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VsMEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERSSubmitted By: Muhammad Muavia Khan Rahmat ullah Danish Syad Azam Shah [SP09-MBA-081] [SP09-MBA-114] [SP09-MBA-027] [SP09-MBA-135]Submitted To: Subject: Submission Date:Dr. Waheed Akhtar Islamic Finance 13/05/2010Department of Management SciencesVSMEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS2COMSATs Institute of Information Technology, Lahore, Pakistan.VSMEEZAN BANK & FAYASL BANK PRODUCT COMP
Citation preview
Vs
MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS
Submitted By: Muhammad Muavia Khan [SP09-MBA-081]
Rahmat ullah [SP09-MBA-114]
Danish [SP09-MBA-027]
Syad Azam Shah [SP09-MBA-135]
Submitted To: Dr. Waheed Akhtar
Subject: Islamic Finance
Submission Date: 13/05/2010
Department of Management Sciences
VS MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS
COMSATs Institute of Information Technology, Lahore, Pakistan.
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VS MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS
MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON, OFFER TO CUSTOMERS
COMSATs Institute of Information Technology, Lahore, Pakistan.
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VS MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS
ACKNOWLEDGEMENT
We are heartily thankful to our supervisor, Mr. Dr. Waheed Akhtar, whose encouragement,
guidance and support from the initial to the final level enabled me to develop an understanding
of the subject. Lastly, we offer our regards and blessings to all of those who supported us in any
respect during the completion of the project.
COMSATs Institute of Information Technology, Lahore, Pakistan.
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VS MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS
Executive Summary
We have done this research task assigned by our course coordinator Dr. Waheed Akhter on the topic “Product comparison of Islamic Bank & Conventional Bank”. We hereby compared the Meezan Bank’s (Islamic) products offered to customers with Faysal Bank’s (Conventional) products. We prepared this assigned work by focusing on the current, saving & consumer finance products of both entities.
Meezan bank is the leading Islamic bank in Pakistan. It is the awarded bank of Pakistan in Islamic banking. It is a totally sharia-based organization. It offers paramount Riba Free Islamic products to the customers that can draw a customer’s interest in Islamic operations. Returns (Profits) from Meezan Bank’s investment pools are distributed among the all depositors according to the nature (Type) of product. There is no exploitation of customer; all products are of balanced nature.
Faysal Bank is a conventional bank. It runs its operations according to materialism as a conventional bank operates. It offer number of packages to attract customers; moreover it also cop-up different sectors of the economy like agriculture and corporate financing. All the products offered by Faysal Bank are of competitive nature with the product of other conventional banks. All the offered products are interest based.
It was concluded that there are several differences in operations of Islamic banking and commercial banking. Recommendations for both banks are given last. So that they improve their functions and products according to customers’ need. Moreover, the demands for Islamic products are increasing with the passage of time.
COMSATs Institute of Information Technology, Lahore, Pakistan.
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VS MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS
TABLE OF CONTENTS
Introduction……………………………………………………………….…………….. 07
What is Bank?..................................................................................................................... 07
History of banking in Pakistan:……………………………………….………………… 07
Banking In Pakistan:…………………………………………….………………………. 07
History and Background of Faysal Bank:……………………………………………… 07
History and Background of Meezan Bank:……………………………….……………. 08
Competitive Products Offered by Both Banks:………………………….…………….. 10
Current Account Products:………………………………...…….……………... 11
Saving Account Products:……………………………….…...….………………. 12
Consumer Finance Products:………………………………….………………... 17
Referance:……………………………………………………………………………...… 26
PREAMBLE
What is Bank?
COMSATs Institute of Information Technology, Lahore, Pakistan.
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VS MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS
In Simple words we can say that bank is a pipeline through which money moves into and
out of circulation. Bank accepts deposits and repays cash to its customers on demand. The bank
borrows money at a lesser rate of interest and lends it to the borrower at a higher rate.
