Al faysal bank ltd

Al- Faysal Bank Limited

INTRODUCTION TO THE MAJOR ISLAMIC
MODES OF FINANCING

1. MORABAHA

This is a mode of sale and purchase of commodities. The
agreement is made between the Bank and a Customer, whereby
Bank purchases a commodity and sells the same to Customer on a
deferred payment basis. The essential features of the Morabaha
are:

1. Existence of a tangible commodity/asset of which physical
possession can be taken before use or consumption.

2. Such commodity or asset has to be acquired from third party
(commodity/asset already in the possession of the Customer,
cannot form basis of the agreement).

3. Bank sells the commodity/asset to the Customer.

LOCAL PURCHASE MORABAHA (LPO)

Bank and the client sign a Morabaha Agreement. Client
submits a request for purchase of commodity/asset by specifying
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Business Institution


quality, quantity and price. Bank appoints an agent under an
Agency Agreement (who could be the client) to purchase the asset/
commodity on behalf of the bank. The Agent purchases the
commodity under a Purchase Order from third party after
obtaining disbursement from the bank through Receipt and submits
a Declaration to this effect. Bank sells the commodity/asset to the
Client on a cost plus profit basis and the parties agree on a
Purchase Price and Due date.

MORABAHA IMPORTS (PAD)

Bank and Client sign a Morabaha Agreement. In terms of the
Morabaha Agreement, the Bank appoints the Client as its Agent
through an Agency Agreement to import commodities from time to
time. Client submits an application to establish letter of credit and
the Bank opens it. Upon negotiation, the Bank creates an advance
in the name of the Client, value payment of funds to the
beneficiary. Upon receipt of documents and arrival of goods, the
Bank and the Client enter into a Morabaha through a declaration
submitted by the client. Such Morabaha can be spotted, where
client pays immediately to retire documents or on a deferred
payment basis, if the client wishes to pay later. In case of deferred
payment, the Client signs a promissory note for the purchase price
agreed and the Bank releases the documents.

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2. IJARAH (LEASING):

Clients use Ijarah financing mainly for financing purchase of
plant and machinery. If assets subject to lease are to be freshly
acquired, Bank may appoint an agent (could be the client) to do so
on its behalf. If Client has already acquired the equipment, Bank
will purchase it from Client and lease it back. The process of
Ijarah takes place as follows:

 Bank and Client sign a Lease Finance Agreement whereby
Client agrees to take on lease from the Bank for specified
assets for an agreed tenor.

 Bank appoints an Agent for acquisition of assets, if not
already in possession of Client.

 Bank intimates Client of acquisition of assets and delivers to
place specified by Client.

 Term of lease starts from date Client takes possession of
assets, whether constructive or physical.

 Client pays a monthly, or quarterly rental to the Bank for the
use of the assets and by virtue of the agreement, becomes
owner of asset only after paying a nominal lease end value.

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3. MUSHARAKAH

Under Islamic jurisprudence, Musharakah means a joint
enterprise formed for conducting some business in which all
partners contribute financially and share the profit as per pre
agreed upon ratios, while the loss is shared according to the ratios
of financial contribution of each partner. The Musharakah is an
ideal alternate to replace interest based lending with far reaching
effects on both production and distribution of capital.

Profit sharing ratios in a Musharakah depend entirely on the
estimated profit the business is able to generate.

The Musharakah is a relationship established, by the parties,
by mutual contract and therefore all necessary ingredients of a
valid contract must be present.

The risk of loss inherent in this mode of financing ensures
that the Bank fully satisfies itself as to the profitability and
feasibility of the business venture as well as to the integrity of its
Musharakah partners.

4. MODARABA

This is a kind of partnership where one partner gives money
to another for investing it in a commercial enterprise. The
investment comes from the first partner who is called "Rabb-ul-
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maal" while the management and work is an exclusive
responsibility of the other, who is called "Modarib" and the profits
generated are shared in a predetermined ratio.

There are two types of Modaraba namely:

• Al Modaraba Al Moqayyadah: Rabb-ul-maal may specify a
particular business or a particular place for the Modarib, in
each case he shall invest the money in that particular business
or place. This is called Al Modaraba Al Moqayyadah (restricted
Modaraba).

