Handbook Of Islamic Banking Products & Services

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Handbook ofIslamic BankingProducts & ServicesIslamic Banking DepartmentState Bank of Pakistan

The TeamNameDesignationContactMr. Pervez SaidDirectorPervez.Said@sbp.org.pkMr. Imran AhmadSenior Joint DirectorImran.Ahmad@sbp.org.pkMs. Fatima JavaidRegulating OfficerFatima.Javaid@sbp.org.pk

"We must work our destiny in our own way and present to theworld an economic system based on true Islamic concept ofequality of manhood and social justice."Quaid-e-Azam Mohammad Ali JinnahFounder of Islamic Republic of PakistanOn the Occasion of the Opening Ceremony of The State Bank of Pakistan on July 1, 1948

TABLE OF CONTENTSS. NoContentsPage1Introduction of Islamic Banking12Islamic Banking Branch Network as on Dec 31, 200833Islamic Banking Products & Services4Products Offered by Full-fledge Islamic BanksProducts offered by Islamic Banking Branches ofConventional Banks4Important terms on Islamic Banking7-6061-129130Disclaimer:The document is prepared for general information only. The information provided in this documentis subject to change by the Islamic Banking Institutions (IBIs) and may not exactly match the IBI’sprevailing policies and practices. Further, this document should not be used as a substitute forproper and up to date legal advice.

INTRODUCTION OF ISLAMIC BANKINGIslamic banking has been defined as banking in consonance with the ethos and valuesystem of Islam and governed, in addition to the conventional good governance andrisk management rules, by the principles laid down by Islamic Shariah. Interest freebanking 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 toavoid interest-based transactions, prohibited in the Islamic Shariah, but also to avoidunethical practices and participate actively in achieving the goals and objectives of anIslamic economy.Islam was the basis of creation of an independent state within the undivided Indo-PakSub-Continent. Since its creation, the people of Pakistan have held the demand forelimination of Riba from the financial system of Pakistan on the basis of Islamicprecepts. All Constitutions of Pakistan have incorporated, within the principles ofpolicy, the elimination of Riba as an important objective of the State policy. Quaid-eAzam, the father of the nation, in his speech at the occasion of the inauguration ofState Bank of Pakistan, had expressed the desire for evolving an Islamic system ofbanking.Article 38(f) of the Constitution of the Islamic Republic of Pakistan provides: “TheState shall . Eliminate riba as early as possible.” The Objectives Resolution, 1947,now a part of the Constitution, as well as principles of policy enunciated in theConstitution also require to establish an order in Pakistan “[w]herein the Muslimsshall be enabled to order their lives in the individual and collective spheres inaccordance with the teachings and requirements of Islam as set out in the Holy Quranand Sunnah”.The efforts undertaken in the 1980’s to Islamize the economy at comprehensive /national level are considered as pioneering work in the Muslim world as this becameimportant reference material for other countries which undertook the path towardsintroduction and establishment of an Islamic banking system.Since Pakistan started with an approach to convert the whole system into Islamic one,a number of amendments in relevant laws were introduced providing legal cover forIslamic financial products and services. Similarly, some new laws were introduced toallow new financial institutions or facilitate the existing ones. The legal andregulatory infrastructure developed during that era has proved to be invaluable assetas we keep on charting the present landscape of the industry today on the same.Islamic Banking Department1

Islamic Banking Industry of Pakistan continued its progress during the year 2008.They have increased their share of assets in the overall banking system to 4.9% up toDecember 2008. The growth is also reflected in increased share of deposits andfinancing & investment that stood at 4.8% and 4.4% respectively at the end of ec-08Total Assets134472118276276%age of Banking 202%age of Banking Industry0.4%1.2%1.9%2.8%4.1%4.8%Financing. & Invest.10304872186187%age of Banking IndustryConventional Banks with IslamicBanking BranchesNo. of Branches (Including 0150289514Currently, there are 6 full-fledge banks and 12 conventional Banks are offeringIslamic Banking products through their Islamic Banking Branches. Hence, branchnetwork of IBIs comprises of around 514 branches as on Dec 31, 2008.Islamic Banking Department2

Islamic Banking Branch Network as on Dec 31, 2008TypeBank NameNo. of BranchesIslamic BankAlbaraka Islamic Bank B.S.C. (E.C.)30BankIslami Pakistan Limited70Dawood Islamic Bank Limited15Dubai Islamic Bank Pakistan LimitedEmirates Global Islamic BankLimitedMeezan Bank Limited23Sub-total40131309Islamic Banking BranchesAskari Bank Limited18Bank AL Habib LimitedBank Alfalah Limited448Habib Bank Limited1Habib Metropolitan Bank LimitedMCB Bank Limited411National Bank of PakistanSoneri Bank Limited5Standard Chartered Bank(Pakistan)8The Bank of KhyberThe Royal Bank of ScotlandUnited Bank Limited16Sub-Total635129Sub BranchesAskari Bank Limited2BankIslami Pakistan LimitedDawood Islamic Bank Limited32Dubai Islamic Bank Pakistan Limited2Meezan Bank LimitedSub Branches TotalGrand TotalIslamic Banking Department635775153

ISLAMIC BANKING PRODUCTS & SERVICESIslamic Banking Institutions of Pakistan are offering a wide range of ShariahCompliant products & services. Murabaha is dominating the financing portfolio ofIBIs. Similarly, Ijara, Musharaka and Diminishing Musharaka are also used depicting anoticeable share in totalMode of Finance - December 2008financing of IBIs. However,Mudaraba, SalamandOthersIstisnaQarz/Qarz-eIstisna portfolios still needs5%3%Hasna0%to be triggered. May be, inMurabahathe coming years, by37%Salamintroduction the Shariah2%compliantAgriculturalproducts, their share get DiminishingMusharakaincreased. Presently,ntly, these29%financing have relativelysmall share as compared toMudaraba0%MurabahaandIjarahMusharakaDiminishing Musharaka.22%2%A comprehensive range ofIslamic Banking productsand services is beingoffered, in order to meet customer's demand of Shariah Compliant Banking, in thefollowing areas: Corporate /SME BankingInvestment BankingTrade FinanceGeneral BankingConsumer BankingIslamic Banking products have to be approved by the Bank's Shariah Advisor asinstructed vide IBD Circular 2 of 2008. As per Shariah requirements, funds andproducts of Islamic Banking are managed separately from the Conventional Bankingside. All funds obtained, invested and shared in Halal modes & investments, undersupervision of the Shariah Advisor.In order to ensuresure compliance with minimum Shariah standards by the banksconducting Islamic banking in Pakistan, the Commission for Transformation ofFinancial System set up in the SBP approved essentials of Islamic modes of financing.Islamic Banking Department4

These are model agreements which have been approved in line with Supreme CourtJudgement on Riba. These include Musharaka, Mudaraba, Murabaha, Musawama,Leasing, Salam and Istisna. These model agreements are expected to facilitate theexisting Islamic banking sector in creating awareness about Islamic banking productsand to develop such products. These model agreements, however, can be modified, inconformity to the products designed by the banks conducting Islamic bankingbusiness. But to bring any kind of change in these model agreements, banksconducting Islamic banking operations, will seek approval of the Shariah Board ofIslamic Commercial Banks or Shariah Adviser of banks having Islamic bankingbranches, ensuring that such changes are consistent with the principles of Shariah.The 1 industry over the years has managed to offer a wide array of productsencompassing almost the entire range of Islamic modes of financing that are able tocater to the needs of majority of the sectors of the economy.Asset SideThe segments covered by the industry through various Shariah compliant modes suchas Murabaha, Mudaraba, Musharaka, Ijarah, Diminishing Musharaka, Salam, Istisna,Wakala and Islamic Export Refinance etc. include Corporate / Commercial, Agriculture, Consumer, Commodity Financing, SME sector, Treasury & Financial Institutions.Also with the increased issuance of Sukuk by corporates investments of IBIs in theseShariah compliant instruments is on the rise.Liability SideOn the Liability side, Islamic Banking Industry offers various Shariah compliantdeposit schemes that are available for customers to invest their funds. These include Current Accounts, Basic Banking Account, Savings Accounts, Term Deposits of various maturities, and Certificates of Investment etc.1iBSRIslamic Banking Department5

