INTERNSHIP REPORT ON MEEZAN BANK ABBOTTABAD(1501) BY Mubasher NazirBBA HONS (Finance) ROLL NO: 8768 SESSION 2005-2010

HAZARA UNIVERSITY MANSEHRAHAZARA UNIVERSITY MANSEHRA

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Internship Report on Meezan Bank AbbottabadThis Internship Report Is Submitted In Partial Fulfillment Of The Requirements For The Degree Of Bachelor Of Business Administration Awarded By The Hazara University Mansehra

HAZARA UNIVERSITY MANSEHRAHAZARA UNIVERSITY MANSEHRA.

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HAZARA UNIVERSITY MANSEHRAApproval Sheet Approval Committee

1. External Examiner Mr._____________________________________________ Signature_______________ 2. Supervisor Mr.____________________________________________ Signature_______________ 3. Head of Department Mr.___________________________________________ Signature________________HAZARA UNIVERSITY MANSEHRA.

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Dedicated ToMy dearest Parents and My Respected Teachers who motivate and encourage me in every aspect of my life and a few Special Friends who have been supporting and cooperating with me to accomplish this task.

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ABSTRACTModern banking system was introduced into the Muslim countries at a time when they were politically and economically at low ebb, in the late 19th century. With the passage of time, however, and othersocio-economic forces demanding more involvement in national economic and financial activities,

avoiding the interaction with the banks became impossible. As countries becameindependent, the need to engage in banking activities became unavoidable and urgent. Governments, businesses and individuals began to transact business with the banks, with or without liking it. This state of affairs drew the attention and concern of Muslim intellectuals. The story of interest-free or Islamic banking begins here. The history of interest-free banking can be divided into two parts. First, when it still remained an idea; second, when it became a reality. The literature of the period begins with evaluations and ends with attempts at finding ways and means of correcting and overcoming the problems encountered by the existing banks. During the last few decades interest-free banking attracted more attention, partly because of thepoliticalinterest it created in Pakistan and partly because of the emergence of young Muslim economists.

Meezan bank is the first Islamic bank and is therefore recognized as one of the pioneer banks that promotes Riba-free (interest free) banking activities all over the country. The bank has developed an extraordinary research and development capability by combining investment bankers, commercial bankers, Shariah scholars and legal experts to develop innovative, viable, and competitive value propositions that not only meet the requirements of todays complex financial world, but do so with the world-class service excellence which our customers demand, all within the bounds of Shariah.

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TABLE OF CONTENTS

Acknowledgments Preface Executive Summary CHAPTER 1 Introduction to Report 1.1 Background Of The Study 1.2 Purpose Of The Study 1.3 Scope Of The Study Research Methodology 1.5 Scheme Of Study CHAPTER 2 Introduction to Banking 2.1 Evolution Of Banking 2.2 Fairly Growrh 2.3 (1628- 1786 BC ) 2.4 687 BC 2.5 Modern Banking 2.6 Type Of Banking 2.7 Development Of Banking In America 2.8 National Bank Act 2.9 Banking Act 1935 2.10 Banking in Pakistan

i ii iii 01 01 01 02 0203

04 04 04 04 04 05 07 07 07 07

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CHAPTER 3 Introduction To Islamic Banking

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3.1 Islamic Finance 3.2 The Islamic Economy system 3.3 The Importance Of Economic Goals 3.4 Islamic Theory 3.5 The Islam View 3.6 Capital can be Invested in a Business venture 3.7 Riba 3.8 Commercial interest and usuey CHAPTER 4 History Of Meezan Bank 4.1 1997-2009 4.2 Meezan Bank Vision And Missions 4.3 Corporate Values 16 4.4 Background Review 19 CHAPTER 5 Comprehensive Business Solution 22 5.1 Corporate And Commercial Banking 22 5.2 Largest Branch Network 23 5.3 Financial Banking 24 5.4 Service Quality 25 5.5 Quaids Concept Of Islamic Banking 25 5.6 Riba Free Banking Objective 25