• Al Modaraba Al Mutlaqah: If Rabb-ul-maal gives full
freedom to Modarib to undertake whatever business he deems
fit, this is called Al Modaraba Al Mutlaqah (unrestricted
Modaraba). However, Modarib cannot, without the consent of
Rabb-ul-maal, lend money to anyone. Modarib is authorized to
do anything which is normally done in the course of business. If
they want to have an extraordinary work which is beyond the
normal routine of the traders, it cannot be done without express
permission from the Rabb-ul-maal. Modarib is also not
authorized to

 keep another Modarib or a partner

 Mix his own investment in that particular Modaraba without
the consent of Rabb-ul-maal.
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HISTORY OF THE GROUP

(ISLAMIC BANKERS)

Faysal Bank Limited (FBL) is a subsidiary of Shamil Bank of
Bahrain E.C. (Islamic Bankers) which is controlled and managed
by the Dar Al-Maal Al-Islami Trust (DMI).

DMI is headed by H.R.H Prince Mohamed Al Faisal Al Saud
with its Head Office in Geneva, Switzerland. It has been one of
the leading contributors to the development of Islamic-banking in
the world, particularly with regard to promoting new modes of
investments compatible with Islamic Shariah, through its network
of over 20 financial and business companies, represented in 15
countries around the world.

Shamil Bank of Bahrain E.C. (Islamic Bankers) came into
existence when the board of DMI decided to merge Faysal Islamic
Bank of Bahrain and Islamic Investment Company of the Gulf.
Based on the pioneering experience of Islamic-banking of both, a
new entity, Shamil Bank of Bahrain E.C was formed. The
amalgamation process was completed in June 2000, with an
objective to further enhance and consolidate the financial base and
to optimize the operational economies. This brought forth a
dynamic institution for integrating Islamic-banking principles and
systems on a global basis. Shamil Bank continues to thrive with its

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Islamic-principles and a strong asset base of US$ 2.9 billion and
equity of more than US$ 230 million. The Bank is fully committed
to the region and continues to hold a 60 percent controlling
interest in Faysal Bank Limited, Pakistan.

INTRODUCTION TO FBL

Faysal Bank Limited (FBL) was incorporated on October 3,
1994 in Pakistan as a public limited company. The shares of the
Bank are quoted on Karachi and Lahore Stock Exchanges. FBL
commenced business operations effective January 1, 1995, taking
over six branches of Faysal Islamic Bank of Bahrain E.C. (FIBB),
which had established its presence in Pakistan since 1987. Sixty
percent of its share capital is held by Shamil Bank of Bahrain E.C.
(Islamic Bankers), and the remaining forty percent by the local
public.

FBL was the first Bank to start Islamic-banking in Pakistan
under the name of FIBB. Its strict compliance to Shariah gives a
distinctive edge over other conventional Financial Institutions.
The Bank is governed by strict Islamic-banking rules and is not
allowed to invest in any government / institutional securities or
financial investment schemes that are interest based.
Since 1987, FIBB operations have been extended to Pakistan in the
form of full commercial operations. FBL, from the time of its
inception has been acknowledged as the Best Commercial Bank in

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Pakistan for two consecutive years by two reputable international
publications, i.e. Euro Money and Asia Money.

BRANCH NETWORK

Limited (FBL) has eleven branches spread all over the
country.

The details of branches include:

• 3 Branches At Karachi

• 2 Branches At Lahore

• 1 Branch At Faisalabad

• 1 Branch At Islamabad

• 1 Branch At Rawalpindi

• 1 Branch At Peshawar

• 1 Branch At Multan

• 1 Branch At Quetta

• 1 Branch At Mirpur (Azad Kashmir)

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All these twelve Branches of Faysal Bank Limited is divided
into three Regions:

North Region South Region Central Region

Islamabad Branch 3 Karachi Branch 2 Lahore Branch

Peshawar Branch Quetta Branch Faisalabad Branch

Rawalpindi Branch Multan Branch

Mirpur Branch

NOTE:

THE MULTAN BRANCH WAS ESTABLISHED ON 1 S T
NOVEMBER 2001 WITH ELEVEN STAFF MEMBERS.

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MISSION STATEMENT

VISION

“The introduction of a just and equitable financial system by
being a world class multi-purpose financial institution, providing a
range of specialised services, working on Shariah principles.”