Current Account is mostly being offered on Qard basis whereas Mudaraba is thepreferred mode used by Islamic banks for offering savings accounts, term deposits &certificates of investment.OthersSome full fledged banks are also offering investment banking products and servicesincluding Sukuk Arrangement, Financial Advisory, Private Placement, Syndication,Trusteeship, Underwriting, Structured Finance, Listing on Capital Markets, ProjectFinancing, Mergers & Acquisitions etc. Further, a variety of other ancillary servicesare also being offered in a Shariah compliant manner such as Bonds & Guarantees, Letters of Credit Remittances ( local & International), Online banking, ATM/debit card ( including Visa), Safe deposit lockers and Utility bill payments etc. Collection of export bills, assignment of export / local bills Inter-Bank funds transfer facility through ATM, E-Statement facility, Lockers, Phone Banking and 24 /7 Call Centre service. Deposit accepting ATMsFollowing Chapter will focus on bankwise various product offering 2 by IBIs ofPakistan.2Data maintained as per IBD Circular No.02 of 2008.Islamic Banking Department6

Products OfferedByFull FledgeIslamic Banks

1. MEEZAN BANK LIMITEDAsset Side ProductsCar IjaraUnderlying Islamic ModeType of ProductBasis for PricingMinimum Financing LimitMaximum Financing LimitMinimum TenorsMaximum TenorsTarget CustomersSecurity/Collateral RequiredIjaraConsumerFixed rate for different tenuresUsed Rs. 250 KUsed Rs. 1.5 million, Semi Commercialupto 1 million, New upto Rs 2 million,Imported upto 4 million,3 Years5 YearsSalaried Individuals, Self-employedProfessionals, Business IndividualsExclusive ownership of the asset, postdated chequesEasy HomeUnderlying Islamic ModeDiminishing MusharakaType of ProductEasy Buyer, Easy Builder, Easy Renovate,Easy ReplaceKIBOR(90 days average of 12-monthKIBOR)In case of Buyer, Builder, ReplacementRs.300,000 In case of RenovationRs.150,000In case of Buyer, Builder, ReplacementRs.40 million, In case of Renovation Rs.1millionIn case of Buyer, Builder, Replacement 3Years In case of Renovation 2 YearsIn case of Buyer, Builder, Replacement 20Years In case of Renovation 7 YearsSalaried Individuals, Self-employedProfessionals, Business IndividualsBasis for PricingMinimum Financing LimitMaximum Financing LimitMinimum TenorsMaximum TenorsTarget CustomersIslamic Banking Department7

Security/Collateral Requiredowner occupied residential property,Land for home building.Short Term FinancingUnderlying Islamic ModeType of ty PositionBasis for PricingMinimum Financing LimitMaximum Financing LimitMinimum TenorsMaximum TenorsTarget CustomersSecurity/Collateral RequiredRating/Bank'sNoAs per SBP Prudential Regulations(PRs)7 days1 YearCorporateCash / MOTD /Letter ofHypothecation/PledgeIslamic Export Refinance Scheme (IERS)Underlying Islamic ModeType of ProductBasis for PricingMinimum Financing LimitMaximum Financing LimitMinimum TenorsMaximum TenorsTarget CustomersSecurity/Collateral RequiredMurabahaCorporate/SMESBP RateNoAs per SBP PRs30 days180 daysCorporateCash/MOTD/Letter ofHypothecation/PledgeLong Term FinancingUnderlying Islamic ModeType of ProductBasis for PricingMinimum Financing LimitMaximum Financing LimitIjara / Diminishing MusharakaCorporate/SMEKIBOR Based/Risk Rating/Bank'sLiquidity PositionNoAs per SBP PRsIslamic Banking Department8

