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 statementMission statement

MCB Bank’s team of committed professionals MCB Bank’s team of committed professionals is dedicated to maintaining long term customer is dedicated to maintaining long term customer relationships through outstanding service and relationships through outstanding service and convenience.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 Accountcurrent 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 InterestThe 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 BasisMinimum 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)

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.

Difference in Deposits:

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 IjarahNo application feeEase of acquiring any new locally

assembled carNo upfront Insurance PaymentNo advance RentalAvailable in tenures of 3, 4 and 5 yearsMinimum 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

12. 4167 9939 14106

239. 4167 87 4253

240. 4167 43 4210

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 lacsFinancing 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) 117Pricing 13.5%Equal monthly installments On finance amount (Rs) 6509Equal monthly installments With insurance premium 6521

Months EMI Financial charges Principle payment

Principle o/s

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

•Islamic Banks do not give cash directly to the customers and it provides funds for commodities.

Difference in Financing: