents/guardians (certain conditions apply).

5. Until you the Young Savers are a minor, i.e., below 18 years, the account will be operated by your parent/guardian. When you attain majority, the balance in the account will be transferred to a new account which you will open and operate after completing required formalities, including the concurrence of your parent/guardian.

6. Bank officers will also visit your school to help you open Young Savers Account and collect your deposit. Profit would be subject to Zakat, Withholding Tax and other Government Levies unless exempted.

PLS SAVING ACCOUNT

Bank AL Habib offers Two Value Added Savings Accounts which are PLS Savings Account and Monthly Profit Plan. Features of PLS Savings Account: Profit is paid out to your Account on six-monthly basis. There is NO Minimum Balance requirement for PLS Savings Account. The indicative Return Payable on "PLS Savings Account" deposits with effect from July 01, 2008 is 5.00 % per annum. Free Life and Disability Insurance cover for accountholders. Features of Monthly Profit Plan: This plan adds to the earning ability of you is PLS Savings Account with Bank AL Habib. Your profit is paid out / credited every month to your Account instead of six-monthly as in case of PLS Savings Account. NO Special forms or applications, NO Minimum Balance requirement.

The indicative Return Payable on "Monthly Profit Plan" deposits with effect from July 01, 2008 is 5.00 % per annum. Free Life and Disability Insurance cover for account holders.

MONTHLY SAVER ACCOUNT

SALIENT FEATURES OF PRODUCT Launched from March 01, 2010
y y

A Savings Account with monthly payment of profits for all age groups. The account can be opened by any individual (single or joint) like salaried person, self employed, retired, housewife, minor, etc.

Expected Rate of Profit on Minimum Monthly Balance: @ 5% p.a. Upto Rs. 99,999 @ 8% p.a. Rs.100,000 & Above

y y y y y

Profit will be paid every month on the first working day of the following month. No minimum or maxmimum balance requirement Free ATM / Debit Card Free Internet Banking & E-Statements Customer may avail up to 90% financing on deposit.

AL HABIB SPECIAL SAVER CERTIFICATE

SALIENT FEATURES OF PRODUCT Launched from October 28, 2010
y y

Three year Savings Certificate with six monthly payments of profits The account can be opened by any; i. ii. iii. iv. v. Individual (single or joint) like salaried person, self employed etc Register Partnership concern Public & Private Company Registered trust Government Body etc.

Minimum Amount required to invest in the certificate is Rs. 25,000

y y y y

Profit will be automatically credited to the customer account. On maturity of the deal customer may opt for automatic roll over at prevailing rate Profit rate is 13.25% per annum payable after completion of every six month In case the certificate is encashed before completion of first six months no profit will be paid and no penalty recovered

If the certificate is en-cashed in the period between the seventh month and any date till the date of maturity a penalty of only 2% will be charged and no profit will be paid for that six monthly period.

y y

Free ATM / Debit Card available 90% financing against deposit is available.

TREASUERS CALLS
Corporate societies, trusts and even individuals have large funds which are generally idle. Such funds can be put to work to earn handsome profits via the AL Habib Treasurer's Account.

This plan is open to Current Deposited Account. Access to such funds requires only a 24 hour notice. Profit is calculated on a daily product basis and credited to your Account monthly. The applicable rates for the Treasurer's Call Deposited Account, effective January 1, 2005 are: Deposit Amount On Balances Below Rs. 250,000 On Balances from Rs. 250,000 to 999,999 On Balances from Rs. 1,000,000 to 4,999,999 On Balances above Rs. 5,000,000> On Balances above Rs. 50,000,000 Rate per Annum Nil 1.25% 1.50% 1.75% To be quoted by zonal office

HAR MAAH MUNAFA AMDANI MAIN IZAAFA

AL Habib Mahana Munafa Account High Returns Reliable and Convenient

1 Year Deposit 2 Year Deposit 3 Year Deposit 4 Year Deposit 5 Year Deposit

11.50% p.a* 11.75 % p.a* 12.00% p.a* 12.25% p.a* 12.50% p.a*

* Expected Rate of Return on deposits effetive February 01, 2011.