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Conclusions 60

11.1 Financings 60 11.2 Term Structure Of Investment By 20 Islamic Bank ,1988 61 CHAPTER 12 Recommendation 66 12.1 Performance Appraisal 66 12.2 Proper Job Rotation 66 12.3 Fair Benefits 66 12.4 Overload Of Work 67 12.5 Credibility Of Customers 67 12.6 Customer Relationship 67 12.7 Empowerment Of Employees 68 12.8 Marketing Culture 68 12.9 Health Activities 68 References 70 Bibliography 71 Appndex 75

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AcknowledgementsAllah is very Kind, Merciful and Compassionate. His benevolence and blessings have enabled me to accomplish this task.I highly appreciate Mr. ALAM ZEB KHAN, Area Manager and RAFIQUE AWAN, Operation Manager, Meezan Bank Abbottabad for their support and collaboration.

I am extremely thankful to my Supervisor MR. ZIA UR REHMAN, who has supervised me throughout to complete this tough task.I pay special gratitude to all my honorable teachers who have been teaching me various courses during the last five years at CIIT, with addict zeal and zest. I wish to express my heartiest and sincere appreciation to my friends for their continuous help, cooperation, and moral support. The last but not least, I would feel incomplete without thanking to my parents who pray for my brilliant success and bright future.

Mubasher Nazir

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AbbreviationsMMF :

Al Meezan Mutual Fund Limited IFIs : Islamic Financial Institutions MIF : Meezan Islamic Fund AMMF : Al Meezan Mutual Fund Limited RTC : Rupees Travelers Cheque MAC : Meezan Aamdan Certificate COII : Certificate of Islamic Investment MIIDA : Meezan Islamic Institution Deposit Account TT : Telegraphic Transfer DD : Demand Draft MT : Mail Transfer PLS : Profit and Loss Sharing FDD : Foreign Demand Draft LC : Letter of Credit

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Executive SummaryAs per the requirement for the degree of BBA (Hons) of Hazara University Mansehra, I took up the internship at Meezan Bank, Abbottabad Branch. This report is based on the experience and knowledge which I got from my internship at Meezan Bank. In the first chapter I have discussed about my time stay in the bank and introduction to the whole report. In second chapter I have discussed about the introduction of the bank. Basic function of Meezan Bank. The story begins with the incorporation of Meezan Commercial Bank limited in Pakistan on October 09, 1991, Meezan Bank Commenced (begin) to operations in April 1992, as a public limited company.

The bank is listed on the Karachi, Lahore and Islamabad Stock Exchanges and the initial public offering was over subscribed by 16 times. I have also mentioned the products which the bank is offering to its customers and then I have given a brief overview of different policies of the bank. In third chapter I have discussed about the concept of Islamic banking according to our religion. this chapter begins with the Islamic finance and the economic growth of Islamic bankig.further I have discussed the goals of Islamic banking., and Islamic theory have also discussed Musharakah / Mudarabah and its uses .In forth chapter there is the history of Meezan bank, its origin and basics, vision and mission statement, the corporate values and the organizational structure.

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In 5th and 6th chapter the business of meezan bank is discussed the products and services of the meezan bank are discussed in this chapter. this chapter also tells us about the branch network of Meezan bank. further I have discussed the meezan team. the 7th chapter is the detail of my whole

internship that what I have learned in 8 weeks the chapter is based on the day by day performance. In the 8th chapter I have discussed about financial analysis. I do the common size analysis of the and company for this purpose I take the data of last five years. Then I do the ratio analysis and in last I analyze the net income, EAT, deposits, EBIT, loans and advances of the bank during last five years. In 9th chapter I have given the swot analysis of Mezan Bank. Swot analysis is done keeping in the view what I have seen and felt in the branch during my intership. In the 10th chapter I have give the conclusions of my internship that the Meezan bank is now have a good reputation in market.

In 11th chapter I have give some personal recommend ions as how bank can improve its performance and then I have write the conclusion about my internship as well as report. And in last I mentioned some important references and web sights from where I get the help during preparation of my reportrnship.

