National College of Business Administration &

Economics (NCBA&E)

Business Strategy
Assignment: Detailed Analysis of Islamic Banking in
Pakistan.
Submitted By:
Saad Alam
2151407
Submitted To:
Sir Qayyum Qureshi

Type

Public Limited

Traded as

KSE: MEBL

Industry

Islamic Banking, Commercial Banking

Founded

1997

Headquarters

Karachi, Pakistan

Products

Murabaha, Ijarah, Diminishing Musharakah, VISA Debit Card, Saving

Accounts, Consumer Banking etc.

Number of
employees

7,000 - 2014

Slogan

The Premier Islamic Bank

Website

www.meezanbank.com

PROFILE:
Meezan Bank (Urdu ) is the first and largest Islamic commercial Bank of Pakistan.
The Bank is headquartered in Meezan House - Karachi, Pakistan. It has a network of over 490
branches in more than 100 cities of Pakistan. It commenced operations in 2002 when State
Bank of Pakistan issued first-ever license for Islamic commercial banking. The Bank has a
market share of 35% in Islamic banking industry of the country.
JCR-VIS Credit Rating Company Limited, an affiliate of Japan Credit Rating Agency, has rated
the Banks short term rating at A1+ (A-One Plus), the highest standard in short term rating, and
the long-term entity rating at AA (Double A) with Stable outlook, making it the only Islamic
bank with AA credit rating in the Islamic banking industry of Pakistan.

HISTORY:
The founder of Pakistan, Quaid-e-Azam Mohammed Ali Jinnah while delivering speech at the
opening ceremony of State Bank of Pakistan on July 1, 1948, stated:
"We must work our destiny in our own way and present to the world an economic system
based on true Islamic concept of equality of manhood and social justice."
The statement serves as the concept of Islamic banking by the founding father of the nation that
was created in the name of Islam in 1947.

1991: Procedure adopted by banks in 1985 was declared un-Islamic by the Federal Shariat
Court (FSC). The Government and some banks/DFIs made appeals to the Shariat Appellate
Bench (SAB) of the Supreme Court of Pakistan.

1997: Al-Meezan Investment Bank is established with a mandate to pursue Islamic Banking.
Mr. Irfan Siddiqui appointed as first and founding Chief Executive Officer.

1999: The Shariat Appellate Bench of the Supreme Court of Pakistan rejects the appeals
and directs all laws on interest banking to cease. The government sets up a high level
commission, task forces and committees to institute and promote Islamic banking on parallel
basis with conventional system.

2001: The Shariah Supervisory Board is established at Al-Meezan Investment Bank led by
Justice (Retd.) Muhammad Taqi Usmani as Chairman. State Bank of Pakistan sets criteria
for establishment of Islamic commercial banks in private sector and subsidiaries and standalone branches by existing commercial banks to conduct Islamic banking in the country.

2002: Meezan Bank acquires the Pakistan operations of Societe Generale and concurrently
Al Meezan Investment Bank converts itself into a full-fledged Islamic commercial bank. The
first Islamic banking license is issued to the Bank and it is renamed Meezan Bank.

2003: Meezan Bank establishes itself as the pioneer of Islamic Banking in Pakistan and
quickly establishes branches in all major cities of the country. A wide range of products are
developed and launched consolidating the Banks position as the premier Islamic Bank of
the country Al Meezan Investment Management Limited (AMIM), the asset management
arm of Meezan Bank, introduces Meezan Islamic Fund (MIF), the countrys first open-end
Islamic Mutual Fund.

2004: The State Bank establishes a dedicated Islamic Banking Department (IBD) by
merging the Islamic Economics Division of the Research Department with the Islamic
Banking Division of the Banking Policy Department. A Shariah Board has been appointed to
regulate and approve guidelines for the emerging Islamic Banking industry. The
Government of Pakistan awards the mandate for debut of international Sukuk (Bond)
offering for USD 500 million. The offering is a success and establishes a benchmark for
Pakistan. Meezan Bank acts as the Shariah Structuring Advisor for this historic transaction.

2006: 62 branches in 21 cities

2007: Banks branch network reached the milestone number of 100 branches. The Bank
introduced Istisna' financing to cater to the working capital needs of customers.

2008: Meezan Bank introduced Tijarah financing to allow customers to raise funds for
financing of stocks of finished goods.

2009: The branch network reached 201 branches (including sub-branches) in 54 cities
nationwide.

2010: The Bank developed Meezan Business Plus, a Mudaraba-based account that offers
an array of free services for businesses, Meezan Euro Savings Account and Meezan Pound
Savings Account. Banks branch network reached 222 branches in 63 cities across
Pakistan.

2011: The inauguration of the new Head office in Karachi. During the year, 53 branches
were opened to reach a landmark of 275 branches in 83 cities across Pakistan.

2012: Completed 10 years of operations.

2013: Over 350 branches in over 100 cities

On 18 October 2014, the Bank acquired the HSBC Pakistan operations. After conversion of the
business and branches of HSBC Pakistan to Meezan Bank; the HSBC Pakistan Accounts and
Term Deposit Receipts (TDRs) converted to Meezan Bank accounts and Certificates of Islamic
Investments (COIIs).

SUCCESS STORY :
Meezan Bank has established over 285 branches in over 80 cities across Pakistan. This is a
milestone that is not only the success story of Meezan Bank but also the continuing success
story of Islamic banking in Pakistan. With this extensive network, our existing and potential
customers are now closer than ever in benefiting from Islamic Banking at their doorstep. All
branches provide real-time online banking facilities to customers.

DIFFERENCE BETWEEN ISLAMIC & CONVENSIONAL BANKING:

Conventional Banking
Money is a commodity besides medium
of exchange and store of value.
Therefore, it can be sold at a price
higher than its face value and it can
also be rented out.

Islamic Banking
Money is not a commodity though it is used as a
medium of exchange and store of value. Therefore,
it cannot be sold at a price higher than its face
value or rented out.

Time value is the basis for charging

Profit on trade of goods or charging on providing

interest on capital.

service is the basis for earning profit.

Interest is charged even in case the

organization suffers losses by using
banks funds. Therefore, it is not based
on profit and loss sharing.

While disbursing cash finance, running

finance or working capital finance, no
agreement for exchange of goods &
services is made.

Conventional banks use money as a

commodity which leads to inflation.

Islamic bank operates on the basis of profit and

loss sharing. In case, the businessman has
suffered losses, the bank will share these losses
based on the mode of finance used (Mudarabah,
Musharakah).

The execution of agreements for the exchange of

goods & services is a must, while disbursing funds
under Murabaha, Salam & Istisna contracts.

Islamic banking tends to create link with the real

sectors of the economic system by using trade
related activities. Since, the money is linked with

the real assets therefore it contributes directly in

the economic development.

STRATEGIC VISION:
The main strategies will focus in the following key reform areas:

ENABLING POLICY ENVIRONMENT

Enabling legal, regulatory, supervisory, liquidity management framework,
taxation regime and financial accounting & reporting framework

SHARIAH GOVERNANCE & COMPLIANCE

The focus in this area will remain on standardization and harmonization of
Shariah practices, as well as on creating distinct Islamic banking products and
services.

AWARENESS & CAPACITY BUILDING

Efforts will be made for coordination and collaboration amongst internal and
external stakeholders, enhancing awareness about Islamic finance, and building
capacity of the stakeholders

MARKET DEVELOPMENT
Initiatives will be undertaken for product diversification and financial inclusion
with the collaboration of stakeholders