y y y y y

Mahaha Munafa Account can be opened with an amount of Rs. 25,000/-. Profit will be paid on the 1st working day of each month. 90% financing allowed against deposit. Free ATM Card Deposit will be rolled over on maturity for same period at prevailing rates unless otherwise requested by the customer.

y y

Profit may be drawn through Cheque or ATM at any branch of Bank AL Habib. Profit is subject to Zakat, Withholding Tax and other Government Levies unless exempted.

y y

Premature encashment will attract penalty as per rules. Transfer of old to new deposit will only be allowed with penalty @ 2.00 flat as per applicable Mahana Munafa Deposit Rules.

SENIOR CITIZEN ACCOUNT

SALIENT FEATURES FOR AL HABIB SENIOR CITIZEN ACCOUNT
y

Savings Account For Senior Citizens of 60 Years & Above (Atleast one of the accountholders should be of 60 years & above in case of joint account)

y y y

Rate of Profit 10 % p.a. (expected rate of return) Profit Payable Monthly. Profit will be automatically credited to account on minimum monthly balance on first working day of each month. Profit may be withdrawn through ATM or cheque from any of our branch.

No Minimum or Maximum Deposit Limits

y y y y

Free Online Banking Free ATM / Debit Card Upto 90% Financing Against Deposits All other conditions including Zakat & Taxes for Savings Account are applicable.

SALANA ACCOUNT
AL Habib Salana Account High Returns Reliable and Convenient

y y

AL Habib Salana Account is a deposit account and can be opened with Rs, 25,000/All other rules applicable to PLS Savings account will also apply to AL Habib Salana Account inculding Zakat, Withholding Tax and other Government Levies unless exempted.

If the deposit is encashed before maturity, profit will be calculated and paid for the period held at the rate applicable to Savings Account.

y y

AL Habib Salana Account profit is paid on yearly basis. The indicative return payable on AL Habib Salana Account deposit effective February 01, 2011 . is 12.50% per annum.

Up to 90% financing allowed against deposit.

CURRENT PLUS ACCOUNT

CURRENT PLUS ACCOUNT SALIENT FEATURES OF PRODUCT y Scheme launched on May29 2009 y a current account that meets all business and individuals needs

y offers various free facilities on maintenance of minimum balance of Rs. 50,000/- including:
y y y y y

Free ATM Card Free Pay Orders Free Online Banking Free Personalized Cheque Books Free Internet Banking.

ISLAMIC BANKING
DEPOSIT SCHEMES
Bank AL Habib Limited, Islamic Banking Branch, invites participation in the following deposit schemes:

y y y

AL Habib Current Accounts AL Habib Saving Accounts AL Habib Term Deposits

The above deposit schemes are based on the Islamic Shariah principles and have been approved by our qualified and experienced Shariah Advisor.

a) AL Habib Current Accounts y y y

It is non-profit earning account with cheque book facility. ATM, Debit Card and Online Banking facilities are available. Funds will be used for investments and providing finances to trade and industries on fully Shariah compliant basis.

Regularly reviewed by qualified and experienced Shariah Advisor.

b) AL Habib Saving Accounts y y y y y y

Based on Islamic principles of Musharakah / Mudarabah. Profits and Losses to be shared as per prescribed rules. Profits to be paid every six month in January and July. Profit to be calculated on the basis of weightages, to be announced at periodic intervals. ATM, Debit Cards and Online Banking facilities are available. Funds will be used for investments and providing finances to trade and industries on fully Shariah compliant basis.

Regularly reviewed by our qualified and experienced Shariah Advisor.

c) AL Habib Term Deposits y y y y

Based on Islamic principles of Musharakah / Mudarabah. Available in tenures of 3 months, 6 months, 1 year, 3 years and 5 years. Profit to be paid periodically or on maturity as per rules. Profit to be shared according to a system of weightages, to be announced at periodic intervals.

Funds will be used for investments and providing finances to trade and industries on fully Shariah compliant basis.

Regularly reviewed by our qualified and experienced Shariah Advisor.