VALUES

The mission statement translates into our objectives:

• To comply with the spirit of Islamic Shariah this will govern
our entire business by translating it into modern financial
products and services.

• To strive for halal profit, prudent growth and pursuit of
improved efficiency.

• To focus on serving our customers and shareholders by building
relationships based on trust and mutual benefit.

• To inculcate a culture of teamwork within the Bank by
introducing staff training and development programmes.

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MANAGEMENT HIERARCHY OF FAYSAL BANK
Pr es i de nt

C EO / CG M

Count r y Gene ral

Manager

Cre di t O p erat i ons Consumer
D ep artm en t D ep artm en t Banking

Corporate Country Head of
Banking Group Operations Consumer
Manager Banking

Country Risk Corporate Corporate
Manager Head Head

Regional Regional Head of
Corporate
Operations Consumer
Head Ban k in g
Manager

Regional Branch Sales &
Branch
Corporate Service
Head Manager Manager

Branch Branch Personal
Relationship Operations Services
Officer Manager Officers

Credit Officers Officers

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BOARD OF DIRECTORS

H.R.H Prince Mohamed

Al Faisal Al Saud Chairman

Mr. Farook Bengali President & CEO

Mr. Khalid A. Janahi Director

Mr. Mahmood A. Faruqui Director

Mr. Nasir Ali Shah Bukhari Director

Mr. Ziad H. Rawasdeh Director

Dr. Said Sa'ad Director

Mr. Tariq Iqbal Khan Director (NIT Nominee)

EXECUTIVE COMMITTEE:

Mr. Khalid A. Janahi Chairman

Mr. Hasan S. Al-Jabari Member

Mr. Farook Bengali Member

MANAGEMENT HIERARCHY

The highest authority in the management of Faysal Bank
Limited is the President. He is responsible for the overall
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functions of the bank. He sits at the Karachi Head Office of the
Faysal Bank Limited and controls the functions of the Bank.

Next authority after the president is CEO (Chief Executive
Officer) or CGM (Country General Manager). He is responsible
for the overall functions of the Bank. He assists the president in
his work.

Then the functioning of the bank is divided into three main
categories.

• Credit Department

• Operations Department

• Consumer Banking.

CREDIT DEPARTMENT

The main purpose of this department is to extend loans to its
clients for the productive purpose. Credit Department is also
called Corporate Banking Group.

OPERATIONS DEPARTMENT

Operations department of the Faysal Bank Limited is
responsible for the overall operations of the bank, Customer

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Services Department, Remittance Department, Clearing
Department, Accounts Department, etc. all come under it.

CONSUMER BANKING

Consumer Banking is the Marketing Department of the
Faysal Bank Limited. The Head of Consumer Banking Department
is present at Head Office of Faysal Bank Limited Karachi. He
prepares the new Deposit Schemes of the Bank and makes the
marketing strategies of these products. He then communicates
these plans to all the branches of the bank. He is being assisted by
Corporate Head and Corporate Head is being assisted by Regional
Head of Consumer Banking.

At Faysal Bank Limited, consumers are treated very well.
They are of the opinion that customers must be satisfied with the
services provided by the Bank. All of the Branches try to make
sure that customers are satisfied with the services being provided
by the Bank.

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DEPOSIT SCHEMES AND OTHER FACILITIES
OFFERED

At FBL "full service" does not simply mean offering a range
of products and services. It also means we provide personalized
service. We believe in dedicating ourselves towards achieving an
outstanding quality in all activities. Therefore, our strength
emanates from the quality of service we provide to our customers
as well as the competitive products that we offer in Consumer
Banking. At FBL, we are aggressively expanding by developing
new array of deposit and investment products in line with the
Islamic principles as well as focusing on developing business in
Consumer Finance.

Faysal Bank endeavors to build and strengthen customer
relationship and their loyalty by providing them with innovative
banking products and services.

We realize every customer’s financial needs are different. As
a result, we have developed a broad range of savings and term
deposit accounts, each offering specific benefits to individuals,
businesses and corporate clients.

Above all, we are always looking for new ways to make
banking as straightforward and friendly as possible in conjunction
with Islamic principles.

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PRODUCTS

• Pak Rupee Current Account – The Faysal Sahulat
Account

• Pak Rupee Savings Account – The Faysal Savings Account

• Pak Rupee Rozana Munafa Account

• Pak Rupee Rozana Munafa Plus Account

• Pak Rupee Faysal Izafa Account

• Pak Rupee Faysal Premium Account

• Other Products

SERVICES

• Global Transaction Service

• Safe Deposit Locker Service

• Travelers Cheque – Pak Rupee and Foreign Currency

• Evening Banking Service

• Fast Telebanking Service

• ATMs

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DEPOSIT SCHEMES

CONSUMER PRODUCTS

 CURRENT ACCOUNT

We may open a Faysal Sahulat Account with a minimum
balance of Rs.10,000/- only. The account offers unlimited
transaction facilities. We may avail all banking facilities with the
current account if we maintain the minimum balance requirement.
With a monthly average balance of only Rs.100,000/-* we can
enjoy the following valuable banking services absolutely free:

• Countrywide cash withdrawal facility 365 withdrawals per year

- Minimum transactional amount Unlimited

• Countrywide cash deposit facility Unlimited

- Minimum transactional amount Unlimited

• Payorders per year 365

• Cheque leaves per year 365

• Demand Drafts drawn on FBL, local365 per year
network

• Small Locker (where available) 01

• ATM Card (when available) 01

*Subject to change as per Bank's policy

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 SAVINGS ACCOUNT

We may open a Faysal Savings Account with only Rs.20,
000/-. There is no restriction on the number of transactions in this
account and we get our profit every six months. Profit is
calculated each day at the day's closing balance. Profit will be
subject to deduction of Withholding Tax at rates levied by the
Government of Pakistan and Zakat, where applicable. Current
expected rate of profit are as follows:

Tier Limit Expected rate of profit

UPTO Rs.25,000/- 00.50 %p.a.
Rs.25,001/- to Rs.50,000/- 03.00 %p.a.
Rs.50,001/- to Rs.100,000/- 04.50 %p.a.
OVER Rs.100,000/- 07.00 %p.a.

 ROZANA MUNAFA ACCOUNT

For Individual / Corporate Customers

To provide specialized solutions for corporations and
individuals, Faysal Bank’s Rozana Munafa offers the perfect
combination of a savings account matched with the flexibility of a
current account. "A saving account that thinks like a current
account".

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We can open this account with an average daily balance of
Rs.200, 000/-. their profits are calculated each day at the day’s
closing balance as long as our monthly average balance remains
above the minimum required balance. Profits will be disbursed
every six months and will be subject to Withholding Tax at rates
levied by the Government of Pakistan. Zakat will be deducted
where applicable. The higher our deposits, the higher the profit.
Current expected rate of profit are as follows:

Expected rate of
Tier Limit
profit

UPTO Rs.200,000/- 07.00 %p.a.
Rs.200,001/- to Rs.1,000,000/- 07.30 %p.a.
Rs.1,000,001/- to Rs.3,000,000/- 07.70 %p.a.
Rs.3,000,001/- to Rs.10,000,000/- 07.80 %p.a.
Rs.10,000,001/- to Rs.25,000,000/- 07.90 %p.a.
Rs.25,000,001/- to Rs.50,000,000/- 08.00 %p.a.
Rs.50,000,001/- to Rs.500,000,000/- 08.25 %p.a.
Rs.500,000,001/- and ABOVE 08.50 %p.a.
For Investment Banks only:

Tier Limit Expected rate of profit

UPTO Rs.100,000,000/- 06.75 %p.a.
Rs.10,000,001/- and ABOVE 07.00 %p.a.

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 ROZANA MUNAFA PLUS ACCOUNT

For Individual / Corporate Customers

To provide the best possible returns for individuals,
corporates and personal businesses, Faysal Bank’s Rozana Munafa
Plus, offers us the opportunity to earn profit every day of the year.
"Get the advantage of a term deposit with the convenience of a
savings account and the flexibility of a current account".