History of banking in Pakistan:
At the time of independence, there were 487 offices of scheduled banks in the territories
now constituting Pakistan. Following the announcement of independence plan in June 1947, the
Hindus residing in the territories now comprising Pakistan started transferring their registered
offices in Pakistan, transferred them to India in order to bring a collapse of the new state. By
30th June 1948, the number of offices of scheduled banks in Pakistan declined from 487 to only
195.
Banking In Pakistan:
Pakistan has indeed unique banking history commencing as were from scratch at the time
of Pakistan of this subcontinent. However it soon comes over its extra ordinary banking
problems and by grace of Allah we have a stable banking sector.
History and Background of Faysal Bank:
Faysal Bank started operations in Pakistan in 1987, first as a branch set-up of Faysal
Islamic Bank of Bahrain and then in 1995 as a locally incorporate Pakistani bank under the
present name of Faysal Bank Limited. On January 1, 2002, Al Faysal Investment Bank Limited,
another group entity in Pakistan, merged into Faysal Bank Limited which resulted in a larger,
stronger and much more versatile institution. In fact it has the highest share capital amongst
private banks in Pakistan and is amongst the largest in terms of equity. Faysal Bank Limited is a
full service banking institution offering consumer, corporate and investment banking facilities to
its customers.
Vision
COMSATs Institute of Information Technology, Lahore, Pakistan.
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VS MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS
“Excellence in all that we do.”
Mission Statement:
“Achieve leadership in providing financial services in chosen markets through
innovation.”
History and Background of Meezan Bank:
Meezan bank is a premier Islamic bank and 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
commercial banking license dedicated to Islamic Banking, by the State Bank of Pakistan.
Meezan Bank stands today at a noteworthy point along the evolution of Islamic Banking
in Pakistan. The banking sector is showing a significant paradigm shift away from traditional
means of business and is catering to an increasingly astute and demanding financial consumer
who is also becoming keenly aware of Islamic Banking. Meezan Bank bears the critical
responsibility of leading the way forward in establishing a stable and dynamic Islamic Banking
system replete with dynamic and cutting-edge products and services.
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.
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
COMSATs Institute of Information Technology, Lahore, Pakistan.
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VS MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS
stakeholders value through an organizational culture based on learning, fairness, respect for
individual enterprise and performance.
Objectives
To develop a committed service culture which ensures the consistent delivery of our
products and services within the highest quality service parameters, promoting Islamic values
and ensuring recognition and a quality banking experience to our customers.
COMSATs Institute of Information Technology, Lahore, Pakistan.
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VS MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS
Meezan Bank Products Faysal Bank ProductsThere is a list of products offered by Meezan
Bank to their customer.
Current Account:
Riba Free - Current Account
Saving Account:
Riba Free - Rupee Saving Account
Riba Free - Dollar Saving Account
Meezan Bachat Account
Meezan Business Plus Account
Karobari Munafa Account
Labbaik Saving Aasaan
There is a list of products offered by Faysal
Bank to their customer.
Current Account:
Faysal Sahulat
Saving Account:
Faysal Savings Account
FCY Saving Plus
Faysal Mahfooz Sarmaya
Faysal Premium
Faysal Moavin
Faysal Market Link
Rozana Munafa Plus Account
COMSATs Institute of Information Technology, Lahore, Pakistan.
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VS MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS
Consumer Financing:
Car Ijarah - Islamic Auto Finance
Easy Home – Islamic Housing finance
Consumer Financing:
Faysal Car Finance
Faysal Home Finance
Faysal Personal Finance
Faysal Khushaal Kisan Scheme
CURRENT ACCOUNT:
In this type of account the client is allowed to deposit or withdraw money as he likes. He
may, thus, deposit or withdraw several times in a day as he likes. Usually the bank allows
this and charges service charges are deducted by the bank from current deposit account. It gives
advantage for paying debts by the convenient and safe means of sending Cheques through the
post thus avoiding the trouble and loss.