ISLAMIC FINANCING
We also offer Islamic Finance for Individual / Traders / Industries, etc. These finances are offered in the following forms:

y y y

Murabaha Finance Ijarah Finance (Leasing) Diminishing Musharakah Finance

All arrangements / documents relating to above are Shariah compliant and have been approved by our Shariah Advisor.
a) Murabaha Finance

A contract between the Bank and a Customer under which the Customer first purchases certain goods/commodities/assets as an Agent of the Bank, and the Bank after taking possession of the goods/commodities/assets sells it to the same Customer by adding certain profit margin to its cost. Murabaha Financing is available for:
y y y y

Local purchase of Assets/Commodities/Goods. Imports under Letter of Credit/Firm Contract. Purchase of raw material for exports. Local purchase of raw materials for production of Goods/Assets.

Shariah Compatibility:

y y

Assets must be Shariah compatible. All agreements/documents approved by our qualified and experienced Shariah Advisor and regular monitoring/checking of Murabaha transactions by the Shariah Advisor.

Customers Guidance:
y y

Murabaha is always allowed for fresh purchases. Goods shall not be used by the Customer before the Murabaha offer and acceptance are signed.

Rollover in Murabaha is not allowed. However, fresh purchases can be made under new Murabaha arrangements.

y y

Murabaha price once fixed cannot be changed. In case of late payment, Customer will have to pay certain amount to charity fund as per Murabaha Agreement.

b) Ijarah Finance (Leasing)

Ijarah is basically the transfer of usufruct of a fixed/durable asset to another person for an agreed period, at an agreed consideration. Under Ijarah agreement the asset will be given to the Customer on rent for the period agreed at the time of contract. For Vehicles (Commercial/Personal use):
y

Ijarah agreement and other document approved by our qualified and experienced Shariah Advisor.

y y

Periodical rentals to be fixed according to Customer needs at very competitive terms. Regular monitoring and checking of Ijarah transactions by our Shariah Advisor.

For Machinery & Equipment (Leasing): Machinery (for small, medium and large industrial units) and office equipment.
y

Lease agreements and other documents approved by our qualified and experienced Shariah Advisor.

y y

Periodical rentals to be fixed according to Customer needs at very competitive terms. Regular monitoring and checking of Ijarah transaction by our Shariah Advisor.

c) Diminishing Musharakah Finance (For Shirkat-ul-Milk)

Diminishing Musharakah is a form of partnership in which one of the partners promises to buy

the equity share of the other partner gradually until the title of the equity share is completely transferred to him. This transaction starts with the formation of a partnership, after which buying and selling of the equity takes place between the two partners. Diminishing Musharakah can be used for plant & machinery, equipment, buildings and automobile financing. Principles of Diminishing Musharakah (Shirkat-ul-Milk): 1. Diminishing Musharakah (DM) is a form of co-ownership in which the client and the bank share the ownership of a tangible asset in agreed proportion and the client undertakes to buy in periodic installments of the proportionate share of the bank until the title to such tangible asset is completely transferred to the client. 2. Diminishing Musharakah can be created only in tangible assets. Diminishing Musharakah shall be limited to the specific asset(s) and not to the whole enterprise or business. 3. A DM would consist of the following three steps

y y y

Creation of joint ownership between the bank and the client. Renting out by the bank undivided share in the asset owned to the client. Selling its share in periodic installments by the bank to the client.

4. All other terms and conditions as are essential to co-ownership, Ijarah and sale shall be fulfilled in respect of different stages in the process of DM arrangement. 5. Proportionate share of the client and the bank must be known and defined in terms of investment. 6. Loss, if any, shall be borne by the bank and the client in the proportion of their respective investments. 7. The amount of periodic payment would go on decreasing with purchase of ownership units by the client. 8. Each periodic payment shall constitute a separate transaction of sale. 9. Separate agreements/contracts shall be entered into at different times in such manner and in such sequence so that each agreement/contract is independent of the other in order to ensure that each agreement is a separate transaction. 10. Following are the documents to be executed in DM Financing;

y y y

Diminishing Musharakah Agreement Rental Agreement for moveable/Immoveable Assets Agreement for purchase of Musharakah Units

11. In case a client fails to honor the undertaking, as aforesaid with regard to the periodic payment and purchase of sale of units as the case may be, the asset may be sold in the open market and the bank aggrieved by such failure shall be entitled to recover:

Actual loss, defined as the difference between the market price and price mentioned in the undertaking, if any, not being the opportunity cost.

ny gain on sale of property, shall be shared by the bank and the client in proportion of their respective investment at the time of such sale.

