 Treasury Management includes a firm's collections, disbursements, concentration, investment and funding activities. In larger firms, it may also include trading in bonds, currencies, financial derivatives and the associated financial risk management.

1. Essentials of Islamic Finance
Final Report on
Meezan Bank Treasury Products
Submitted To:
Mr. Talha Kapadia
Submitted By:
Mudassar Iqbal

2. Table of Contents
Table of Contents........................................................................................................................................2
Overview......................................................................................................................................................3
Objectives of Treasury.................................................................................................................................3
Meezan Bank Treasury Products.................................................................................................................4
Sukuk Transactions......................................................................................................................................5
Bai Muajjal of Sukuk....................................................................................................................................6
Commodity Murabaha.................................................................................................................................6
Interbank Transactions................................................................................................................................6
One-stop Treasury Shop..............................................................................................................................7

3. Overview
 Treasury management (or treasury operations) refers to the management of an
enterprise's holdings, with the ultimate goal of maximizing the firm's liquidity
and mitigating its operational, financial and reputational risk.
 Treasury Management includes a firm's collections, disbursements,
concentration, investment and funding activities. In larger firms, it may also
include trading in bonds, currencies, financial derivatives and the
associated financial risk management.
 Islamic Treasury involves activities that are carried out in ways that do not
conflict with the principles and consciences of Islam.
 It represents an assertion on religious law that prohibits the following
transactions:
 Usury (Riba)
 Gambling (Maisir)
 Ambiguity (Gharar)
Objectives of Treasury
 Ensure liquidity is available to meet all current and future obligations,
 Maximize return on investment portfolio managed,
 Ensure bank is funded in the most appropriate and cost efficient manner,
 Identify and mitigate financial risk that could erode bank’s financial standing.

4. Meezan Bank Treasury Products
 Meezan Bank’s treasury is guided by Shariah with the objective of reviewing,
streamlining, and controlling the bank’s domestic and international Treasury-
related operations.
 Treasury caters to the branches and customers for their entire foreign
exchange requirement with efficiency and professionalism. Ready/ spot as well
as all forward cover services are provided to branches/customers within
Shariah guidelines.
 Customers are also provided advice on a regular basis about the currency
movement by the dealing room augmented by market outlook (without any
commitment & obligation)
 Meezan Bank conducts Sukuk / Commodity Murabaha transaction to optimize its
returns on its PKR / Dollar portfolio, besides participating in local/
international Sukuk issues, e.g. GOP, WAPDA, Qatar, Dubai Sukuks, etc.

5. Sukuk Transactions
 A substantial portion of the Bank's liquidity has been deployed in the two
Government of Pakistan (GOP) Ijarah Sukuk auctions, with Meezan Bank
investing an additional amount of Rs. 29 billion during the year 2011.
 Recognizing its role as the largest Islamic bank in the country and being a
primary dealer of SBP, Meezan Bank actively traded the GOP Ijarah Sukuk
during the Year-2011 worth Rs. 11 billion. Apart from that the bank has
invested in Sukuks for other institutions as well.
Institution Name Paid up value per
Certificate
Rate of Return
Government of Pakistan Rs. 100,000 6 months weighted average
yield of T-bills
WAPDA Rs. 5,000 6 months KIBOR (+ 0.35%)
Pakistan International
Airlines
Rs. 5,000 6 months KIBOR (+1.75%)
Sui Southern Gas Company Rs. 833 3 months KIBOR (+0.80%)
Engro Fertilizers Limited Rs. 5,000 6 months KIBOR (+1.50%)
Central Bank of Bahrain US $ 1 6.25% p.a.

6. Bai Muajjal of Sukuk
 In order to enhance the product base of Treasury department, Meezan Bank
developed a new liquidity management product named as 'Bai Muajjal of
Sukuk'.
 In Bai Muajjal, the Bank sells Shariah compliant sukuk on a deferred payment
basis to other financial institutions / customers. The credit price is agreed at
the time of sale and proceeds are received at the end of credit period.
 The average return on these products was 11.30% p.a. in Year 2011
Commodity Murabaha
 Commodity Murabaha is a universally accepted trade transaction structured as
a money market instruments under the contract of Murabaha
 The trade involve a spot purchase of approved commodities for immediate
delivery and a forward sale on deferred payment term.
 The average return on this product was 1.2% p.a. in Year 2011
Interbank Transactions
 On the interbank FX side, the Bank has become a formidable market player,
having a daily volume of USD 40 million in outright FX transactions in both spot
and forward trades.
 Meezan Bank has internationally renowned banks such as JP Morgan Chase,
Deutsche Bank, Commerzbank, HSBC, Standard Chartered, ING, Bank of
America, Citibank, Unicredit, Banco Santander, BNP Paribas, Bank of China,
Sumitomo Mitsui, etc. on its correspondents list.

7. One-stop Treasury Shop
 Realizing the need to have a one-stop treasury shop for all its customers, a
state-of-the art dealing room has now been established at the Bank's new Head
Office, equipped with Reuters, Bloomberg and other electronic trading
platforms from various vendors.
 The department comprises of FRMs, CFAs and ACI-certified individuals. During
the year, FI workshops were held in Islamabad, Lahore, Karachi and Multan to
update branches on Trade Finance-related developments.