Current Account (Riba Free):
This bank account that is ideal for
businesses and individuals looking for Shariah
compliant banking and ease of access. With a
minimum amount of only Rs.10,000 this
product offers you a range of benefits
including personalized checking facility, no
restrictions on the number of transactions,
free Call Centre facilities, free balance
Faysal Sahulat:
Faysal Sahulat is a transactional
account specially designed for individuals and
business customers who seek instant access to
their funds at any FBL branch in Pakistan.
Account can be opened with an initial deposit
of Rs. 5,000.
COMSATs Institute of Information Technology, Lahore, Pakistan.
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VS MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS
certificates, priority banking and much more.
KeyFeatures of Meezan current A/c Products:
Free access to account through online banking at all Meezan Bank branches countrywide.
Unlimited transaction facilities.
On maintaining a monthly average balance of Rs. 1000,000 or more following additional facilities are provided, free of cost:
Cheque Book
Pay orders
Visa ATM/Debit Card
KeyFeatures of Faysal Current A/c Products:
Free access to account through online banking at all Faysal Bank branches countrywide.
Unlimited transaction facilities.
On maintaining a monthly average balance of Rs. 500,000 or more following additional facilities are provided, free of cost:
Cheque Book
Pay orders
Visa ATM/Debit Card
Outcomes & Recommendation:
Both banks offered the current account product with about same features but the
minimum deposit limits vary. Meezan bank limits is higher than Faysal bank. And the limit for
additional is higher than Faysal bank. Both bank have to set the lowest limits of deposit so that
the persons with low salary and wages can access it.
COMSATs Institute of Information Technology, Lahore, Pakistan.
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VS MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS
SAVING ACCOUNT:
An account used to deposit money at a bank or credit union and earn Interest / Profit on
the account over time. Money can be added or removed from the account by visiting the bank.
Usually you can add or withdraw funds at any time; there is no cost to do so. Banks may require
a minimum to open or maintain the account. This type of account is often the easiest account for
children to open. Because of its simplicity, it is the first account for many people and is used by
all ages.
Rupee saving Account (Riba Free):
With a minimum of only PKR 10,000
The Rupee Saving Account can be opened
under Musharakah Agreement. The profit
earned is calculated every month. And if the
client maintains a monthly balance of PKR
10,000 the client is eligible for the profits that
will be disbursed every month.
Meezan Bachat Account (Riba-Free):
Meezan Bachat Account is a unique
saving account that provides high monthly
returns with the flexibility to withdraw savings
if needed. Account Holders receive profit even
if their balance falls below Rs. 25,000/- in any
month. Profit is credited to their account every
month and is calculated with reference to the
minimum balance maintained in the account
during the preceding month. The Riba-Free
Faysal Savings Account:
Faysal Savings is specially designed to
cater to the need of those who like to earn on
their hard earned savings. This account
provides convenience for the account holders.
Account can be opened with an initial deposit
of Rs. 10,000/. Profit is calculated on monthly
minimum balance. Profit is paid on six
monthly bases
Rozana Munafa Plus:
Rozana Munafa Plus is a savings account
in which profit (Interest) is calculated on day
end balance, and is disbursed on a monthly
basis. The customer gets benefited because it
provides customer with the option of a high
value monthly profit (Interest) account.
Account opening and minimum balance
requirement of Rs. 100,000 for individual
customers and Rs. 500,000 for corporate
COMSATs Institute of Information Technology, Lahore, Pakistan.
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VS MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS
Meezan Bachat Account works under the
principles of Mudarabah. Maximum balance
limit for getting highest profit rate is Rs.
1,000,000/-
Meezan Business Plus:
Meezan Business Plus is a Mudarabah-based
account that allows customers to conduct their
banking transactions while availing a wide
range of free services and therefore provides
the ideal blend of convenience & flexibility
that you deserve in Islamic banking. Minimum
investment required to open an account is Rs.
100,000/- There is no restriction on
withdrawals or numbers of transactions
Meezan Business Plus Account can be opened
by Individuals, Sole Proprietorships,
Partnerships, Limited Companies.
