2016

Internship Report

MEEZAN BANK LIMITED

SHARIAH AUDIT & ADVISORY
Submission: 19-Sep-2016

Mansoor Ali Seelro

MBA (RE) 2Y 20153-18419
Institute of Business Management

mansoor.seelro@gmail.com std_18419@iobm.edu.pk

TABLE OF CONTENTS
Internship Particulars at a Glance ........................................................................................................... 2
About the Bank ..................................................................................................................................... 3
Vision...................................................................................................................................................... 3
Mission ................................................................................................................................................... 4
Values ..................................................................................................................................................... 4
Meezan Bank Shareholding Structure ................................................................................................ 4
Shariah Audit & Advisory Department .............................................................................................. 4
Key Projects........................................................................................................................................... 5
Analysis of Untapped African IBF Market ................................................................................ 5
Analysis of Russian, Chinese and Australian IBF Markets ....................................................... 6
Review of AAOIFI Shariah Standards....................................................................................... 6
Shariah Audit of RUBA Digital ................................................................................................. 7
Observations, Learning and Exposure................................................................................................ 7
Alignment of Practice with Theory............................................................................................ 7
Fundamentals of Islamic Banking & Finance ............................................................................ 8
Knowledge about Islamic Banks operating in Pakistan and Abroad ......................................... 8
Miscellaneous Learning (Professional & Personal) ................................................................... 9
Concluding Remarks ............................................................................................................................ 9
Appendix .............................................................................................................................................. 10
Annexure-A Islamic Banking & Finance in Africa .............................................................. 10
Annexure-B Islamic Banking & Finance in Russia, China & Australia .............................. 12
Annexure-C AAOIFI Shariah Standards Summary ............................................................. 14
Annexure-D RUBA Digital Audit Report ............................................................................ 15

mansoor.seelro@gmail.com std_18419@iobm.edu.pk

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Internship Particulars at a Glance

Duration

Eight weeks (July 18 September 9, 2016)

Purpose

Evaluation

Status

Paid

Location

MBL Head Office, S.I.T.E Karachi

Department

Shariah Audit and Advisory

Supervisor

Muddasir Ali Soomro

Designation

Assistant Manager

Team Lead

Shaikh Muhammad Asif

Designation

Vice President

Dept. Head

Muhammad Farhan Ul Haq Usmani

Designation

Senior Vice President

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About the Bank

Meezan Bank, Pakistans first and largest Islamic bank, is a publicly listed company with a
paid-up capital of Rs. 10 billion. It is one of the fastest growing financial institutions in the
banking sector of the country. With its Vision of establishing Islamic banking as banking of
first choice the Bank commenced operations in 2002, after being issued the first-ever Islamic
commercial banking license by the State Bank of Pakistan.
The Bank provides a comprehensive range of Islamic banking products and services through a
retail banking network of more than 550 branches in 143 cities of the country. Backed by a
state-of-the art T-24 core banking system, the branch network is supported by 24/7 banking
services that include over 500 ATMs, VISA and MasterCard Debit cards, a Call Center,
Internet Banking, Mobile Application and SMS Banking facility. To cater the unbanked
population, the Bank also offers Branchless Banking services through Meezan UPaisa Worlds first Islamic Branchless Banking.
The Bank operates strictly under the principles of Islamic Shariah and is well-recognized for
its product development capability and Islamic banking research and advisory services. In order
to ensure strict Shariah-compliance in all its products and services, the Bank has established a
dedicated Product Development and Shariah Compliance department that operates under the
supervision of the Banks in-house Resident Shariah Board Member and a Shariah Supervisory
Board comprising of internationally renowned Shariah scholars.
Meezan Bank stands amongst the top Islamic Banks globally. Islamic Finance News
Malaysia has awarded the Bank with two global awards for the year 2015 - Best Islamic Retail
Bank and a third position in the Overall Islamic Banks category. The Bank has also been
rated as the Best Islamic Bank of the Region according to South Asian Disclosure Index.

Vision
Establish Islamic banking as banking of first choice to facilitate the implementation of an
equitable economic system, providing a strong foundation for establishing a fair and just
society for mankind.

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Mission
To be a premier Islamic bank, offering a one-stop shop for innovative value-added products
and services to our customers within the bounds of Shariah, while optimizing the stakeholders
value through an organizational culture based on learning, fairness, respect for individual
enterprise and performance.

