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Subject: Islamic Banking and Finance
Prepared by:
SHEIKH ALI ASGHAR:
PROJECT TOPIC: BANK ISLAMI
CONTENTS
1. INTRODUCTION
2. HISTORY
3. OPREATIONS IN PAKISTAN
4. ISLAMIC BANKING SERVICES
5. ISLAMIC FINANCING PRODUCTS
6. FINANCING TECHNIQUES
7. INVESTMENT PRODUCTS
8. CONCLUSION
INTRODUCTION
The idea of bank islami was given by Jahangir siddiqui
and company limited and randeree family in late 2003.
Mr. Hassan A. bilgrami was oppionted as a adviser to the
sponsors on march 16, 2004 to formalize the idea.
He given the concept of bank islami to the sponsors on
march 24, 2004. Bank islami was incorporated on oct,18
2004. Bank islami was the first bank who received the
first Islamic banking license.
The main focus of bank is to work according to the sharia
and wealth management and investing in different
products.
on 2005 Dubai bank also joined bank islami and become
the major shareholderand provide more than 18% capital
of that bank..
HISTORY
The islami bank is first located in Karachi. And the bank
islami is the first bank to receive the Islamic banking
license from the state bank of Pakistan in 2003.
The Islami bank started its operations on April 7, 2006.
This bank has many brancheson nationwide213 branches
in 80 cites. On May 7, 2015 KASAB bank also joined
bank islami and become a part of bank islami. Now a days
bank islami is the 11th
largest network which is consist
317 branches etc. the product of bank islami is retail
banking, consumer banking, investment banking ,and
trade financing etc. And total revenue of bank islami in
2014 is PKR 7812 million. And net income is 314
million. This bank has total number of employees is 2300.
On 26 September, 2005 joined the sponsor and become
the one of the major founding shareholder by investing
18.75% in the total capital.
Operations of bank islami
Bank islami activities that consistent with the principle of
sharia and its practical applications through the
development of Islamic economics and sharia compliant
finance .providing things according to the Islamic rules
Some of the operationsare e.g
1. Pork or alcoholis also haram in islam
2. Private or semiprivate commercial institutewith in the
Muslims community
3. Mutual funds around the world complying with Islamic
principle
4. Profit distribution mechanism
5. Concept of weightages
Islamic banking services
The bank islami also offers many types of Islamic
banking services. They were Offer these services to
promote Islamic banking services. Some of these services
are following.
1.MorabahaCommodity:
Morabahais free of loan or interest e.g profit on
sales.
2.Musharaka:
Musharaka is partnership contractthat is allow to
each party to enter in business and share the profits
and risk.
3.Leasing(ijara)
Ijara contractis that to provide things on lease for
specific time period. Provide services on rental basis.
4.Trade financebusiness:
Trade finance signifies financing for trading, and it
concern both domestic and internationaltrade
transactions. A trade transaction requires a seller of
goods and services as well as a buyer.
These are the some Islamic banking services that are
provided by the bank islami in Pakistan
Islamic financing products
CORPORATEPRODUCTS
This area includes mudaraba, musharaka, project finance
(istisn’a), working capital finance, trade services and
account services like saving accountsor current accounts.
Some of them are also their financing techniques.
CONSUMERPRODUCTS
Well there are three productsoffered in this area. First of
all listed above them all is MUSKUN home finance. The
bank provides loan to their clients that can be used for
home construction, renovation, purchaseor for the home
replacement. The duration of deferred payments can be
extended to over 25 years.
Now the second one is islami auto finance. As the name
suggests that they provide loan for the purchase of
automobile. Loan can be provided for new, used or
reconditioned cars with loan duration of 1 to 7 years.
Third one is auto finance for imported vehicles. The
requirements for the loan and duration are same as
mentioned above but with TAKAFUL rate 2.9% but keep
in mind that it varies with vehicle type.
SMEfinancing& foreignexchange
Bank islami provide funds for SME (small medium
enterprise) for peoplewho want to set up their own
businesses. They also provide currency exchange services
and also exchange between commodities.
Financing techniques
Techniques that are used by bank islami are:
1.Working capital finance
2.Project finance
3.Musharakah finance
4.Mudarabahfinance
1. Workingcapitalfinance
In the techniquethe bank provides short term funds to
their clients for fulfilling their day to day funding needs
required by the businesses. They provide loans which are
suitable for their client with minimum low risk profile.
Techniques used in working capital includemurabaha
financing, karobar financing, istisna and finally salam.
2. Projectfinance
Funds are provided for medium to long term basis for the
client’s project. Now project finance consists of Ijarah
and diminishing musharakah.