12. The bank shall be entitled to recover outstanding periodic payments in respect of the period for which the client has actually used or possessed the asset which shall be payable to the bank.

DECLARATION OF PROFIT
Declaration of Profit on various Deposits for the Quarter ended December 31, 2010 Bank AL Habib Limited Islamic Banking has declared the following Profit Rates: Products Saving Deposit (1 999,999) Saving Deposit (1,000,000 9,999,999) Saving Deposit (10,000,000 49,999,999) Saving Deposit (50,000,000 & above) Term Deposit - 1 month Term Deposit - 3 months Term Deposit - 6 months Term Deposit - 1 year (profit to be paid on monthly) Term Deposit - 1 year (profit to be paid on maturity) Term Deposit - 3 years (profit to be paid monthly) Profit Rates 5.32% 5.47% 5.70% 6.08% 7.75% 8.75% 9.75% 10.30% 10.75% 10.80%

Term Deposit - 3 years (profit to be paid on maturity) Term Deposit - 5 years / Equity

11.00% 11.40%

13. TThe above profit rates have been approved by our Shariah Advisor. 14. Policy for Distribution of Profit for next three months i.e. from January 1, 2011 March 31, 2011. 15. The Bank is currently offering Term Deposits of various maturities in addition to the Saving Deposits. The term deposits and saving account, will work under the principle of Mudarabah. 16. The Bank will calculate the profit of the deposit pool after every quarter. Profit will be distributed at the Gross Income level. The Gross Income will be calculated after deducting costs and expenses directly incurred in deriving that Income. 17. Gross Income of the deposit pool will be shared between the Bank (Mudarib) and depositors (Rab ul Maal) on the basis of a pre-determined profit sharing ratio. 18. The Bank's profit sharing ratio will be 60% of the Gross Income and Depositors' profit sharing ratio will be 40% of the Gross Income. 19. The profit is distributed among the account holders on the bank's predetermined weightages, announced at the beginning of the quarter based on their respective category/tiers. 20. At the end of the period, the Bank may unilaterally reduce its profit sharing ratio for the benefit of depositor(s). 21. In case of a loss, as per the rules of Mudarabah, the deposit pool will share the loss in the ratios of investment of depositors. 22. Moreover, Bank will create a Profit Equalization Reserve (PER) equivalent to 1% of its Gross Income, i.e. before the distribution of profit between Mudarib and Rab-ul-Maal. The main purpose to create PER is to maintained profit rates smooth and compatible to the market. These reserves will be created at each quarter end, and same will be included in the Gross Income in the subsequent quarter.

23. Weightages declared for the 1st quarter i.e. (1st January, 2011 31st March, 2011) are: S/n 1 2 3 4 5 6 7 8 9 Products Saving Deposit (1 999,999) Saving Deposit (1,000,000 9,999,999) Saving Deposit (10,000,000 49,999,999) Saving Deposit (50,000,000 & above) Term Deposit - 7 Days Term Deposit - 1 month Term Deposit - 3 months Term Deposit - 6 months Term Deposit - 1 year (profit to be paid monthly) Weightages assigned 0.70 0.72 0.75 0.80 0.80 0.85 1.00 1.05 1.10

10

Term Deposit - 1 year (profit to be paid on maturity) Term Deposit - 3 years (profit to be paid monthly) Term Deposit - 3 years (profit to be paid on maturity) Term Deposit - 5 years / Equity

1.15

11

1.30

12

1.35

13

1.50

24. The above mechanism has been approved by our Shariah Advisor.

HOME REMITENCES
HOME REMITTANCE
Bank AL Habib Limited will encourage all remitters to open account for the beneficiaries in Pakistan at any BAHL branch to avail following services absolutely free of charge:

y y

No minimum balance required to open and maintain a Savings account Same day value for remittances received before 1300 Hrs PST for deposit in the remitter/ beneficiarys BAHL account.