We can open this account with an average daily balance of
Rs.500,000/-. To avail a high profit on this account, they offer us
a tiered profit structure. Profit will be calculated daily on the
closing balance at the interim rate of return as long as our monthly
average balance is above the minimum balance required. If
monthly average balance falls below the minimum requirement,
then normal PLS savings account rate will apply but each day at
the day's closing balance. Profits will be disbursed every month
and will be subject to Withholding Tax at rates levied by the
Government of Pakistan. Zakat will be deducted where applicable.
The higher our deposit, the higher the profit. Unlike other savings
accounts, Rozana Munafa Plus does not keep us waiting. In fact,
profit is disbursed to our account each and every month, giving us
the advantage of a monthly income certificate (term
deposit).Current expected rate of profit are as follows:

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Expected rate of
Tier Limit
profit

UPTO Rs.500,000/- 07.00 %p.a.
Rs.500,001/- to Rs.1,000,000/- 07.10 %p.a.
Rs.1,000,001/- to Rs.3,000,000/- 07.25 %p.a.
Rs.3,000,001/- to Rs.10,000,000/- 07.40 %p.a.
Rs.10,000,001/- to Rs.25,000,000/- 07.55 %p.a.
Rs.25,000,001/- to Rs.50,000,000/- 07.70 %p.a.
Rs.50,000,001/- to Rs.100,000,000/- 07.85 %p.a.
Rs.100,000,001/- and ABOVE 08.00 %p.a.

 FAYSAL IZAFA ACCOUNT

At Faysal Bank, they realize every customer’s financial
needs are different. As a result, they have developed Faysal Izafa
Account, which provides an option of growth or a monthly income
plan.

Faysal Izafa Account is a term deposit account for corporate
and individual customers designed to help our money grow
securely and swiftly. An account can be opened with an
investment of Rs.25,000/-. This account gives us the option of one
month to five years deposits. On six month deposit profit is paid
monthly.

Current expected rate of profit is between 07.80% to 10.75%
p.a.

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Profit on the Izafa Account will be subject to deduction of
Withholding Tax at rates levied by the Government of Pakistan
and Zakat, where applicable.

OTHER PRODUCTS:

In addition to the special savings and investment schemes,
we can choose from a host of our regular notice deposit schemes
with maturities of 7 and 30 days. Profit will be subject to
deduction of Withholding Tax at rates levied by the Government
of Pakistan. And Zakat, where applicable. Current expected rate
of profit on notice deposits is between 05.00% to 05.50% p.a.

SERVICES OFFERED

Inter-Branch Transfer of Funds

We can both deposit and withdraw cash from any of our
branches, regardless of which branch in which we have the
account in. We need only to carry our cheque book.

Safe Deposit Locker Facility

All our branches offer lockers for lease, in a variety of sizes
at very competitive rentals. Locker facility is available to all
customers maintaining minimum balance requirements in their
respective account categories.

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Travelers Cheques

We may purchase Muslim Commercial Bank (MCB) Rupee
Travelers Cheques at any of our branches. Faysal Bank branches
also issue American Express, US Dollar and Pound Sterling
Travelers Cheques to provide maximum convenience and ease to
our customers.

Evening Banking

In addition to the regular morning banking hours, all our
branches are open for business from 3 p.m. to 5 p.m. We may
deposit cash and cheques, use our locker, open accounts and
conduct a host of other banking transactions during these hours.

Fast Telebanking Service

When banking with them we need not come to the bank for
routine work. Faysal Bank offers telebanking facility (currently at
selected branches). We are assigned a unique PIN with which we
can access information pertaining to our account over the
telephone. We can also open related accounts, transfer funds into
pre-designated accounts, request for statement by instant fax
through a phone call, amongst many other services.

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Automatic Teller Machines

In order to give its customers maximum convenience, Faysal
Bank has recently tied in with MCB to use their network of over
100 ATMS country-wide. This means that we can be in any
location where MCB ATM is located and still have access to our
Faysal Bank account 24 hours every day. All we have to do is
carry our ATM card with us.

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DEPARTMENTS OF FAYSAL BANK
LIMITED

1. CUSTOMER SERVICES DEPARTMENT

Customer Services Department is one of the important
departments in the bank. Faysal Bank Limited also has a full
fledge Customer Service Department. This department performs a
variety of functions. Every customer is first received by this
department and is assisted here as well. The functions which are
performed by Customer Services Department include:

• Account Opening

• Account Closure

• Balance Confirmation

• Statement of Accounts

• DD/TT/PO application

• Stop Payment Request

• Information about Deposit Schemes

• Cheque Book Requests etc.
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• Remittance Department

A major function of any bank is to transfer the funds from
one place to another. Faysal Bank Limited uses the following
modes to transfer the funds.

