Islamic Finance

Comparison between Islamic Banking and conventional Banking

Prepared By:

M. Ali khan (Mbe-sp08-016)

Waqar Saleem Pasha (Mbe-sp08-54)

Ahmed Ishtiaque (Mbe-sp08-02)

Jahanzaib Dilawer(Mbe-spo08-013)

BankIslami By:

M. Ali khan

And

Waqar Saleem Pasha

BankIslami

History

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.

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

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 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.

Now 102 branches in 49 cities.

Services Offered By BankIslami

Services Offered by BankIslami

Corporate banking Working Capital Finance: Murabahah Financing: Istisna Financing: Salam Financing: Project Finance: Ijarah: Diminishing Musharakah: Musharakah Finance: Mudarba Finance:

Investment Banking Advisory Fund Raising Corporate Restructuring Mergers & Acquisitions Infrastructure Development Project Financing

Trusteeship

Trusteeship for SUKUKs etc

Fiduciary Roles in Mutual Funds

Home Purchase: Financing Tenure 2 to 20 years Financing Range Rs. 200K – 10M Bank Investment Ratio Maximum up to 80% for salaried / selected SEPs *

Maximum up to 70% for Businesspersons/NRPs(* Doctors, Engineers, Architectures, Chartered Accountants)

Prepayment Option available 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.

Home Construction:

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 Maximum 2 Years Financing Tenure Minimum 2 Years (excluding construction period)

Maximum 20 Years (including construction period) Financing Range Rs. 200K – 10M 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.

Prepayment Option available 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.

Home Renovation: Construction Tenure Maximum 6 months Financing Tenure 2-7 Years Financing Range Rs. 150K – 10M Bank Investment Ratio Maximum 50% for Salaried / Selected SEPs*

Maximum 50% for Businessmen/NRPs(* Doctors, Engineers, Architectures, Chartered Accountants)

Prepayment Option available 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.

Auto Ijara New Vehicle: 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 security deposit paid by you at the beginning* or to purchase it at a price as low as the security deposit.

Auto ijarah new vehicle Ijarah facility for New Vehicles Tenure of Ijarah Min- 3 Years, Max-5 years Minimum Cost of Vehicle Rs. 250,000 Security Deposit Min -30%, Max-50% Processing Charges Rs. 4,500/- (Rs. 1,000 Pre Processing is part of the Rs. 4,500/- Amount) Tracker Installation All Vehicles costing above Rs. 600,000 are required to be installed with tracker Takaful Takaful coverage on all vehicles is compulsory and is provided by Takaful Pakistan

Retail Banking

Retail Banking:

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.

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, 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)

Islamic Foreign Currency

Islamic Foreign Currency: 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

Islami Bachat Account

Islami Bachat Account: 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.

Salient Features: 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

Islami Mahnama Munafa Account: 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.  

Waqar Saleem Pasha

Mbe-spo8-054

Corporate Finance

Corporate Banking: 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

Working Capital Finance

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 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.

Salam Financing

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.

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.

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.

Value add services: Online Banking: Inter Bank Fund Transfer: Internet Banking: ATM Debit Card: 24/7 Phone Banking: eStatement:

By: Ahmed Ishtiaque

and

Jahanzaib Dilawer

About Standard Chartered

listed on both the London Stock Exchange and the Hong Kong Stock Exchange

a history of over 150 years in banking global network of over 1,400 branches derives over 90 per cent of profits from

Asia, Africa and the Middle East

Standard Chartered in Pakistan

largest international Bank in Pakistan operating in Pakistan for over 140 years established its operations in 1863 in

Karachi After the acquisition of Union Bank in

September 2006 SCB incorporated in Pakistan on 30

December 2006

Standard Chartered in Pakistan

a network of 162 online branches in 41 cities

Standard Charterd Products & Services Accounts services Credit Cards Loans Insurance

Accounts

Saving Account Current Account Term Deposit Employee Banking

Saving Accounts

Super save Account High Yield Account Easy Saver Account Bonus Saver Account Flex Account Mahana izafa

Super save

Minimum average balance requirement as low as PKR 25,000

Profit calculated on minimum monthly balance and paid half yearly

High yeild

Minimum average balance requirement as low as PKR 500,000

Higher returns on higher balances

Easy Saver

No minimum monthly average balance requirement

Profit of 7.25% p.a. on all balances. Profit paid monthly

Bonus Saver

Earn a maximum rate of 9%

Flex Account

No minimum balance requirement Monthly account maintenance fee of up

to PKR 150/-

Mahana Izafa

Profit calculated on minimum monthly balance and credited to your Mahana Izaafa Account every month

Jahanzaib Dilawer(Mbe-Sp08-013)

Current Accounts

Basic Banking Rupee Current Xtra Mile Foreign Currency Business Account Sahulat Online