Ijarah is where bank islami lease out its asset to client and
receive rental payment for the use of asset but the
ownership remains to the bank and at the end the client
can purchaseasset at agreed price.
Diminishing musharakah is usually on propertyand have
two types that are “shirkat-al-milk” and “shirkat-al-aqd”
3. Musharakahfinance
Musharakah is a type of partnership where all partner
invest in an enterprise and gets profit with mutually pre
agreed ratio. Keep this thing in mind that loss is shared
according to capital invested in the project/enterprise.
4. Mudarabahfinance
Mudarabahis also a type of partnership in which one
partnerinvests in the capital (rab-al-maal) and the other
one provide its skills (mudarib) for the project. Losses are
beard by the capital provider whereas profits are
distributed with pre-agreed ratios.
Investment products
Bank islami investment productshave been categorized in
five steps and each one has further divisions which are
following:
1.Advisory
2.Structuring
3.Underwriting
4.Trusteeship
5.Specialized roles
1. Advisory
 Fund raising
 Corporatestructuring
 Mergers and acquisitions
 Infrastructure development
 Project financing
Bank islami also acts as an advisory firm with providing
the above mentioned services.
2. Structuring
 Securitizations
 Distressed assets sales
 Structuredfinance
 Initial public offerings (IPO)
They Provide securities to clients against their deposits
and issuance of shares/bondsthrough ipo’s.
3. Underwriting
 SUKUK
 Equity
 Musharakah certificates
Signing and accepting of liability by depositorsthus
guarantying payment in case of loss.
4. Trusteeship
 Trusteeship for SUKUK
 Fiduciary roles in mutual funds
5. Specializedroles
 Private equity
 Special projects
 Ijarah and musharakah syndications
Conclusion
When we were making this project we searched much of
the information on websites regarding bank islami. But
gradually it became easy for us to know about this bank
because when we looked at their site, it was well
oraganized and updatedand most important thing was that
their investment tehniques, productsand services or
whatever we were looking for was clearly mentioned with
having sub-categorizes with sufficient details.
Now when it comes to our perception about thebank, we
believe that this bank follows most of the Islamic
financing techniqueswith shari’a complient manner.
Offerings are quite attractive and projects in which they
have invested also look like they will bring a handsome
return to bank islami. That’s all we have concludedabout
this bank.

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Bank islami final project

  • 1. Subject: Islamic Banking and Finance Prepared by: SHEIKH ALI ASGHAR: PROJECT TOPIC: BANK ISLAMI
  • 2. CONTENTS 1. INTRODUCTION 2. HISTORY 3. OPREATIONS IN PAKISTAN 4. ISLAMIC BANKING SERVICES 5. ISLAMIC FINANCING PRODUCTS 6. FINANCING TECHNIQUES 7. INVESTMENT PRODUCTS 8. CONCLUSION
  • 3. INTRODUCTION The idea of bank islami was given by Jahangir siddiqui and company limited and randeree family in late 2003. Mr. Hassan A. bilgrami was oppionted as a adviser to the sponsors on march 16, 2004 to formalize the idea. He given the concept of bank islami to the sponsors on march 24, 2004. Bank islami was incorporated on oct,18 2004. Bank islami was the first bank who received the first Islamic banking license. The main focus of bank is to work according to the sharia and wealth management and investing in different products. on 2005 Dubai bank also joined bank islami and become the major shareholderand provide more than 18% capital of that bank..
  • 4. HISTORY The islami bank is first located in Karachi. And the bank islami is the first bank to receive the Islamic banking license from the state bank of Pakistan in 2003. The Islami bank started its operations on April 7, 2006. This bank has many brancheson nationwide213 branches in 80 cites. On May 7, 2015 KASAB bank also joined bank islami and become a part of bank islami. Now a days bank islami is the 11th largest network which is consist 317 branches etc. the product of bank islami is retail banking, consumer banking, investment banking ,and trade financing etc. And total revenue of bank islami in 2014 is PKR 7812 million. And net income is 314 million. This bank has total number of employees is 2300. On 26 September, 2005 joined the sponsor and become the one of the major founding shareholder by investing 18.75% in the total capital.