Demand Draft

Telegraphic Transfer

Payment Order

DEMAND DRAFT (DD)

Demand Draft is used to transfer funds from one city to
another. Client who wants to transfer his funds from one city to
another fills a form requesting the bank to prepare a DD. DD
applications form contains columns requiring information for the
preparations of DD e.g.

• Beneficiary Name

• Applicant’s Name

• Address

• Amount to be sent, etc.

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Bank deducts some charges against DD. These charges
include:

Commission

a. Upto Rs. 10,000 0.200/- minimum Rs. 20

b. 10,001 to 100,000 0.150/- minimum Rs. 40

100,001 to 1,000,000 0.0750/- minimum Rs. 15

Over 1,000,000 0.0500/- minimum Rs. 750

Postage = Rs. 35

Excise = Rs. 2

Advance Tax = .2%

If a client is a tax payer then advance tax is exempted
provided that he submits the tax exemption certificate.

TELEGRAPHIC TRANSFER

Telegraphic Transfer is another mode of transfer of funds. It
is the quickest mode of transfer of funds from one city to another.
For TT’s clients have to submit the application on a prescribed
form of the bank. Client can deposit money into the bank or can
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request the bank to deduct the amount against the TT along with
the charges against the issuance of TT from his account. The
changes against the issuance of TT charged by Faysal Bank
include:

Commission

Upto Rs. 10,000 0.200/- minimum Rs. 20

10,001 to 100,000 0.150/- minimum Rs. 40

100,001 to 1,000,000 0.0750/- minimum Rs. 150

over 1,000,000 0.0500/- minimum Rs. 750

Telex charges = Rs. 50 (flat)

Advance Tax = .2%

If a client is a tax payer then advance tax is exempted
provided that he submits the tax exemption certificate duly signed
and stamped. After receiving the application for the TT, bank
immediately issues the receipt to the customer and immediately
fills the TT issuing form which is duly signed and test number is
the corresponding bank by fax to whom TT is issued. The
corresponding bank after proper verification i.e. test agreement,
etc., pays the amount to the beneficiary. For the identification of

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proper person, Name, ID number and Bank Account Number is
used.

PAYMENT ORDER (PO)

Payment order normally called pay order is another
instrument of transferring fund. It is an instrument which is used
to transfer funds within the city. If any party wants to make
payment to another party within the city, it can make payment
through Pay Order. Bank deducts certain charges against the
issuance of Pay Order.

Commission = Rs. 50 (flat)

Excise duty = Rs. 2

Advance Tax = .2%

If a client is a taxpayer then advance tax is exempted
provided exemption certificate is duly signed and stamped. A
client who is willing to get a Pay Order from Faysal Bank Limited
will have to fill an application form which contains the following
information:

• Beneficiary Name

• Amount of Pay Order

• Applicant’s Name

• Charges deducted by the bank etc.

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Payment Order is handed over to the client in the typed form
and duly signed by the bank.

2. FOREIGN EXCHANGE DEPARTMENT

In this department the dealing is made in foreign currency.
In Faysal Bank Limited four types of foreign currency
accounts are available.

• US Dollar

• Pound Sterling

• Japanese Yen

• Dutch Mark

FUNCTIONS OF FOREIGN EXCHANGE
DEPARTMENT

This department performs the following functions.

 Account Opening

 Account Closing

 FC IN/Outward Remittances

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 Issuance of Travellers Cheques

3. CASH DEALING DEPARTMENT

Cash dealing department of Faysal Bank Limited is given the
full responsibility of handling all receipts and disbursement of
cash, as a result of transaction in both local and foreign
currencies. It is also responsible for the book – keeping of these
transactions and the safe custody of cash.

The following are the major functions of the Cash Dealing
Department.

 Cash Receipts

 Encashment of Cheques.

 Clearing Department

Clearing is a system in which banks exchanges cheques and
other negotiable instruments drawn on each other. A clearing
house facility is provided by the State Bank of Pakistan for
offsetting of cross obligations between the different banks.

The major function of clearing department is to receive the
cheques which are drawn on some other bank. The customer can
get the money in his account at Faysal Bank Limited from the

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cheques drawn on another bank. The bank accepts these cheques
and collects the amount from the bank on which cheques are drawn
through clearing house. Bank charges some commission for this
function.