Karobari Munafa Account(Riba Free):
Karobari Munafa is a high profit
savings account specifically tailored for large
Corporate or GoP (Govt. Of Pakistan)
controlled entities. It allows customers to earn
higher returns on surplus cash balances. It has
no preset transaction limits and comes with a
variety of free packaged benefits. Profit will be
calculated on a Daily Product Basis Minimum
customers.
Faysal Premium:
Faysal Premium is a savings account
specially designed for high value deposits with
attractive profit rates. Account can be opened
with an initial deposit of Rs. 5 million. Profit is
calculated on daily balance basis. Profit is paid
on monthly basis. Access to account through
on-line banking at all Faysal Bank branches
across Pakistan.
Faysal Moavin Savings Account:
Faysal Moavin is a Savings account
made for genuine individual savers. Faysal
Moavin offers the perfect combination of
savings account matched with the flexibility of
a current account. Account can be opened
with an initial deposit of Rs. 20,000. No
restriction on the number of transactions.
Profit is calculated on daily balance basis and
COMSATs Institute of Information Technology, Lahore, Pakistan.
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VS MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS
balance requirement for account opening is Rs.
1 Million. No restriction on deposits and
withdrawals.
Dollar saving Account (Riba Free):
With a minimum of only $100 you can
open a Dollar Saving Account in Meezan
bank under a Mudarabah Arrangement. That
is strictly in conformity with the principles of
Islamic Shariah. The return earned on the
Mudarabah Pool is calculated every month and
the profit ratio for all investors is declared at
the beginning of the month.
The Karobari Munafa Account:
The Karobari Munafa Account works
under the principles of Mudarabah and is
strictly in conformity with the rules of Islamic
Shariah. Profit calculation and all banking
transactions are in strict adherence to the
Islamic Shariah, monitored by our Shariah
Advisor and the Shariah Supervisory Board
Labbaik Saving Aasaan:
Labbaik Saving Aasaan is ideal for
paid on monthly basis. Tiered profit structure
providing an incentive to save more. This
means, as the deposit amount increases, the
profit also increases.
Faysal Mahfooz Sarmaya:
To provide convenience and value to
customers with foreign currency related needs,
Faysal Bank's Mahfooz Sarmaya foreign
currency account offers attractive features.
Account can be opened in three major
international currencies: US Dollars, Pound
Sterling and Euro. Minimum balance for
opening Mahfooz Sarmaya is 1000 units of the
currency in which the account is opened.
FCY Saving Plus:
FCY Saving Plus is a new foreign currency
savings account with attractive profit rates
where customers get their profit on a monthly
basis. Account can be opened in US Dollars,
Pound Sterling and Euro currency. Minimum
balance for opening FCY Saving Plus is 500
units of the currency in which the account is
opened. Profit is calculated on monthly
average balance. Profit is disbursed on
monthly basis. No FCY cash deposit charges.
COMSATs Institute of Information Technology, Lahore, Pakistan.
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VS MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS
customers if they are a small saver and wish to
save for their spouse, children, parents etc. They
can take benefit from this special Mudarabah
based Deposit account (available from 6 months to
20 year plans) for Umrah & Hajj where you will
also be entitled for profit on the deposited amount
thus providing you a bigger incentive to save for
Umrah/Hajj through Labbaik Saving Aasaan.
On maintaining the monthly average balance
equivalent to USD 50k or above, the following
additional facilities are provided. Borrowing in
PKR up to 90% of FCY. Preferential rates on
consumer finance.
KeyFeatures of Meezan Saving A/c Products:
Halal & High Competitive returns Profit payment on monthly basis open
for individuals only.
Waiver of application fee for Car Ijarah & Easy Home for accounts with minimum balance of Rs. 500,000
Free bank balance certificates
Visa Debit Card.
Free facilities: cheque books and pay orders
Saving Account opened under Musharakah Agreement.
