Presentation of Business Finance

Presented to:
Sir Ghulam Mustafa
Presented by:

M. Jaffar Tayar 48
Syed Ali Kamran Abidi 50
Syed Hussain Zain ul Abiden Gardezi 85
Mirza Ali Raza 90
Topic:

Difference b/w Commercial

& Islamic banking
(MCB Vs. Meezan Bank)
BANK DEFINITION:

"Banks are institution that enjoys the

public money doing nothing for the
public".
Banker
 Banker includes a body of person whether
incorporated or not who carry on business
of banking
“Banks are the guardian & distributor of money”
 MCB is one of the leading banks of Pakistan with
a deposit base of about Rs. 280 billion and total
assets of around Rs.300 billion. Incorporated in
1947, MCB soon earned the reputation of a solid
and conservative financial institution managed by
expatriate executives.  In 1974, MCB was
nationalized along with all other private sector
banks.  This led to deterioration in the quality of
the Bank’s loan portfolio and service quality. 
Eventually, MCB was privatized in 1991. 
•Vision Statement

 Challenging and Changing the Way you

Bank.
Mission statement
MCB Bank’s team of committed professionals
is dedicated to maintaining long term customer
relationships through outstanding service and
convenience.
 Meezan Bank Limited is a publicly listed company
first incorporated on January 27, 1997. It started
operations as an investment bank in August of
the same year. In January, 2002 in an historic
initiative, Meezan Bank was granted the nation's
first full-fledged license dedicated to Islamic
Banking, by the State Bank of Pakistan.
Our 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.
Our 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.
ACCOUNTS
 Current Account
current account is used by the business owners due to its ease of
transaction.
 Saving Account
MCB’s Rupee Savings account is the most convenient way to
manage your savings.
 Khushali Bachat Account:
Similar to saving account interest rate of 1%. Standard markup
rate 20%.
 Basic Banking Account (BBA)
This product has been introduced to facilitate the low income
group as well as the existing account holders who wish to convert
their regular savings or current account into Basic Banking
Account.
Islamic Terminologies to understand
deposits:

 Definition of Riba or Interest

The word "Riba" means excess, increase or addition, which correctly
interpreted according to Shariah terminology, implies any excess
compensation without due consideration (consideration does not include
time value of money).
 MUDARABAH
This 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 "Rab-ul-Maal" while the
management and work is an exclusive responsibility of the other,
who is called "Mudarib" and the profits generated are shared
among the partners.
Deposit Schemes:
 Riba-Free Meezan
Bachat Account
The Riba-Free Meezan Bachat Account works under the
principles of Mudarabah and is strictly in conformity with
the rules of Islamic Shariah.
On agreeing to become an account holder, the customer
enters into a relationship based on Mudarabah with
Meezan Bank. Under this relationship, the customer is an
Investor (Rab ul Maal), and the Bank is the Manager
(Mudarib) of the funds deposited by the customer.
 Current Account
Trasactions are not limited.
No profit is given on this account.
Karobari Munafa Account
Profit will be calculated on a Daily Product Basis
Minimum balance requirement for account opening is Rs.
1Million.
No restriction on deposits and withdrawals.
Free facilities: cheque books and pay orders.
Dedicated account / relationship manager.

Basic Banking Account (BBA)

 Difference in Deposits:
 In commercial banking a fixed interest rate is offered to customer
after depositing a certain amount of money.
 In islamic banking the rate of profit (surplus on deposit)depends
on the profit which the particular bank earns means that there is not
fixed percentage of the profit rate.

 In commercial banking if a customer has deposit below than 10,000 in

certain accounts( ) the 50 Rs. is deducted from balance as charges
and are included in bank profit & loss statement.

 In islamic banking if a person has output balance below than

10,000 in certain accounts( ) 50 Rs. is also deducted but not
included in profit & loss statement and goes to charity institutions.
Car Ijarah:

 Car is leased under the name of the bank.