The representative of all banks in Pakistan attend the State
Bank session which is performing the duties of clearing house on
each business day at some fixed time. They deliver cheques that
their bank may have negotiated by other banks. The responsibility
of smooth operation of the clearing function lies with the State
Bank of Pakistan.

When there are many banks in the country, each will receive
a number of cheques drawn on each other and deposited for
collection. A clearing house is a place where these cheques are
brought and mutual claims of each bank on each other are offset
and a settlement is made by the payment of a difference.

4. CREDIT OPERATIONS DEPARTMENT

In this department of Faysal Bank Limited, the loans are
advanced by the bank to its customers.

Loans are given in lump sum amount to the customers to
meet the capital requirements of customers. When customers want
loan to finance a large project, bank asks them to provide

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feasibility report of that project in order to ensure safe return of
loan.

Faysal Bank Limited extends loan for different maturity
period. There are short term, intermediate term, and long term
loans offered to its customers.

Maximum period of loans given to client is 180 days. For
extending loans there is an agreement signed between the bank and
the client in which purpose of loan, amount of loan, rate of profit
being shared by the bank and the client, etc. are agreed.

Difference between Faysal Bank Limited and other
commercial banks is that Faysal Bank Limited believes on Islamic
banking. In Islam interest is void therefore Faysal Bank Limited
believes on Islamic values. Faysal Bank Limited does not charge
interest on loans. It makes an agreement with the client and
charges its share of profit.

A current account is opened for the client when his/her loan
is sanctioned. If the client is unable to submit profit to the bank
then there is no compounding charged from him and his
outstanding profit remains there without any charge.

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BASIC REQUIREMENTS FOR EXTENDING
LOANS
In Faysal Bank Limited, the basic requirement for the
extension of loan is that the person who wants to get credit from
Faysal Bank Limited must be an account holder of the bank. It is
not required that the customer should be an account holder of that
particular branch in which credit application is submitted. If a
customer is an account holder of any other branch then his credit
worthiness can be checked from that particular branch.

TYPES OF LOAN OFFERED BY FAYSAL BANK LTD

Faysal Bank Limited offers different categories of loans to
its clients.

 Loan against foreign currency.

 Loan against property.

 Loan against shares.

 Loan Against Foreign Currency

Faysal Bank Limited extends loan against the security of
foreign currency. The profit margin charged by Faysal Bank
Limited against the foreign currency loan is 12% to 14%.

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The maximum limit for the extension of loans is 75% and
25% is margin retained by the bank e.g. if the client has $10,000
in his account then he can get maximum of $7,500 as a loan
amount. Following is done against:

• Foreign currency account mainly in dollars

• Fixed deposit receipt in dollars.

 LOAN AGAINST PROPERTY

A customer of Faysal Bank Limited can get loan against the
collateral of property. The profit charged by the bank against the
property ranges from 14% to 16%.

The rate of profit depends upon the value of property. If the
property is located in good place and documents of the property
are complete then bank will charge a profit rate of 14%.

 LOAN AGAINST SHARES

Faysal Bank Limited also extends loan against the security of
shares. But now a days due to the economic instability the loans
against the security of shares is not given. The bank charges
minimum commission from its valued clients.

35


COMPETITORS OF FAYSAL BANK LIMITED

Mainly all the banks in the Private Sector are the competitors
of Faysal Bank Limited. Faysal Bank Limited has a competitive
edge over other commercial banks. This competitive edge is that
Faysal Bank Limited is the only bank in Pakistan who is truly
adopting the concept of Islamic Banking.Other commercial bank
also claiming that they are doing the Islamic banking but in actual
sense, Faysal Bank Limited is the only bank which is following
the real concept of Islamic Banking.

Faysal Bank Limited invests its funds in only Islamic modes
of finance e.g. Musharaka business, Modaraba business, Ijara, etc.

Due to this factor, many people invest their money in the
Faysal Bank Limited and bank’s deposits are increasing year by
year.

36


SWOT ANALYSIS

After viewing Faysal Bank Limited the strengths,
weaknesses, opportunities and threats which we have identified are
as follows.

STRENGTHS

Computerization

The main strength of Faysal Bank Limited is that all of its
branches are fully computerized and they have latest software’s
available to keep the records of their customer’s accounts and
other important information. The advantages of computerization
are:

 That it reduces manual work.

 It provides good customer services.