KeyFeatures of Faysal Saving A/c Products:
Access to account through on-line banking at all Faysal Bank branches across Pakistan.
Profit payment on monthly basis open for individuals only.
Free online banking.
Priority Banking
Free facilities: cheque books and pay orders
Outcomes & Recommendation:
Both banks are offering the numbers of products in saving account categories because
large number of customers is interested in opening saving account. Because a specific return is
given on the deposit. Meezan bank give the return from their profit and is Halal according to
Shariah Meezan Saving Account opened under Musharakah Agreement while the Faysal bank
give the return from their interest based profit which is totally haram in Shariah point of view.
COMSATs Institute of Information Technology, Lahore, Pakistan.
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VS MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS
So, Faysal bank should launch Islamic product because they are operating in Islamic country.
COMSATs Institute of Information Technology, Lahore, Pakistan.
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VS MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS
CUSTOMER FINANCE:
The division of retail banking that deals with lending money to consumers. This includes a wide
variety of loans, including credit cards, mortgage loans, and auto loans, and can also be used to
refer to loans taken out at either the prime rate or the sub prime rate.
COMSATs Institute of Information Technology, Lahore, Pakistan.
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VS MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS
Islamic Car Financing:
Car Ijarah is Pakistan's first
"Interest Free" car-financing based on
Islamic financing mode of Ijarah or
Islamic leasing. This product is ideal for
interest averse individuals, looking for a car
financing that provides the convenience of a
well designed product while avoiding an
interest based transaction. Car Ijarah totally
Halal auto finance facility that is very
affordable, with quick processing and minimal
documentation. Car financing that is very
competitively priced, hassle-free, and totally
Halal.
As Ijarah is basically is the transfer of
usufruct of a fixed asset to another person for
an agreed period, at an agreed consideration.
Under car Ijarah agreement the car will be
given to the customer for the period agreed on
the time of contract. In car Ijarah the asset
remains in the ownership and risk of bank and
the customers only pay the rentals for use
of the asset: just like house rent. The
product has grown all over the country with a
portfolio of Rs 291 million as of 31st
December with non-performing contracts.
Faysal Car Finance:
Faysal Car Finance is the most flexible product
designed to meet customer needs. Car
Financing for locally manufactured new and
used cars and imported cars. Car Financing up
to five years. Down payment only 20% of the
car value plus Minimum documentation
charges. Fast processing. Option to
prematurely terminate the facility.
Eligibility:
Now you can swiftly, easily and cost
effectively owns a car if you are:
A Pakistani National holding the New Computerized Identity Card (NADRA)
Minimum 20 years of age at the time of financing.
A Businessman or Self-Employed with a minimum of one year experience in the same business and profession.
A Salaried person with at least two years employment history.
Limitations:
Faysal bank not leases cars to judges, lawyers, army, and police.
Mostly prefer the salaried persons rather than landlord.
COMSATs Institute of Information Technology, Lahore, Pakistan.
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VS MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS
Features:
No application fee Ease of acquiring any new locally
assembled car
No upfront Insurance Payment
Low Monthly Rent
No advance Rental
Available in tenures of 3, 4 and 5 years
Minimum security deposit as low as 20%
Easy Home Finance:
Easy Home is Pakistan’s first totally
Shariah-compliant Home Finance facility. One
that is comprehensive, affordable, and totally
hassle-free. For at Meezan Bank, They are
committed to meeting their customers’ needs,
in a truly Shariah-compliant manner coupled
with dedicated service excellence.
Easy Home: Islamic Housing Finance. The
nation’s 1st Islamic Housing Facility. It is a
very comprehensive product based on the
Diminishing Musharakah Mode that provides
the market a long awaited totally Shariah-
Complaint mortgage facility that allows home
Insurance Company ADAM G and EFU
Insurance 5%
Lease term 3, 4 and 5 years
Internal rate of return 18.5%
Down payment 20% of asset value
Soft ware use Symbol and Lims
Debt burden should less than 33%
Faysal Housing Finance:
Faysal Housing Finance gives their
customers so much more than great financing
rates. They help their customers all the way to
make their next move in an easy and timely
manner. Whether they want to build a new
home or are in a hurry to move into a ready
built house or just want to renovate their
existing home or even transfer their existing
expensive mortgage finance balance, They
offer the following Housing Finance Package.