Minimum TenorsMaximum TenorsTarget CustomersSecurity/Collateral Required1 Year5 YearsCorporateCash/MOTD/Letter ofHypothecation/PledgeBill Purchase (Usance)Underlying Islamic ModeType of ProductBasis for PricingMinimum Financing LimitMurabahaCorporate/SMEPrevailing Market RateNoMaximum Financing LimitMinimum TenorsMaximum TenorsAs per SBP PRs15Days180 DaysBill Purchase (Sight)Underlying Islamic ModeType of ProductBasis for PricingMinimum Financing LimitMaximum Financing LimitMinimum TenorsMaximum TenorsTarget CustomersTarget CustomersSecurity/Collateral RequiredSalamCorporate/SMEPrevailing Market RateNoAs per SBP PRs2 Days30 DaysCorporateCorporateCash/MOTD/Letter ofHypothecation/PledgeMeezan TijarahUnderlying Islamic ModeType of ProductBasis for PricingAgency & SaleFinancing forCorporate/SME/CommercialMarket driven and customer's creditprofileIslamic Banking Department9

Minimum Financing LimitMaximum Financing LimitMinimum TenorsMaximum TenorsTarget CustomersSecurity/Collateral RequiredN/AAs per customer profileN/Aupto 1 yearCorporate/SME/CommercialHypo charge over fixed assets/propertyetc.Islamic Banking Department10

Liability Side ProductsCurrent AccountUnderlying Islamic ModeAcceptable CurrencyType of ProductMinimum Balance Requirement (ifany)Minimum TenorMaximum TenorProfit CalculationPeriodicity of profit calculationTarget CustomersService charges Leviable (if NAbusinessmen, individualsNoSaving AccountUnderlying Islamic ModeAcceptable CurrencyType of ProductMinimum Balance Requirement (ifany)Minimum TenorMaximum TenorProfit CalculationPeriodicity of profit calculationTarget CustomersService charges Leviable (if nthlysalaried persons, housewives and otherindividual customersNoIslamic Banking Department11

Karobari Munafa AccountUnderlying Islamic ModeAcceptable CurrencyType of ProductMinimum Balance Requirement (ifany)Minimum TenorMaximum TenorProfit CalculationPeriodicity of profit calculationTarget CustomersService charges Leviable (if any)MudarabaPKRSavingRs. 1 millionCheckingCheckingMonthlyMonthlyHigh net worth individuals, businessconcernsNoFCY Current AccountUnderlying Islamic ModeAcceptable CurrencyType of ProductMinimum Balance Requirement (ifany)Minimum TenorMaximum TenorProfit CalculationPeriodicity of profit calculationTarget CustomersService charges Leviable (if any)QardUSD, GBP, EurocheckingUSD 100NANANANAAll customers willing to open FCYcurrent accountNoFCY Savings AccountUnderlying Islamic ModeAcceptable CurrencyType of ProductMinimum Balance Requirement (ifany)Minimum TenorMudarabaUSD, GBP, EuroCheckingUSD 100NAIslamic Banking Department12

Maximum TenorProfit CalculationPeriodicity of profit calculationTarget CustomersService charges Leviable (if any)NAmonthlymonthlyCustomers who prefer FCY checkingAccountNoDollars Mudaraba Certificate (FCY Term)Underlying Islamic ModeAcceptable CurrencyType of ProductMinimum Balance Requirement (ifany)Minimum TenorMaximum TenorProfit CalculationPeriodicity of profit calculationTarget CustomersService charges Leviable (if any)MudarabaUSD, GBP, EuroTerm DepositUSD 100003 months3 yearsMonthlyHalf yearly, maturitycustomers who prefer long terminvestment in USD with better returnsNoCertificate of Islamic InvestmentUnderlying Islamic ModeAcceptable CurrencyType of ProductMinimum Balance Requirement (ifany)Minimum TenorMaximum TenorProfit CalculationPeriodicity of profit calculationTarget CustomersService charges Leviable (if any)MudarabaPKRTerm DepositRs. 50,0003 Months5YearsMonthlyMonthly, Quarterly, MaturityCustomers who wish to invest fromshort term to long termNoIslamic Banking Department13

Meezan Amdan CertificateUnderlying Islamic ModeAcceptable CurrencyType of ProductMinimum Balance Requirement (ifany)Minimum TenorMaximum TenorProfit CalculationPeriodicity of profit calculationTarget CustomersService charges Leviable (if any)MudarabaPKRTerm DepositRs. 100,0005 years7 YearsMonthlyMonthlyCustomers who wish to invest for longterm.NoMeezan Providence CertificateUnderlying Islamic ModeAcceptable CurrencyType of ProductMinimum Balance Requirement (ifany)Minimum TenorMaximum TenorProfit CalculationPeriodicity of profit calculationTarget CustomersService charges Leviable (if any)MudarabaPKRTerm DepositRs. 1,000,0002 Years7Years6 monthly, maturity6 monthly, MaturityCorporate / Pension fundsNoMonthly Mudarabah CertificateUnderlying Islamic ModeAcceptable CurrencyType of ProductMinimum Balance Requirement (ifany)Minimum TenorMaximum TenorMudarabaPKRTerm DepositRs. 1,000,0001 Month1 MonthIslamic Banking Department14

Profit CalculationPeriodicity of profit calculationTarget CustomersService charges Leviable (if any)MonthlyMonthlyCustomers who have excess liquidity toinvest for 1 monthNoSpecial Musharaka CertificateUnderlying Islamic ModeAcceptable CurrencyType of ProductMinimum Balance Requirement (ifany)Minimum TenorMaximum TenorProfit CalculationPeriodicity of profit calculationTarget CustomersService charges Leviable (if any)MusharakaPKRTerm DepositRs. 50,000,000No preset Tenoras per maturityMaturityMaturityCorporate /Financial Institutions.NoMeezan Business PlusUnderlying Islamic ModeAcceptable CurrencyType of ProductMinimum Balance Requirement (ifany)Minimum TenorMaximum TenorProfit CalculationPeriodicity of profit calculationTarget CustomersService charges Leviable (if any)MudarabaPKRCurrent AccountRs. 100,000N/AN/AAverage BalanceMonthlyBusiness Individuals & CorporateAs per schedule of chargesIslamic Banking Department15

2. ALBARAKA ISLAMIC BANKAsset Side ProductsIjara Financing (Commercial Vehicles)Underlying Islamic ModeIjaraType of ProductBasis for PricingCorporate, SMEKIBOR based fixed and variable ratesMinimum Financing LimitAs per PRs and subject to bank's internalassessment for allocation of limitAs per PRs and subject to bank's internalassessment for allocation of limitMaximum Financing LimitMinimum TenorsMaximum TenorsTarget CustomersSecurity/Collateral Required3 Years5 YearsAll customers falling under corporate,SME sectorTitle of the leased asset on bank's name,Security deposit and or any othersecurity as per PRsIjara Financing (office equipment)Underlying Islamic ModeIjaraType of ProductBasis for PricingCorporate, SMEKIBOR based fixed and variable ratesMinimum Financing LimitAs per PRs and subject to bank's internalassessment for allocation of limitAs per PRs and subject to bank's internalassessment for allocation of limit3 YearsMaximum Financing LimitMinimum TenorsMaximum TenorsTarget CustomersSecurity/Collateral Required5 YearsAll customers falling under corporate,SME sectorTitle of the leased asset on bank's name,Security deposit and or any otherIslamic Banking Department16