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CHAPTER 1

INTRODUCTION TO REPORT1.1) Background of study :

Meezan Bank Ltd has grown to become the largest Islamic bank in the country. The bank claims to be the Pakistan premier Islamic bank determined to set higher standards of achievements . The bank comes in to existence by the order promulgated by governor general and standard functioning from Nov 20, 1997 Meezan Bank is the major business partner our government of Pakistan with special emphasis on fostering Pakistan economic growth through aggressive and balanced lending polices, technologically oriented products and services offered through its large network of 203 branches .1.2) Purpose of study :

The purpose of study is to get more knowledge about the structure and function of the department of MBL has clear picture of its financial health in particular . For this purpose a through financial analysis through common sizing and ratio analysis of the bank, is carried out to is to judge the actual financial standing of the bank . Solid recommendations are given on all aspects to further improve the functioning of the bank . 1.3) Scope of the study : The time duration of eight weeks is a quite insufficient for conducting complete study and

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observation of large bank. Being a specializing in finance, the main focus of study is its financial aspects including the financial health of the bank and its comparison with previous year performance . Some of the problems faced by the bank have been identified and some remedies have also been suggested to overcome these problems and improve the prevailing financial condition of the bank . 1.4) Research Methodology: MBL is one of the leading and establishes bank of the country. It has a large step of departments and a big organizational structure. While working in a branch of the bank , it is not possibly to thoroughly cover all the areas of the bank , as it requires more time and eight weeks are in no way sufficient to do. Different tools and techniques were use together relevant information for writing the report first interview were taken from the manager and other staff member of the bank. For this purpose some unstructured question were asked and depending on them some conclusion were made. Secondly, the liter & journal from regional head quarter and staff college were also reviewed which gave very useful information about the functioning of the bank. I also visited the MBL official website i.e.www.meezanbank.com which gave very useful information about functioning of the bank. My personal observations during the short stay also helped me to collect about this specific branch. 1.5) Scheme of study : The scheme of study of the report is as under . 1 Part one is about the introduction of the study, which includes its background, purpose and

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scope of the study research methodology and the scheme of study . 2 Part two is about the literature review, of the bank , the departmentation and its function, and detail study of the credit department . Part three is about the financial analysis of the bank

which includes the ratio analysis, common size analysis, comparative analysis and index analysis . 3 Part four is includes SWOT analysis, problems and recommendations prescribe for the bank to further improves its functioning . CHAPTER 2

INTRODUCTION TO BANKINGWHAT IS BANK?

Before going to start we must know that what is bank? Like many other subjects and social sciences no any precise definition can be given for the study of banking also. Different authors have defined and described this subject, keeping in view the particular functions of banking. Mr. Paget says No one and no body corporate can be a banker who does not open: 1 Current Account 2 Pays cheques drawn upon him 3 Collects cheques for the customers Mr. Kinly says Bank is an institution which receives deposits and advances loans. The definition laid down in the Banking Companies Act 1962 is Bankers means a person, transacting the business of accepting for the purpose of lending or investment, of deposits of money from public, repayable on demand or otherwise and withdrawals by cheques, drafts or orders or otherwise and includes any Post Office Saving Bank. In view of the above definitions, in simple words a bank can be defined as an institution dealing in money, accepting deposits and advancing loans. Definition There are different opinions about the origin of the word Bank. According to some authors the

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word bank is derived from Latin word Bancus or Banque which means a bench. The explanation of this origin is attributed to the fact that the Jews in Lombardy transected the business of money exchange on benches in the market place. When the business failed, the people destroy the bench. Incidentally the word bankrupt is said to have been evolved from this practice.Origin:

The opponents of this opinion argue that if it was so, then how is it that the Italian moneychangers were never called Bunchier in the middle ages. Other authorities hold the opinion that Bank is derived from German word back which mean joint stock fund. Later on, when the German occupied major part of Italy, the Back was italicized into Bank.2.1) Evolution of banking

The word Bank derived from the words bancus or banque which means a bench . The word bank is derived from the German word Bank which joint Stock Fund . 2.2) Early growth Babylonians who developed banking system as early as 2000 BC .Temples of Babylon were used as Banks . 2.3) 1628 1786 BC . king Hammurabi the founder of the Babylonian empire dew up a code where in he laid down standard uses of procedure for banking operations by temples and great land owners .

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Sumerians , Babylonians, Hittites and Assyrians standardized the vales of goods in silver , copper, bronze or electrum . 2.4) 687 B.C Gyges , king of Lydia, casted electrum ingots of identical shape and uniform weight. As an official guarantee of values in 687 BC. In Greece, the temples of Ephesus and Delphi were the biggest Banks

The earliest known public bank is said to be the bank of Venice which was established in 1157 AD . Soon Venice and Genoa become the most important money market . Modern banking originated in the 14th century in Barcelona. In 1401 a German public bank are formed. Bank of Genoa in 1407, by the 16th century , some more public banks were formed in Venice, Milan, Amsterdam, Hamburg and Nuremberg . Bank of Amsterdam was also founded in 1609 . In 1690 , the bank of Hamburg came in to Existence . 2.5) Modern Banking 1700, the banks of England was not only issuing notes but also conducting accounts for customer . 1 In 1946 the labor Government nationalized the bank of England. 2.6) Types of Banks : 1 Commercial Banks 2 Merchant Banks 3 Mortgage Banks 4 Saving Banks

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5 Consumer Banks 6 Investment Banks 7 Development Banks 8 Cooperative Banks 9 Exempt Banks 10 Central Banks 1.Commercial Banks:

The commercial banks receive from the general public which are repayable on demand upon written orders of depositors. The commercial banks are also distinguished for providing short term finance to trade , commerce and industry to enable these sector to expand their productive activities .2. Merchant banks :

Merchant banks are those which have been mainly financing the domestic and international trade in united king Dom . During the late 18th and 19th century the trade between countries was financed by bills of exchange by well reputed merchant houses for which they would charge a commission for their service .3.Saving Banks :

The basic purpose of these banks is to inculcate the habit of savings in the people . The saving bank deposits are not repayable upon the written orders of the depositor but the depositor or his agent has to appear personally at saving bank to make withdrawal , and for this purpose he must present a pass book, a certificate of deposit or some similar documents to prove his right to receive payment.

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4. Mortgage Banks :

These banks mainly deal in loans for the acquisition or construction of real estate against the security of mortgages . Saving and loans associations and farm _loan associations are some of the well known forms of the mortgage banks .5. Consumer Banks :

These banks provides finance for purchasing consumption goods for the use of the borrowers . sales finance and credit unions are some of the popular forms of consumer banks 6. Investment Banks :

The investment banks asset business houses and government bodies to raise money through the sale of stocks and bonds for usually long term purposes . 7. Development Banks : The banks have been established to provide long-term development finance to the trade, commerce, and industry. 8. Cooperative Banks : These are the banks established and registered as a cooperative venture to provide banking facilities to the members of the cooperative . 9. Eximp Banks : These are the banks which provide finance for promotion of import and exports to trade, commerce and industry .The bank are contributing greatly toward the expansion of international trade .10. Central Banks :

Central banks occupy unique position in the banking structure of a country , because they have been entrusted with the responsibility of controlling the money supply, interest rates and financial market of the country for the purpose of economic development .2.7) National Bank Act :

Was passed by the congress in 1863 , which required each new national bank to deposit united states Bonds equal to one- third of its capital with comptroller of currency . National notes equal to 90

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% of the par or market value of the deposit bonds, whichever was lower .In 1913, the federal Reserve Act was passed ,and it reduced the requirement of the reserve for the banks if they formed themselves into commercial banks .2.8) Banking Act 1935:

Laid the foundation for the modern federal Reserve system by establishing the federal open market operations and buying and selling of government securities . 1939, commercial

banking system was functioning satisfactorily with as many as 14,531 commercial banks in the united states . 1940 to 1945, while the holding of Government securities by the banks increased to almost four times . the post war period saw some recession in the banking system , but soon it was over , and the banks regained their stature by1962. 2.9) Banking In Pakistan : There were 487 offices of scheduled banks in the territories now constituting Pakistan The committee recommended that the Reserve Bank of India should continue to function in Pakistan until 30th sep 1948 . By 30th June 1948, the number of offices of scheduled banks in Pakistan declined from 487 to only 195 . Quaid-i-Azam Muhammad Ali Jinnah inaugurated the state bank of Pakistan on July 1st,1948 . The first Pakistan notes were issued in Oct, 1948 in the denominations of Rs 5,10 and by August 1949 the state Bank of Pakistan withdrew the Reserves Bank of India notes of the values of Rs 125.02 cores with the help of the Pakistan notes .

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