Transfer of ownership at the clearance of
principal amount and rent. No objection
certificate.
 Security deposit is 15 %. 5% is the processing
charges on purchase of additional units.
 If car is damaged no payment is given. If the car
is stolen then the installment is stopped.
 Time period for which the car is offered are 3, 4
and 5 years. Accordingly the rate of rent is
calculated. IRR( International rate of rent).
 Rent is paid on the monthly bases.
Car Ijarah, Pakistan’s First Islamic
Car Financing
 Car Ijarah is Pakistan’s first Interest Free car financing
based on the Islamic financing mode of Ijarah (Islamic
leasing). This product is ideal for individuals looking for
car financing while avoiding an interest-based transaction.

Meezan Bank’ Car Ijarah is a car rental agreement, under

which the Bank purchases the car and rents it out to the
customer for a period of 3 to 5 years, agreed at the time of
the contract. Upon completion of the lease period the
customer gets ownership of the car against his initial
security deposit.
 Key Features of Car Ijarah
 No application fee
 Ease of acquiring any new locally
assembled car
 No upfront Insurance Payment
 No advance Rental
 Available in tenures of 3, 4 and 5 years
 Minimum security deposit as low as 15%
Diminishing Musharka:

 The type of partnership which eliminates with the

passage of time. As the partner buys the share of the
firm.
 House finance and Project finance.
 Sitara textile mill.
 Car rent.
 LGS.
 Nishat School.
 Bakhtawar Amin Memorial Trust.
 Transfer of ownership after the completion of the project.
Maximum time is 7 years. 1 year grace period for
construction and working of a project.
Murabaha:

 Customer is the agent of the bank.

Commodity purchase, Raw Material (lucky
cement)
 “Do not give cash to the customer”. Give tax
invoice.
 Security:
 Bank act as retailer. Repayment is single
installment. Deferred payments in max. 180
days and min. 9 days.
 Why is Halal home finance so important to you?
Owning your own home is one of life’s most important
achievements. It represents your security, stability, and
is a great blessing in itself. It provides that all-important
safety and comfort for you and your loved ones.
 However, in today’s often unpredictable and costly
environment, saving the required money can take a
lifetime in itself. Rising property prices, taxes, inflation,
currency devaluation… it’s all a very hard bargain. On
the other hand, owning your own home and paying an
easy installment, which takes you step by step towards
complete ownership, is so much better than paying rent
which ultimately only adds to your expenses.
 Islamic Financing on a Diminishing Musharakah
basis
With Easy Home you participate with Meezan Bank
in a joint ownership of your property, where the
Bank will provide a certain amount of financing
(usually up to 85%). You agree to a monthly
payment to the bank of which a component is for
the use of the home, and another for your equity
share. In fact, the total monthly payment is reduced
regularly as your share in the property grows.
When you have made the full investment, which
had been agreed upon, you become the sole
owner with a free and clear title to the property.
Easy Buyer
 Flexible financing from PKR 300,000/- to PKR
40 million
 Easy selection of financing tenure from 3
years to 20 years
 Bank Investment Ratio (BIR) 
 Up to 85% for Salaried / Select SEP*
 Up to 70% for Businesspersons & Self
Employed Professionals
 Up to 75% for Non-Resident Pakistanis (NRP)
 No restriction on early unit purchase / early
termination
Easy Builder
 Easy Builder is a comprehensive proposition that contains:
 1Residential construction on applicant’s owned land
2Purchase of land & residential construction 3Enhancement
of an already constructed residential bungalow Features 
 Flexible financing from PKR 300,000/- to PKR 40 million
 Easy selection of financing tenure from 2 years (excluding
construction period of max 12 months) to 20 years
 Bank Investment Ratio (BIR) 
 Up to 70% for Salaried /Select SEPs*/Self Employed
Professionals/Businessman
 Up to 75% for Non-Resident Pakistanis (NRP)
 No restriction on early unit purchase / early termination
Easy Renovate