security as per PRsIjara Financing (Ijarah for Vehicle-Domestic)Underlying Islamic ModeIjaraType of ProductBasis for PricingCorporate, SMEKIBOR based fixed and variable ratesMinimum Financing LimitAs per PRs and subject to bank's internalassessment for allocation of limitAs per PRs and subject to bank's internalassessment for allocation of limit3 YearsMaximum Financing LimitMinimum TenorsMaximum TenorsTarget CustomersSecurity/Collateral Required5 YearsAll customers falling under corporate,SME sectorTitle of the leased asset on bank's name,Security deposit and or any othersecurity as per PRsIjara Financing (Ijarah for Plant & Machinery)Underlying Islamic ModeIjaraType of ProductBasis for PricingCorporate, SMEKIBOR based fixed and variable ratesMinimum Financing LimitAs per PRs and subject to bank's internalassessment for allocation of limitAs per PRs and subject to bank's internalassessment for allocation of limit3 YearsMaximum Financing LimitMinimum TenorsMaximum TenorsTarget CustomersSecurity/Collateral Required5 YearsAll customers falling under corporate,SME sectorTitle of the leased asset on bank's name,Security deposit and or any othersecurity as per PRsIslamic Banking Department17

Ijarah Financing (Office Equipment-Consumer)Underlying Islamic ModeIjarahType of ProductBasis for PricingConsumerKIBOR based fixed and variable ratesMinimum Financing LimitAs per PRs and subject to bank's internalassessment for allocation of limitAs per PRs and subject to bank's internalassessment for allocation of limit3 YearsMaximum Financing LimitMinimum TenorsMaximum TenorsTarget CustomersSecurity/Collateral Required5 YearsCustomer falling under salaried, selfemployed and businessmen categoriesfor consumer financing.Title of the leased asset on bank's name,Security deposit and or any othersecurity as per PRsIjarah Financing (Ijarah for vehicle-domestic)Underlying Islamic ModeIjarahType of ProductBasis for PricingCorporate, SMEKIBOR based fixed and variable ratesMinimum Financing LimitAs per PRs and subject to bank's internalassessment for allocation of limitAs per PRs and subject to bank's internalassessment for allocation of limit3 YearsMaximum Financing LimitMinimum TenorsMaximum TenorsTarget CustomersSecurity/Collateral Required5 YearsAll customers falling under corporate,SME sectorTitle of the leased asset on bank's name,Security deposit and or any otherIslamic Banking Department18

security as per PRsMurabaha FinanceUnderlying Islamic ModeMurabahaType of ProductBasis for PricingCorporate, SME,KIBOR based fixed rates for eachtransaction.As per PRs and subject to bank's internalassessment for allocation of limitAs per PRs and subject to bank's internalassessment for allocation of limit90 daysMinimum Financing LimitMaximum Financing LimitMinimum TenorsMaximum TenorsTarget CustomersSecurity/Collateral Required1 YearAll customers falling under corporate,SME sectorCash, Collateral, Pledge, Mortgage orhypothecation of asset or as per PRs orbank's requirement.Export Murabaha & Murabaha Finance FE-25Underlying Islamic ModeMurabahaType of ProductBasis for PricingMinimum TenorsCorporate, SMECurrent interbank foreign currency ratefor export Murabaha: LIBOR basedcurrent rates for Murabaha FinanceAs per PRs and subject to bank's internalassessment for allocation of limitAs per PRs and subject to bank's internalassessment for allocation of limit90 daysMaximum Tenors180 YearMinimum Financing LimitMaximum Financing LimitIslamic Banking Department19