y y

ATM/Debit Card accepted at over 6000 merchants and 2000 ATMs across Pakistan. Free Life Insurance cover for up to PKR 1 million, subject to prevailing terms and conditions for PKR Savings account holders.

y y y

Issuance of Pay Order or Demand Draft. Direct Debit and Standing Instructions for frequent payments from accounts Competitive exchange rates for FCY transactions or transfer from US$ account to PKR account.

NetBanking for round the clock internet banking services from any where at any time for balance inquiry, statement of account and funds transfer etc.

24X7 Call Center and TeleBanking services.

The Remitters can open their own account while in Pakistan either prior to their departure or while they are visiting Pakistan. NRP remitting funds in foreign currency can choose any Currency and Bank listed below for their foreign currency remittances to their account in Pakistan.

For Remittances in Australian Dollars SNo BANK NAME SWIFT/BIC NATIONAL AUSTRALIA BANK LTD, NATA AU 33 033 1 MELBOURNE

ACCOUNT NO 1803071765500

For Remittances in Canadian Dollars SNo BANK NAME ROYAL BANK OF CANADA, 1 TORONTO

SWIFT/BIC ROYC CA T2

ACCOUNT NO 208-655-1

For Remittances in Euros SNo BANK NAME COMMERZBANK A.G. FRANKFURT 1 AM MAIN

SWIFT/BIC COBA DE FF

ACCOUNT NO 400 880 7125 01 EUR

For Remittances in GB Pounds SNo BANK NAME HABIBSONS BANK LIMITED, 1 LONDON HSBC BANK PLC, LONDON 2 LLOYDS TSB BANK PLC, LONDON 3

SWIFT/BIC HSBL GB 2L MIDL GB 22 LOYD GB 2L

ACCOUNT NO 21003565 35783575 01003578

For Remittances in Japanese Yen SNo BANK NAME NATIONAL BANK OF PAKISTAN, 1 TOKYO

SWIFT/BIC NBPA JP JT

ACCOUNT NO 21059

For Remittances in US Dollars SNo BANK NAME CITIBANK NA, NEW YORK 1 HABIB AMERICAN BANK, NEW 2 YORK JPMORGAN CHASE BANK 3 NATIONAL ASSOCIATION, NEW YORK

SWIFT/BIC CITI US 33 HANY US 33 CHAS US 33

ACCOUNT NO 36200709 20729933 0011685302

4 5

MASHREQBANK PSC, NEW YORK STANDARD CHARTERED BANK, NEW YORK

MSHQ US 33 SCBL US 33

70120054 3582-035242001

For Remittances in Swiss Francs SNo BANK NAME CREDIT SUISSE, ZURICH 1

SWIFT/BIC CRES CH ZZ 80A

ACCOUNT NO 0835-0902223-53000

For Remittances in Pak Rupee: Simply mention your beneficiary's complete account number with branch and city name for direct credit.

BANK AL-HABIB BRANCHES

AL HABIB BRANCHES
The Bank's Head Office is situated in the city of Multan in Punjab, but its main Principal Office is located in Karachi since it is the hub of business activities in Pakistan.

Presently, the Bank has a network of Two Hundred And Seventy Seven Branches including 25 Sub Branches & 8 Islamic Banking Branches in all the major cities of Pakistan and abroad fully automated and computerized and providing wide range of banking services.. The following is a list of Bank AL Habib branches. Select region or link to locate the nearest branch.

ATM NETWORKS
ATM NETWORKS
With Bank AL Habib ATM Card you can access your savings and current account through ATM's in Pakistan with visiting your branch. You can also carry out most of the personal banking transactions such as Balance Inquiries, Cash Withdrawal, Mini Statement etc.
1 Link ATM Network

You can access your account not only through Bank AL Habib ATMs but also through the ATM of other banks on 1-Link network.