  • 5. Operations of bank islami Bank islami activities that consistent with the principle of sharia and its practical applications through the development of Islamic economics and sharia compliant finance .providing things according to the Islamic rules Some of the operationsare e.g 1. Pork or alcoholis also haram in islam 2. Private or semiprivate commercial institutewith in the Muslims community 3. Mutual funds around the world complying with Islamic principle 4. Profit distribution mechanism 5. Concept of weightages
  • 6. Islamic banking services The bank islami also offers many types of Islamic banking services. They were Offer these services to promote Islamic banking services. Some of these services are following. 1.MorabahaCommodity: Morabahais free of loan or interest e.g profit on sales. 2.Musharaka: Musharaka is partnership contractthat is allow to each party to enter in business and share the profits and risk. 3.Leasing(ijara) Ijara contractis that to provide things on lease for specific time period. Provide services on rental basis. 4.Trade financebusiness: Trade finance signifies financing for trading, and it concern both domestic and internationaltrade
  • 7. transactions. A trade transaction requires a seller of goods and services as well as a buyer. These are the some Islamic banking services that are provided by the bank islami in Pakistan
  • 8. Islamic financing products CORPORATEPRODUCTS This area includes mudaraba, musharaka, project finance (istisn’a), working capital finance, trade services and account services like saving accountsor current accounts. Some of them are also their financing techniques. CONSUMERPRODUCTS Well there are three productsoffered in this area. First of all listed above them all is MUSKUN home finance. The bank provides loan to their clients that can be used for home construction, renovation, purchaseor for the home replacement. The duration of deferred payments can be extended to over 25 years. Now the second one is islami auto finance. As the name suggests that they provide loan for the purchase of automobile. Loan can be provided for new, used or reconditioned cars with loan duration of 1 to 7 years. Third one is auto finance for imported vehicles. The requirements for the loan and duration are same as
  • 9. mentioned above but with TAKAFUL rate 2.9% but keep in mind that it varies with vehicle type. SMEfinancing& foreignexchange Bank islami provide funds for SME (small medium enterprise) for peoplewho want to set up their own businesses. They also provide currency exchange services and also exchange between commodities.
  • 10. Financing techniques Techniques that are used by bank islami are: 1.Working capital finance 2.Project finance 3.Musharakah finance 4.Mudarabahfinance 1. Workingcapitalfinance In the techniquethe bank provides short term funds to their clients for fulfilling their day to day funding needs required by the businesses. They provide loans which are suitable for their client with minimum low risk profile. Techniques used in working capital includemurabaha financing, karobar financing, istisna and finally salam. 2. Projectfinance Funds are provided for medium to long term basis for the client’s project. Now project finance consists of Ijarah and diminishing musharakah. Ijarah is where bank islami lease out its asset to client and receive rental payment for the use of asset but the ownership remains to the bank and at the end the client can purchaseasset at agreed price.
  • 11. Diminishing musharakah is usually on propertyand have two types that are “shirkat-al-milk” and “shirkat-al-aqd” 3. Musharakahfinance Musharakah is a type of partnership where all partner invest in an enterprise and gets profit with mutually pre agreed ratio. Keep this thing in mind that loss is shared according to capital invested in the project/enterprise. 4. Mudarabahfinance Mudarabahis also a type of partnership in which one partnerinvests in the capital (rab-al-maal) and the other one provide its skills (mudarib) for the project. Losses are beard by the capital provider whereas profits are distributed with pre-agreed ratios.
  • 12. Investment products Bank islami investment productshave been categorized in five steps and each one has further divisions which are following: 1.Advisory 2.Structuring 3.Underwriting 4.Trusteeship 5.Specialized roles 1. Advisory  Fund raising  Corporatestructuring  Mergers and acquisitions  Infrastructure development  Project financing Bank islami also acts as an advisory firm with providing the above mentioned services. 2. Structuring  Securitizations  Distressed assets sales
  • 13.  Structuredfinance  Initial public offerings (IPO) They Provide securities to clients against their deposits and issuance of shares/bondsthrough ipo’s. 3. Underwriting  SUKUK  Equity  Musharakah certificates Signing and accepting of liability by depositorsthus guarantying payment in case of loss. 4. Trusteeship  Trusteeship for SUKUK  Fiduciary roles in mutual funds 5. Specializedroles  Private equity  Special projects  Ijarah and musharakah syndications
  • 14. Conclusion When we were making this project we searched much of the information on websites regarding bank islami. But gradually it became easy for us to know about this bank because when we looked at their site, it was well oraganized and updatedand most important thing was that their investment tehniques, productsand services or whatever we were looking for was clearly mentioned with having sub-categorizes with sufficient details. Now when it comes to our perception about thebank, we believe that this bank follows most of the Islamic financing techniqueswith shari’a complient manner. Offerings are quite attractive and projects in which they have invested also look like they will bring a handsome return to bank islami. That’s all we have concludedabout this bank.