Target CustomersSecurity/Collateral RequiredAll customers falling under corporate,SME sectorCash, Collateral, Pledge, Mortgage orhypothecation of asset or as per PRs orbank's requirement.Import Murabaha & Murabaha Finance FE 25 ImportUnderlying Islamic ModeMurabahaType of ProductBasis for PricingCorporate, SMECurrent interbank foreign currency ratefor export Murabaha: LIBOR basedcurrent rates for Murabaha FinanceAs per PRs and subject to bank's internalassessment for allocation of limitAs per PRs and subject to bank's internalassessment for allocation of limit90 daysMinimum Financing LimitMaximum Financing LimitMinimum TenorsMaximum TenorsTarget CustomersSecurity/Collateral Required180 YearAll customers falling under corporate,SME sectorCash, Collateral, Pledge, Mortgage orhypothecation of asset or as per PRs orbank's requirement.Islamic Export Refinance SchemeUnderlying Islamic ModeType of ProductBasis for PricingMinimum Financing LimitMaximum Financing LimitMinimum TenorsMurabaha, Istisna, Musawama,MusharakaCorporate, SMEAs per SBP refinance rateAs per PRs and subject to bank's internalassessment for allocation of limitAs per PRs and subject to bank's internalassessment for allocation of limitAs per PRs.Islamic Banking Department20

Maximum TenorsTarget CustomersSecurity/Collateral Required180 YearAll customers falling under corporate,SME sectorCash, Collateral, Pledge, Mortgage orhypothecation of asset or as per PRs orbank's requirement.Housing Musharaka-ConsumerUnderlying Islamic ModeDiminishing MusharakaType of ProductBasis for PricingConsumerKIBORMinimum Financing LimitRs.300,000Maximum Financing LimitRs.20 millionMinimum Tenors3 YearsMaximum TenorsTarget Customers20 YearsCustomers falling under salaried, selfemployed and businessmen categoriesproperties are mortgaged in bank's favor,personal Guarantee or any othercollateral.Security/Collateral RequiredCommercial Construction and PurchaseUnderlying Islamic ModeDiminishing MusharakaType of ProductBasis for PricingCorporate, SMEKIBORMinimum Financing LimitMinimum TenorsAs per PRs and subject to bank's internalassessment for allocation of limitAs per PRs and subject to bank's internalassessment for allocation of limitNoMaximum Tenors5 YearsMaximum Financing LimitIslamic Banking Department21

Target CustomersSecurity/Collateral RequiredAll customer falling under Corporate/SME sector.Properties are mortgaged in bank'sfavor, personal Guarantee or any othercollateral.Personal Murabaha-ConsumerUnderlying Islamic ModeMurabahaType of ProductBasis for PricingConsumerMarket based fixed rateMinimum Financing LimitRs.25,000Maximum Financing LimitRs.500,00Minimum Tenors6 MonthsMaximum TenorsTarget Customers2 YearsCustomers falling under salaried, selfemployed and businessmen categoriesfor consumer financing.Murabaha shall be secured by way ofhypothecation of items to the bankSecurity/Collateral RequiredExport MusharakaUnderlying Islamic ModeMusharakaType of ProductBasis for PricingCorporateKIBOR plus spread (pre-agreed ratio)Minimum Financing LimitAs per PRs and bank's internalassessmentAs per PRs and bank's internalassessmentAs per PRs and bank's internalassessmentMaximum Financing LimitMinimum TenorsIslamic Banking Department22

Maximum TenorsTarget Customers180 daysCorporate, SMESecurity/Collateral RequiredPledge, Mortgage or Hypothecation ofassetsIslamic Banking Department23

Liability Side ProductPLS Saving Account-LocalUnderlying Islamic ModeAcceptable CurrencyType of ProductMinimum Balance Requirement (ifany)Minimum TenorMaximum TenorProfit CalculationPeriodicity of profit calculationTarget CustomersService charges Leviable (if any)MudarabaPKRTermNA7 days5 yearsDaily Product BasisHalf YearlyIndividuals,Organizations,companies, businessesNoFirms,PLS Saving Account-ForeignUnderlying Islamic ModeAcceptable CurrencyType of ProductMinimum Balance Requirement (ifany)Minimum TenorMaximum TenorProfit CalculationPeriodicity of profit calculationTarget CustomersService charges Leviable (if any)MudarabaEuro, USD, GBP, Yen.TermNA7 days2 years.Daily Product BasisHalf YearlyIndividuals,Organizations,companies, businessesNoIslamic Banking DepartmentFirms,24