MARKET UPDATES
CREDIT RATING
The Pakistan Credit Rating Agency (PACRA) has upgraded the long-term rating of Bank AL Habib Limited to AA+ (Double A plus), while maintaining the short-term rating at A1+ (A one plus). Meanwhile, the ratings of the unsecured, subordinated TFC issues have also been upgraded to AA (Double A). These ratings denote very low expectation of credit risk emanating from a very strong capacity for timely payment of financial commitments. The ratings reflect the banks exceptional asset quality and robust financial profile, an outcome of managements prudent risk management policies and low risk appetite. The managements proactive stance towards strengthening its systems and controls and initiatives in product innovation, technology upgradation and outreach expansion have assisted growth prospects, while improving the banks relative positioning among peers. Meanwhile, the bank continues to sustain a strong foothold in its core area of focus trade finance to commercial segment despite intensifying competition. The Bank: Bank AL Habibs sponsors are members of the Habib family one of the oldest and most distinguished names in Pakistans banking circles. They are actively involved in the management of the bank. Mr. Abbas D. Habib, the CEO, is with the bank since its inception. He has over 40 years of experience in domestic and international markets. He is backed by a team of experienced professionals, most of whom have long association with the bank. The bank operates a network of over 240 branches (June 2009), covering major cities and towns in Pakistan and a Wholesale Branch in Bahrain. The TFCs: Bank AL Habib has issued three unsecured, subordinated TFCs of PKR 1,350mln (July 2004), PKR 1,500 mln (Feb 2007) and PKR 2,000 mln (June 2009). All instruments are for a tenor of 8 years with major principal redemption commencing in July 2011, Aug 2014, and Sep 2016 respectively. The latest TFC issue in June 2009 was arranged by the bank and was privately placed.

ECONOMY WATCH
1. Since the issuance of the monetary policy statement in July 2006, State Bank of Pakistan (SBP) has been closely monitoring developments in the economy and has remained vigilant about the risks and challenges identified in the statement. These challenges were: (a) high inflation, (b) strong growth in monetary aggregates, (c) expansionary fiscal stance pushing up aggregate demand, (d) widening external account deficits, and (e) challenging international environment characterized by oil price hike and its volatility, possibility of disorderly unwinding of global imbalances, and deceleration in world economic growth. 2. In response to these challenges, SBP raised the cash reserve requirement (CRR) for banks, together with further increasing its policy rate by 50 bps to 9.5 percent in July 2006.

3. Initial evidence for FY07 suggests that SBPs monetary tightening undertaken so far has been successful in reducing excess demand from the economy, without hurting the growth momentum. In particular, while the GDP growth rate is expected to be close to the target of 7 percent for FY07 and above the FY06 level, 1 the underlying inflationary pressures have been easing off during the first six months of FY07. YoY core inflation (Non-Food Non-Energy NFNE) has come down to as low as 5.5 percent in December 2006 from 7.4 percent for December 2005 and a local peak of 7.8 percent in October 2005.

4. However, the headline inflation has remained stubbornly high at an average 8.4 percent during H1-FY07, 2 which is well above the annual target of 6.5 percent for FY07. In this regard, the continuing high food inflation is the key driver for pressure on the overall CPI; and has a potential to dilute the impact of monetary tightening by strengthening inflationary expectations in the economy, if not addressed timely. While the role of administrative measures to improve supplies of essential food items has become more important, the monetary policy has to continue focusing on further containing the

excessive demand pressures in the economy. Inflation outcome for FY07 is likely to be higher than the annual target for the year.

5. Focus on reducing domestic inflation is also required to help contain the cost of doing business in Pakistan, which is essential in improving the countrys external competitive position. This is particularly important as the July-November 2006 trade gap has worsened on the back of an unexpected slowdown in export growth. The deceleration in exports indicates the presence of increased global and regional competition in addition to the existing structural weaknesses.

6. It may be pointed out that SBP has allowed liberal access to concessional Long-term Financing for Export-Oriented Projects (LTF-EOP) and has lowered the financing cost of eligible items under the Export Finance Scheme (EFS). In fact, real lending rates on EFS and LTF-EOP are negative and even lower than the rates prevailing in regional countries. However, these incentives are also posing difficulties for effective monetary management due to their significant contribution in reserve money growth, which translates into overall monetary expansion.