A Pakistani Resident and National holding the
New Computerized Identity Card (NADRA) or
Non-Resident Pakistani holding a NICOP.
Buy a Home
COMSATs Institute of Information Technology, Lahore, Pakistan.
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VS MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS
purchase, building, renovation, and even
replacement of an existing mortgage. They
offer the following Housing Finance Packages.
Easy Buyer
Easy Builder
Easy Renovate
Easy Replacement
Meezan Personal Finance:
Meezan Bank is not dealing in personal
fiancé at this time for salaried person and non-
salaried persons.
Build a House
Home Renovation
Balance Transfer Facility
Eligibility:
Aged between 25 to 60 years if you are a salaried person and of 65 years if you are in business.
In continuous employment for 3 years and at least 1 year with the existing employer.
In business with at least 3 years of business or professional experience
Earning a net monthly income of Rs.30, 000/- or more [spouse’s income can also be combined with yours].
Faysal Personal Finance:
Personal loan is unsecured for bank
because no security is pledged in this situation.
Only take 6 security Cheques. Range is from 1
lack to 5 lack .It is only for salaried and
business persons. This department is much
sensitive because recovery of loan is difficult.
The target of this department is 1.5 million if
they fulfill this target than employees get
salary + bonus. In personal loan two types of
loan are included
Secured loan
COMSATs Institute of Information Technology, Lahore, Pakistan.
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VS MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS
Meezan Agri-Finance:
Meezan Bank is not dealing in Agri-
fiancé at this time for farmers, for developing
or productive purposes in agricultural sector.
Un-secured loan
The range of unsecured loan is from one lack
to 5 lack .In this loan no security is pledged so
unsecured. Mark-up is also high. Mark –up
varies according to situation.
While in secured loan security is necessary
and loan limit is above to 5 lacks.
Faysal Khushaal Kisan Scheme:
Faysal Bank offers specialized products
for the agricultural sector. Its branches located
in agricultural areas of Pakistan are all
equipped to help the local farmers improve
their yield and methods of farming by offering
timely and affordable modes of financing to
suit their needs.
Faysal Bank provide two types of Agri. Loan
Developing loan Production loan
Developing loan:
Developing loan is for long term for the
purpose of development of land, for example
loan for tractors, treasures and machinery use
in land for the purpose of development of land.
Developing loan further classified into
COMSATs Institute of Information Technology, Lahore, Pakistan.
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VS MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS
Form Loan Non- Form loan
Form loan is for forms for example tractor and
machines use in fields. While Non-form loan is
for dairy, poultry form, fishing, and shading
and for buying animals.
Production Loan:
Production loan is issued for the inputs of
fields. For example for seeds, fertilizers and
labors etc. It also has two types
Form Loan
Non- Form Loan
Form loan is used fro the inputs used in fields
for example seeds, fertilizers, water expenses
etc .While Non-form loan is used for the feed
of animals for example Oil cakes ,green food
etc Mark-up is 18.5%, 14.5% is charged by
KIBER and remaining 4% is charged by FBL.
The 4% markup can be changed by FBL
according to its requirements but KIBER
markup remains same for all banks. As a
security bank accept the land, gold, heavy and
valuable machinery and tractor etc The down
payment of tube well is 10% For Dairy and
Poultry form is 20%. For seeds, fertilizers etc
is no down payment.
COMSATs Institute of Information Technology, Lahore, Pakistan.
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VS MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS
Features:
High financing amounts. Maximum financing against property
value.
Flexibility to make partial prepayments.
Minimal processing charges.
Very affordable and competitive monthly payment plan with a regularly reducing rental amount.