PLS Saving Account-Local & ForeignUnderlying Islamic ModeAcceptable CurrencyType of ProductMinimum Balance Requirement (ifany)Minimum TenorMaximum TenorProfit CalculationPeriodicity of profit calculationTarget CustomersService charges Leviable (if any)MudarabaPKR, Euro, USD, GBPSavingNANANAOn minimum monthly balancemaintained.Half YearlyIndividuals, Organizations, Firms,companies, businessesNoCurrent AccountUnderlying Islamic ModeAcceptable CurrencyType of ProductMinimum Balance Requirement (ifany)Minimum TenorMaximum TenorProfit CalculationPeriodicity of profit calculationTarget CustomersService charges Leviable (if any)QardPKR, Euro, USD, GBPCurrentNANANANANAIndividuals, Organizations, Firms,companies, businessesNATerm DepositUnderlying Islamic ModeAcceptable CurrencyType of ProductMudarabaPKRTermIslamic Banking Department25

Minimum Balance Requirement (ifany)Minimum TenorMaximum TenorProfit CalculationPeriodicity of profit calculationTarget CustomersService charges Leviable (if any)NA2 Years3 YearsDaily Product BasisAt maturity/Half YearlyIndividuals, Organizations, Firms,companies, businessesNAAlBaraka Incentive AccountUnderlying Islamic ModeAcceptable CurrencyType of ProductMinimum Balance Requirement (ifany)Minimum TenorMaximum TenorProfit CalculationPeriodicity of profit calculationTarget CustomersService charges Leviable (if any)MudarabaPKRSavingRs.100,000NANADaily Product BasisHalf YearlyIndividuals, Organizations, Firms,companies, businessesNAAMI Joint Pool AccountUnderlying Islamic ModeAcceptable CurrencyType of ProductMinimum Balance Requirement (ifany)Minimum TenorMaximum TenorProfit CalculationPeriodicity of profit calculationTarget CustomersService charges Leviable (if any)MudarabaPKRTermRs.50,0003 months5 YearsDaily Product BasisHalf Yearly basisIndividuals, Organizations, Firms,companies, businessesNAIslamic Banking Department26

3. BANK ISLAMI PAKISTAN LIMITEDAsset Side ProductMurabahaUnderlying Islamic ModeMurabahaType of ProductBasis for PricingCorporate, SMEKIBORMinimum Financing LimitAs approved by bank's credit committedMaximum Financing LimitRs.900 million (linked with bank'sequity)15 days180 daysCorporate, SMEMinimum TenorsMaximum TenorsTarget CustomersSecurity/Collateral RequiredCash margin, Equitable/registeredmortgaged, pledge of stocks/shares,Hypothecation charge on current assetsIjara (corporate)Underlying Islamic ModeIjaraType of ProductBasis for PricingCorporate, SMEKIBORMinimum Financing LimitAs approved by bank's credit committedMaximum Financing LimitRs.900 million (linked with bank'sequity)3 Years5 YearsCorporate, SMEMinimum TenorsMaximum TenorsTarget CustomersSecurity/Collateral Requiredownership of the leased asset, securitymargin, PGsIslamic Banking Department27

Diminishing MusharakaUnderlying Islamic ModeType of ProductBasis for PricingCombination of Shirkat-ul-milk andIjaraCorporate, SMEKIBORMinimum Financing LimitAs approved by bank's credit committedMaximum Financing LimitRs.900 million

Products offered by Islamic Banking Branches of Conventional Banks 61-129 4 Important terms on Islamic Banking 130 Disclaimer: The document is prepared for general information only. The information provided in this document is subject to change by the Islamic Banking Institutions (IBIs) and may not exactly match the IBI's

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