7. An additional challenge to growth in monetary aggregate emanates from large foreign exchange inflows during H2-FY07. While the foreign exchange inflows through privatization and GDR floatation were anticipated at the beginning of the year, other FDI inflows are accelerating. Although such inflows help in keeping the exchange rate stable by offsetting the foreign exchange drain due to the current account deficit and turning the overall outlook of balance of payments positive in the short to medium-term making it a more than welcome development; their counterpart contribution in accelerating the net foreign assets brings a 8. Challenge to monetary management. Given the existing trend of reserve money growth, large foreign exchange inflows would also imply that monetary policy has to be necessarily kept tight in order to mitigate the risks of excessive expansion in the domestic liquidity.

9. The pattern of government borrowings, especially in the wake of a pro-cyclical expansionary fiscal policy and the slowdown in import-related tax revenues (if not offset by other sources of revenues), pose another challenge to the conduct of monetary policy. In particular, the government borrowings and its increasing reliance on the central bank are major sources of concern. Diversifying the governments sources of borrowing, adopting a judicious mix of short-term and long-term borrowings and maintaining the sanctity of the overall yield curve would, therefore, appear to be a better policy option for the government in the given environment. In this respect, recent issuance of PIBs is a welcome development.

10. While there is an overwhelming influence of domestic events on the overall economic performance of Pakistan, SBP also takes into account key developments in global and regional economies. The robust growth in the last few years and the resulting inflationary pressures prompted various central banks, including the central banks in the region, to raise their key policy rates in 2006. This will help their economies to reduce excess demand pressures and easing off inflation.

11. In sum, while most of the risks and challenges identified in the monetary policy statement for H1-FY07 still persist (except for the threat of continued acceleration in international oil prices), the key challenge for SBP is to keep the FY07 inflation outcome as close to the target as possible. So far, the current monetary policy posture appears to be striking the balance of gradually reducing the excess demand pressures from the economy, without prejudice to the high growth prospects. SBP also realizes that the policy measures taken earlier this year would have a further dampening effect on borrowing and spending in due course. Thus, SBP will be closely monitoring the economic developments and outlook for FY07 and will take appropriate actions as and when required in pursuit of maintaining the objective of price stability without prejudice to Economic growth.

CONCLUSION

From the above in formation we are concluded that Bank Al Habib due very well in the market. They used the good strategies for accomplish of the organization goals and objective. Bank Al Habib met their budget in the year very effectively, increase the branches in Pakistan major cities, and increase the ATMs network. They used the strategy sales promotion for the promotion for the promotion of their product in the market, introduced the new product in the market like youngers savers account and etc. They used the frontal attack in the market for the promotion of their business in the market like other banks in the Pakistan. They are politically strong because they have no account of that kind that is effected by the politically instability in the country. They are to much aware in giving the credit facility to the customer. Due to this the bad debts ratio of the bank is to much low 0.05%. They are also due the work socially for the country for the promotion of the organization in the Pakistan society. Bank Al Habib has the good position in liquidity because they have the C.A ratio 20% of total deposits. Bank Al Habib is mostly emphasis on the financing and deposits that is the better for the effective work of the organization. They are poor in the IT department but they are solving this problem in last year by installing a new system of IT, and also train their employees hire the skilled employees for the IT sector. By this performance of the IT sector of the Bank Al Habib is too much improved.

SUGGESTIONS
They do the well but there is still need to improve the business operations.  They should improve the marketing department for the promotion and the better result for the organization  They should used the electronic media frequently for targeting the higher class of the customers  They should sponsor the events in Pakistan and also in the world for the promotion of the business.  Bank Al Habib should become quick to give loans and cards.  Make Easy procedure for applying for a credit card  Give more incentives like bonuses overtime pay etc.
 Make strong Self Marketing Department.

Bibliography
y http://www.bankalhabib.com y http://www.wekipedia.com y http://www. Scribd.com y http://www.Investopedia.com y Print media y Advertisements y Others

APPENDIX