Basic Banking

Non-profit bearing No Minimum Balance Required Maximum 2 free deposits & 2 free

withdrawals allowed per month

Rupee Current

Local Currency Transaction account PKR 5000 balance required

Xtra Mile

Minimum Monthly Average Balance Requirement PKR 15,000

Debit Card with no issuance fee

Foreign Currency

Minimum Balance Required: US$/GBP/EUR 2,000

No transaction charges

Business Account

Rs. 100,000 balance required Unlimited withdrawals and deposits

Sahulat Online

Minimum Balance Required: Rs 50,000 PKR 50 will be charged if Monthly

Average Balance not Maintained

Term deposit

Attractive returns Flexible deposit periods Choice of monthly, quarterly, semi-

annual or annual profit payments Automatic renewal of deposit Minimum requirement for placement of

Term Deposits is PKR 50,000

Credit Cards

Visa Platinum Credit Card Master card titanium Credit Card PIA Co-brand Credit Card Master card cash back Credit Card Visa Card Saadiq Visa Credit Card Master card easy Credit Card American Express Credit Card

Loans

Home Purchase Home Loan

Home Purchase

Repayment tenor of 1 to 20 years in monthly installments

Loan to value up to 60% of the property value

Financing of up to PKR 30 Million Minimum Net Income as low as PKR

30,000 per month

Home Loan

Loan amount of up to PKR 10,000,000 to fulfill your requirements

Repayment tenor ranging from 1 to 10 years

Loan to value maximum of up to 60 % of the property value

Minimum Net Income as low as PKR 20,000 per month

Insurance Secure Life Plan Mustaqbil Taleem Rishtay Tahaffuz Invest n assure Family care Iqra education Plan Cash cover Plan

Corporate Financing:

Corporate Advisory & Finance  Standard Chartered’s Corporate Advisory & Finance

group has over 190 experienced professionals based around the world. We have the expertise, experience and local knowledge to deliver high quality advice and execution on strategic cross-border advisory and leveraged financing transactions.

Mergers & Acquisitions Whether your company is seeking to

access new markets, products, technologies, investors or business partners or restructure through asset divestment, our M&A teams are well positioned to assist you.

Leveraged Finance Our Leveraged Finance teams arrange

and structure financing for various strategic transactions, often working closely with our M&A teams to provide financing for M&A transactions.

Equity Corporate Finance Our Equity Corporate Finance team is a

leader in Asia in IPOs, placings, and other equity capital raisings.

Structured Finance  A leading provider of cost-efficient,

lease-based and asset-based financing solutions to businesses in Asia, Africa and the Middle East, we can create and tailor the right structured solutions for your business needs.

Project & Export Finance   We can add value to your business by providing: Limited recourse financings - for energy or infrastructure projects

and acquisitions Export finance - for export of capital goods with support of export

credit agencies (ECAs) Project-related refinancings or restructurings Financial advisory, valuation and modelling - related to new project

developments, acquisitions and competitive tenders / privatisations

Comparison Between Products and Services of Both Banks

Basic Banking and Retail Banking

Bank Islami Basic Account Holding Islami Bachat Account

Islami Mahnama Munafa Account.

A minimum balance of Rs. 5,000/- only to open the account

Joint Account facility up to four joint account holders

Standard Chartered

No Minimum Balance Required

Maximum 2 free deposits & 2 free withdrawals allowed per month .

Consumer Banking

BankIslami

Home Purchase: Home Construction: Home Renovation: Home Replacements: Auto Ijara New Vehicle: Auto Ijara Used imported: Islami Foreign Currency Account: Islami Bachat Account Islami Dollar Bachat Account: Islami Mahnama Munafa Account: Islami Amdani C

Standard Chartered Accounts services Credit Cards Loans Insurance

BankIslami Home Purchase: Financing Tenure 2 to 20

Years. Financing in terms of rent

sharing. Maximum up to 80% for

salaried / selected SEPs *Maximum up to 70% for Businesspersons/NRPs(* Doctors, Engineers, Architectures, Chartered Accountants)

Standard Chartered

Repayment tenor of 1 to 20.

Loan Provided on terms of interest.

Financing of up to PKR 30 Million

Minimum Net Income as low as PKR 30,000 per month

BankIslami Debit cards. Foreign Currency

Account: 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

Standard Chartered Credit Cards for multiple

users. Minimum Balance

Required: US$/GBP/EUR 2,000.

BankIslami

Islami Bachat A/c. Monthly profit/loss payment

on daily product basis at the end of the month.

Profit can be accessed according to customer requirements mainly in cash.

Free 1 Card, BankIslami's ATM & Debit card.

Joint Account Facility.

Standard Chartered Mahan Amdani

Certificate: 10% to 10.25% return.

Profit is distributed through ATM / VISA Debit card.

Corporate Financing

Account Services Trade Services Working Capital Finance Murabahah Financing: Istisna Financing: Salam Financing Project Finance Ijarah Diminishing Musharakah:

Corporate Advisory & Finance 

Mergers & Acquisitions

Leveraged Finance

Equity Corporate Finance

Structured Trade Finance and Financing  Structure.

Project & Export Finance 

Thank you!