Values

Shariah-compliance

Integrity

Professionalism

Innovation

Service excellence

Social Responsibility

Motivated and professionally trained employees who are empathic to customer needs

Meezan Bank Shareholding Structure

Meezan Bank is divided in terms of its ownership of its total paid up capital of Rs. 10,027
million. Four major shareholding heads are:
1. Noor Financial Investment Company (49.11%) Kuwait
2. Pak Kuwait Investment Company (30%) Pakistan
3. Islamic Development Bank (9.32%) KSA
4. Other shareholders (11.57%) General public

Shariah Audit & Advisory Department

The department I was attached to was Shariah Audit and Advisory. Shariah Audit and Advisory
department provides a centralized hub for Shariah-compliant solutions for customer needs,
Islamic banking training and Shariah audit and compliance. This function works under the
guidance and direct supervision of the Bank's Shariah Audit Committee, and performs the
following functions:

Providing input to the bank on Shariah matters in order to comply with Shariah rules.

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Endorsing Shariah policies and procedures prepared by the bank and to ensure that the
contents do not contain any elements which are not in line with Shariah.

Assisting parties such as legal, auditors or consultants on Shariah matters.

Providing Islamic banking advisory services to both local and foreign institutions.

Conducting regular Shariah audit and reviews of branches and departments.

Coordinating with banks Shariah Audit Committee.

Facilitating external learning of Islamic banking at universities and business schools

The Bank has achieved such success and recognition in its research and product development
activities that the practices and procedures adopted by Meezan Bank are largely accepted as
the benchmarks of Islamic banking industry, not only locally but also internationally.
Alhamdulillah in the year 2013, in recognition of the Bank's contribution to research and
development in Islamic banking, the Bank received the 'Best Research and Development 2013'
by Global Islamic Finance Awards, London.

Key Projects1
Four major projects that I was assigned during this internship course, among others, included
research on African market, research on Russian, Chinese and Australian markets, review of
Shariah Standards, and Audit of RUBA Digital. They are discussed here:

Analysis of Untapped African IBF Market

The Islamic Banking and Finance (IBF) market in majority of the African countries is still
untapped, yet lucrative. Islamic finance can act as the catalyst in mobilizing funding into
Africa, thereby resulting in economic growth and sustainable development. This is driven by
increased domestic demand, developments in the private sector and strong trade relations with
developed economies. Although the Islamic financial services industry in Africa is currently
dominated by the banking and Sukuk segments, growth potential remains in the asset
management and Takaful spheres.
Key growth drivers for Islamic Banking & Finance in Africa are as follows which pose this
market more attractive for entry.

Besides the projects discussed in this section, many other day-to-day tasks were performed which were part
of routine; hence, not being discussed here.

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A continent with more than 1.2 billion population.

A continent with more than 50% Muslim population.

Continents growth is expected to progress to more than 6% in the upcoming years as

per the African Economic Outlook.

Takaful and Asset Management sectors having more growth potential.

People getting more aware of Islamic banking needs as Islamic banking is booming
worldwide.

Legislation and Infrastructure developments in Africa are also paid attention by the
local governments.

Some big Banking groups already have presence in Africa, Al Baraka, among others.

Refer to Annexure-A for parts of report detailing on African market research.

Analysis of Russian, Chinese and Australian IBF Markets

Refer to Annexure-B for parts of report containing details about research on Russian, Chinese
and Australian IBF markets.

Review of AAOIFI Shariah Standards

The third major project was to review and summarize the Shariah Standards by Accounting
and Auditing Organization for Islamic Financial Institutions. AAOIFI is a Bahrain-based
organization responsible for the development of international standards applicable for Islamic
financial institutions. Out of 54 number of standards, I worked on 10 standards which added a
lot to my current knowledge repository. In fact, working on standards is a springboard for those
who have just kicked off their career in Islamic Banking and Finance since they give them the
basic knowledge of how these standards apply to Islamic Financial Institutions including the
banks. PowerPoint slides can be viewed in which the standards have been paraphrased and
summarized.
Here is a quick list of standards I reviewed:

Guarantees

Hawalah

Ijarah

Mudarabah

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Murabahah

Financial Papers (shares & bonds)

Islamic Insurance (Takaful)

Investment Sukuk

Salam

Istisnaa

Refer to Annexure-C where some PowerPoint slides have been reproduced.