Staff

The second strength of Faysal Bank Limited is that it has
staff which is well qualified and capable of performing the task
which is assigned to them.

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Fast Service

The Faysal Bank Limited is one of the leading banks in the
private sector. The act which makes them capable to achieve this
position is the quality and speed of services which they provide to
their customers.

Employee Service

The Faysal Bank Limited is the one of few banks in the
private sector which provide the employees written policy which
helps them to know the opportunities present ahead. The rules and
regulations of the banks are briefly described in the policy manual
and it is a sort of a guidance for employees to know what is right
and what is wrong.

WEAKNESSES

Small Network

The Weakness Of Faysal Bank Limited is that it has small
network of branches all over Pakistan. It has only 12 branches all
over the country and if we compare this proportion with any Govt.
bank than this proportion is very small.

38


Disbelief in Advertising

The other weakness of Faysal Bank Limited is its disbelief in
advertising. We can hardly find any advertisement of the bank in
print media or in electronic media. So management should
consider this and should realize the importance of advertising.
Only then they would be able to attract more customers and the
market.

OPPORTUNITIES

Govt. Policies

The economic and industrial reforms brought into country by
the present Military Govt. seems promising. This has not only
increased the confidence of people within the country but also
people outside the country are now more interested to have funds
invested in Pakistan. So now this is the time to avail this
opportunity and attract those investors to come in Pakistan and
invest funds. This is because when someone comes in the country
and deposit funds in the banks then the balances of the deposit in
the bank increases and the banks invest those funds to earn returns
and in that case the bank flourishes.

39


THREATS

Greater Competition

The major threat for Faysal Bank Limited is the intensified
competition among the private banks in the country. There are
many private banks now a days operating in the country and every
bank is trying to improve its functioning and try to give more
facilities to customers because in return they will get more
deposits from the clients. So if Faysal Bank Limited want to have
an edge from its competitors than it has to improve its functioning
and try to give more facilities and services to its customers.

Impact of Privatization

Now Days the Govt. is in an attempt to privatize the national
banks so that the banks improve their functioning and customers
have better service options. Like recently, MCB and Allied Bank
have been privatized. So this has increased the competition among
the private banks.

If Faysal Bank Limited wants to compete with other banks
and wants to increase its shares in the market then they have to
improve their services and also have to spend on advertisement.

40


FUTURE PLANS

Going forward, the Bank is poised for growth of its financing
base through selective Morabaha (Financing Resale of Goods),
Musharakah (Mutual Paticipation Financing), Modarabah
(Certificate of Investment) and Ijarah (Leasing) transactions.
FBL's equity base is extremely strong and it plans to aggressively
expand its business by introducing Islamic deposit and investment
products as well as focusing towards developing business in the
consumer finance segment.

They planned to open three more branches for which they
have gained approval from the state bank and they hope to have all
the three branches operating by the end of 2002.

CONSUMER FINANCING
INTRODUCING SOON

41


OBSERVATIONS AND CONCLUSION

We observed Faysal Bank Limited as a financially sound
bank. Its profits are increasing year by year, its staff is very good
and sincere with the bank. But due to the present economic slump,
the business of the bank is reduced. Foreign currency business of
the bank is almost stopped.

Now the bank is concentrating on its Rupee Business and in
this regard bank has recently introduced a new scheme called
Faysal Izafa. The bank is also opening its branches in near future
in Sialkot. This will help the customer of Sialkot to get better
services from such a good bank in the private sector.

We found the rules and regulation of the bank very good and
strict e.g. a limited staff is allowed to enter cash department and
Security system is very good and modern.

42


SUGGESTIONS

AND

RECOMMENDATIONS

After making this term report on Faysal Bank Limited,Abdali
Road, Multan, we have suggested some recommendations for the
bank which will help the bank to improve its service and the bank
would be able to compete with other banks in the private sector.

There is a great burden of customers on each branch of
Faysal Bank Limited. We suggest that Faysal Bank Limited should
open new branches so that burden of work should be shifted.

Credit cards should be started and marketing practices should
be increased. Marketing practices should be done in a best
possible manner and marketing strategy started at any of the
Faysal Bank Limited branch should be adopted by each branch of
Faysal Bank Limited.

There is a great need of online banking. It should be
introduced in the bank at its earliest. Bank should also start ATM
Card in the near future and the Bank should also spend on
advertising and promotion.

43

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