Features:
Flexible repayment options Option to partially or fully terminate
the facility.
Financing tenor up to 20 years!!!
Fast processing.
Minimum processing charges
Enhancement option available
Financing available up to 80% of the market value of the property.
Outcomes & Recommendation:
Both banks are operating in consumer finance products but the mode of financing varies.
Meezan bank is fallowing the Shariah laws while the Faysal bank is fallowing the conventional
banking. In Faysal bank financing is totally interest based while the Meezan bank financing is
totally rental based. Meezan bank is providing just “Car Ijarah Finance” and Easy Home
Finance” while the Faysal Bank offering the Car financing, Home financing, Personal & Agri
Loan facility. Faysal Bank should convert their conventional financing into Islamic financing
because the Islamic financing is the ideal financing technique. In which both parties avoided
from interest as well as transect happily. There is no exploitation of parties/ persons involved in
financing contract. Meezan bank can be got the more market share by offering the personal and
Agri loan with Islamic mode of financing.
COMSATs Institute of Information Technology, Lahore, Pakistan.
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VS MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS
Basic Difference between conventional and Islamic banking
Conventional Banking Islamic Banking The functions and operating modes of
conventional banks are based on fully manmade principles.
The functions and operating modes of Islamic banks are based on the principles of Islamic Shariah.
The investor is assured of a predetermined rate of interest.
In contrast, it promotes risk sharing between provider of capital (investor) and the user of funds (entrepreneur).
It aims at maximizing profit without any restriction.
It also aims at maximizing profit but subject to Shariah restrictions.
It does not deal with Zakat. In the modern Islamic banking system, it has become one of the service-oriented functions of the Islamic banks to be a Zakat Collection Centre and they also pay out their Zakat.
Lending money and getting it back with compounding interest is the fundamental function of the conventional banks.
Participation in partnership business is the fundamental function of the Islamic banks. So we have to understand our customer’s business very well.
It can charge additional money (penalty and compounded interest) in case of defaulters.
The Islamic banks have no provision to charge any extra money from the defaulters. Only small amount of compensation and these proceeds is given to charity. Rebates are give for early settlement at the Bank’s discretion.
Very often it results in the bank’s own interest becoming prominent. It makes no effort to ensure growth with equity.
It gives due importance to the public interest. Its ultimate aim is to ensure growth with equity.
For interest-based commercial banks, borrowing from the money market is
For the Islamic banks, it must be based on a Shariah approved underlying
COMSATs Institute of Information Technology, Lahore, Pakistan.
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VS MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS
relatively easier. transaction.
Since income from the advances is fixed, it gives little importance to developing expertise in project appraisal and evaluations.
Since it shares profit and loss, the Islamic banks pay greater attention to developing project appraisal and evaluations.
The conventional banks give greater emphasis on credit-worthiness of the clients.
The Islamic banks, on the other hand, give greater emphasis on the viability of the projects.
The status of a conventional bank, in relation to its clients, is that of creditor and debtors.
The status of Islamic bank in relation to its clients is that of partners, investors and trader, buyer and seller.
Conclusion:After a complete analysis of both banks we conclude that both banks are doing well in
their respective fields. Moreover, Faysal Bank also have Islamic banking unit but still it has to
improve enough to represent Pakistan over the world in Islamic banking.
Meezan bank should also enhance its market share nationally and internationally by
launching awareness programs for society to create better understanding regarding Islamic
banking.
COMSATs Institute of Information Technology, Lahore, Pakistan.
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VS MEEZAN BANK & FAYASL BANK PRODUCT COMPARISON OFFER TO CUSTOMERS
Reference:
1. Official web sites of Meezan Bank.
i. www.meezanbank.com.pk
ii. www.almeezan.com.pk
2. Official web site of Faysal Bank
i. www.faysalbank.com
3. Others:
i. http://mohdhafez.wordpress.com/
ii. www.wikipedia.com
iii. www.answers.com
COMSATs Institute of Information Technology, Lahore, Pakistan.
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