Shariah Audit of RUBA Digital

The fourth and the last key project was to conduct telephonic audit interviews of RUBA Digital
branches across Pakistan. RUBA Digital is one of Meezan Banks clients. It was wonderful
experience being on telephone with the BMs, ASMs, ZSMs, DSMs, etc. The action item of this
audit was an Audit Report containing the ratings of randomly selected officials of RUBA
Digital.
Refer to Annexure-D to view the audit report.

Observations, Learning and Exposure

Being part of Pakistans largest and fastest-growing Islamic Bank is a great prestige indeed.
The work environment that the company provides is really genial and conducive to learning. I
have exposed to different organizations within Pakistan, but the system of work at Meezan
Bank is really what eases their employees. I can summarize my overall learning and practical
observations during this brief span of time in the following four sections.

Alignment of Practice with Theory

It was observed that, within the capacity that I worked in and the time span that I worked for,
practice did not differ from theory. For example, before a company goes for product
development, market development or diversification, the company always conducts research
to have insights into the market mechanism. Likewise, the research I performed on African
market, was a step towards market development that Meezan Bank intends to enter in future.

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Hence, the point of learning is that it is prudent as well as essential to engage in a well-designed
research before originally launching the product and entering the market. Without such
research, every effort will come to nothing.

Fundamentals of Islamic Banking & Finance

While working on different projects and routine tasks during the internship, knowledge of
fundamentals of Islamic Finance really increased. For example, Islamic equivalent for
conventional bonds are Sukuk, for conventional leasing it is Ijarah, for conventional insurance
it is Takaful, etc. Other fundamental concepts studied are:

Musharakah a form of partnership in which all the partners share the profit or loss
of the joint venture.

Mudarabah a form of partnership where one partner gives money to another for
investment. The investment comes from Rab-ul-Mal, and the other partner who is
responsible for its management is called Mudarib. All losses are borne by Rab-ulMal. However, if the investment is profitable, Mudarib and Rab-ul-Mal both have
right to share profits.

Murabahah a type of sale/trade contract that involves the sale of an item on a

spot/deferred payment basis. The cost price of and profit on the item must be known
to both parties (the buyer & the seller) at the time of contract sign.

Salam a contract whereby the seller undertakes to supply some specific goods to
the buyer at a future date in exchange of an advanced price fully paid at spot.

Istisnaa a contract whereby a commodity is transacted before it comes into

existence. This means, the customer orders manufacturer to manufacture a
commodity for him. The payment could be on spot or in instalments according to the
stages of production.

Knowledge about Islamic Banks operating in Pakistan and Abroad

Previously the knowledge about Islamic banks operating in Pakistan and abroad was limited,
but now I know much more about banks which are operating as full-fledged Islamic banks here
and abroad.

mansoor.seelro@gmail.com std_18419@iobm.edu.pk

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Miscellaneous Learning (Professional & Personal)

I learnt hosts of professional and personal things which can be summarized as follows:

Strong follow-ups are crucial, especially in a service industry.

Go-getter attitude is a must to excel in ones career.

Things should be probed, not taken for granted.

More focused career planning after joining Meezan Bank.

Professional social circles expanded during brief span of time.

Concluding Remarks
The way a person learns during course of studies is different from the the way a person learns
during course of work. I believe that during work, a person develops in addition to learning,
but during course of studies, a person learns only (not develops). The internship I completed
with Meezan Bank was a great source of development for me. It was, in fact, quite conducive
to learning and open to rapid career growth because of my repeated exposure and interaction
with top management vis--vis multiple and miscellaneous projects. At Meezan Bank, human
capital is the most valuable equity.
More to the point, the internship provided me the opportunity of working with a team of highly
qualified professionals who remained a great source of motivation and professional grooming
for me. In addition, the environment of the bank was ideal for me since it was genial and quite
conducive to work briskly without being reserved.
Meezan Bank provides the tools needed for its people to develop world-class analytical,
leadership, management and relationship-building skills. The bank ensures the proper
development of its employees to cope with the current market trends and business needs.
Besides, the bank fosters teamwork and encourages innovation at all levels of career.

mansoor.seelro@gmail.com std_18419@iobm.edu.pk

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Appendix

Annexure-A Islamic Banking & Finance in Africa

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mansoor.seelro@gmail.com std_18419@iobm.edu.pk

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Annexure-B Islamic Banking & Finance in Russia, China & Australia

mansoor.seelro@gmail.com std_18419@iobm.edu.pk

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mansoor.seelro@gmail.com std_18419@iobm.edu.pk

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Annexure-C AAOIFI Shariah Standards Summary

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Annexure-D RUBA Digital Audit Report

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