 Flexible financing from PKR 150,000/- to

PKR 1.0 million
 Easy selection of financing tenure from 2
years up to a maximum of 7 years
 Up to 50% for Salaried /Select SEPs*/
Self Employed Professionals /
Businessman / Non-Resident Pakistanis
(NRP)
Easy Replace
 Transfer your existing mortgage!You can now continue to
enjoy your home, but with the added satisfaction and
peace of mind you always wanted. Meezan Bank will help
you switch your existing liability over to us and let you
enjoy the benefits of Halal and totally flexible financing.
 Features 
 Flexible financing from PKR 300,000/- to PKR 40 million
 Easy selection of financing tenure from 3 years to 20 years
 Bank Investment Ratio (BIR) 
 Up to 85% for Salaried /Select SEPs*/Self Employed
Professionals/Businessman
 Up to 75% for Non-Resident Pakistanis (NRP)
 No restriction on early unit purchase / early termination
Musharaka:

According to this concept, a financier and his client

participate either in the joint ownership of a property or an
equipment, or in a joint commercial enterprise.
Musharka is the partnership. The profit is shared among the bank
and the customer with which there is a partnership agreement.
 Months Unit Price Monthly Rent Total payments(Rs.)

       

1. 4167 10417 14583

2. 4167 10373 14540

3. 4167 10330 14497

4. 4167 10286 14453

5. 4167 10243 14410

6. 4167 10200 14366

7. 4167 10156 14323

8. 4167 10113 14280

9. 4167 10069 14236

10. 4167 10026 14193

11. 4167 9983 14149

Loans offered by MCB:

 Cash Finance:(13%)
This loan is given upto 20 million. Usually for the crop season for cotton
and wheat. Cotton dealers mill owners. Kibor ( Karachi inter bank offer
rate).
On the basis of volume of business and operations of business.
It is renewed after 1 year.
 Running Finance:(15%)
Account holder in which 6 months installments.
Security: Prime security is property and collateral
 Demand Finance:(10%)
Its not necessary to be an account holder. Most liquid security are the
certificates. The DSC ( Defense Saving Certificate) whose value
increases with the time.
Regular income certificate.
 Project Finance:
Fixed investment. New project may be a new plant or machinery.
MCB  CAR4U

 MCB Car4U can give you all ... MCB

Car4U through its flexibility, affordability,
speed and other special benefits makes
you keep up with the fast pace of life ...
because we know Kahin na Kahin tau
Hai.. 1 Car4U.
 Financing up to Rs. 20 lacs
 Financing tenures from 1 to 7 years
 Only up to 10% down payment
 Equal monthly installments.
 Currently available in 16 major cities:
Karachi, Lahore, Faisalabad, Rawalpindi,
Islamabad, Quetta, Multan, Peshawar,
Hyderabad, Sialkot, Gujrat, Gujranwala,
Sargodha, Mirpur (AJK), Jhelum, Sahiwal
Apna Ghar Pyara Ghar

MCB Pyara Ghar now provides you with all you

want as you can renovate your existing home,
buy or construct a dream house that you always
envisioned for you and your family. After all,
"Apna Ghar... Pyara Ghar"
 Financing up to Rs 20 million

 Financing Tenures from 2 to 20 years

 Equal monthly installments.

 Loans up to 80% of the value of your house or

flat
Amortization schedule for
Pyara Ghar

Remaining tenure (in months) 117

Pricing 13.5%
Equal monthly installments
On finance amount (Rs) 6509
Equal monthly installments
With insurance premium 6521
Months EMI Financial charges Principle Principle o/s
payment
422303

1 6509 4751 1758 420545

2 6509 4731 1778 418767

3 6509 4711 1798 416969
4 6509 4691 1818 415151
5 6509 4670 1839 413312
6 6509 4649 1860 411452
7 6509 4629 1880 409572
8 6509 4608 1901 407671
9 6509 4586 1923 405748
10 6509 4564 1945 403803
11 6509 4543 1966 401837
12 6509 4521 1988 399849
 Difference in Financing:

•Islamic Banks do not give cash directly to the customers

and it provides funds for commodities.