What is al – baraka islamic bank

Islamic Finance

Group Members

Nadeem Abbas 09 Muhammad Irfan Shahid 12 Muhammad Tanveer 15 Hafiz Muhammad Mustghas 22

Topic: Al-Baraka Islamic Bank (AIB)

University Of Education Okara Campus

What is Al – Baraka Islamic Bank (AIB)?

AlBaraka Islamic Bank (AIB) is a member of Albaraka Banking Group (ABG) which is a Bahraini Joint Stock Company listed on Bahrain and Dubai stock exchanges and one of the well-known leading international Islamic banks.

Albaraka Banking Group is the biggest Islamic banking group listed on the Bahrain Stock

Exchange in terms of capitalization. It has been rated by Standard & Poor's as BBB- with a short-term rating of A-3.

The authorized capital of ABG is US$1.5 billion, while the total equity amounts to about US$ 1.59 billion. With assets of US$11.2 billion, the Group has a wide geographical presence in the form of subsidiary banking Units in 12 countries, which in turn provide their services through more than 250 branches. These banking Units are Jordan Islamic Bank/ Jordan,

History

Al-Baraka Islamic Bank (AIB) has the honor of being the pioneer of Islamic banking in Pakistan and has been operating in the country as branches of Al-Baraka Islamic Bank Bahrain since 1991.

Over the years, the bank has successfully developed and maintained its identity as one of the leading providers of a host of banking products and services in strict compliance with Shari‟ah principles. Currently operating with 20 branches in 11 major cities of the country,

AIB offers a wide array of Islamic financing products such as Murabaha, Ijara, Musharaka and Islamic Export Refinance,

Al - Baraka’s Commitment to Islamic Banking

Al-Baraka Islamic Bank and Al-Baraka Banking Group are fully committed to develop and promote an integrated Islamic Financial System. Compliance with the rules and principles of Islamic Shariah is the core of the banking and financial activities and its philosophy. All its banking activities are very closely regulated by a Board of Shariah Advisors based at the Head Office in Bahrain and a Shariah Advisor based in Pakistan, to ensure strict compliance with the highest standards of Islamic Banking principles.

Present Status in Pakistan

Currently the authorized capital of Al – Baraka Islamic is US $ 1.5 billion, while the total equity amounts to about US $ 1.5 billion. The Group has a wide geographical presence in the form of Subsidiary banking units in, which in turn provide their services through more than branches. Currently there are 496 employees working at different branches of Al – Baraka Islamic at Pakistan.

With assets in excess of Rs. 70 billion; a workforce of 1400 professionals and a network of 89 branches in 37 cities and towns across Pakistan.

Vision and Mission of AIB

Vision To be a leading and a

diversified International Islamic Bank, Offering a wide range of Quality Products and Services and forming strategic alliances for a Competitive Edge.

Mission We strive to be a Premier Regional

Islamic Bank, Dedicated to the Economic and Social Development of our target market, Maximizing our Clients and Shareholders Value And focusing on the Human Resource Development In an environment of Creativity and Innovation.

Objectives of AIB

To enhance shareholder value whilst pursuing a strategy of business growth and geographical expansion.

To provide innovative and high quality research and development into Islamic financial products which comply fully with the principles of Shariah Law and Islamic values, for the benefit of our customers.

To utilize the Group’s geographical presence to distribute its products and services and promote cross border services.

To maintain the highest international standards of corporate governance and regulatory compliance.

Islamic modes followed by AIB

Mudarba

Musharka

Murabaha

Murabaha LC

Takaful

Ijarah

Istisna'a

Murabaha

Murabaha is an Islamic form of asset financing and has a fixed term and a predetermined profit. In a Murabaha the bank buys a specific asset that the customer wants, and after having owned it and becomes its property, it sells to the customer at the buying price plus a profit at a rate agreed at the time of entering into the contract. Murabaha helps enterprises and commercial customers by serving their project and business needs.

Murabaha LC

The customer submits an application to the bank to open a letter of credit for the purchase or import of goods, indicating that it wants to buy the goods from the bank upon arrival on a Murabaha basis.

The bank will open a letter of credit accordingly, and the price will be paid by the bank in its capacity as the buyer of the goods.

Upon the arrival of the goods, the bank sells them to the customer on a Murabaha basis at an agreed price which includes the cost of goods, a profit and service fees

Istisna'a

Istisna is an Islamic form of financing used to finance construction and industrial projects, such as the construction of buildings and so on. The unique feature of Istisna'a is that it allows the selling of an asset which does not exist at time of the contract. The payment can be in immediate cash or may be in the form of deferred payments.

Products of AIB

Al Baraka Basic Banking (Current account)

Khazana Account (saving account)

Sarparast Family Takaful

ABPL Auto Ijarah

Al Baraka Mahana Barkah

Al Baraka Mahana Amadani

Tifl-Young Savers Accoun

Housing Musharakah

Al Baraka Basic BankingSalient features

A Pak Rupee current account with no minimum balance requirements

No profit / return will be paid to the depositor on the balance maintained in the account

Can be opened with as low as Rs. 100/=

No minimum balance requirement and no penalty for low balances

Unlimited and free access to cash withdrawals through ABPL’s ATM network.

Transactions on non-ABPL ATMs will be charged as per the Schedule of Charges

Statement of account will be issued once a year

Other services will be provided as per prevailing Schedule of Charges

Additional benefits such as e-Statement, 24/7 Phone Banking, SMS Banking

Islamic concept

The ABPL Basic Banking Account is based on the Islamic principle of Qarz, whereby the customer is the lender and the bank is the borrower. Customer funds are invested with utmost care in halal business ventures only, and are payable, on demand, with neither any addition and/or penalty.

Khazana Account

Minimum initial investment of Rs. 100,000/-

Available only in Pak Rupees

Tiered profit structured

Unlimited deposits and withdrawals

Profit is paid on monthly basis and calculated on a daily product basis

Enjoy higher profits on higher balances

Additional benefits such as e-Statement, 24/7 Phone Banking, SMS Banking, ATM/Debit Card

Al Baraka Khazana account is based on the Islamic concept of Mudarabah. Under this arrangement the customer is Rab-ul-Maal (Investor) and the bank is Mudarib (Fund Manager). Customer deposit is invested in profitable business ventures which are legal and Shariah compliant. The profit/loss is shared on a pre determined ratios. As Fund Manager, the bank is entitled to a part of the profit, whereas profit distribution amongst the depositors and shareholders is made according to the weightages assigned to their investment at the beginning of each month.

Salient features Islamic concept

Sarparast Family Takaful

Saving for long-term needs in the future.

Regular contributions invested in a diversified portfolio of Islamic funds ranging from Sukuk to Mutual Funds, based on the customer’s risk appetite.

Flexible plans in terms of frequency of payment.

Takaful cover allows family to receive funds, in case of death of the participant.

Al Baraka’s Sarparast, safeguards your future, while giving you the financial freedom you deserve. It helps you plan necessary events of your life from marriage to education, retirement to vacations or pure savings in accordance with the Islamic principles.

Al Baraka Bank (Pakistan) Ltd. in association with Pak-Qatar Family Takaful Limited is offering an exclusive product “Sarparast – Family Takaful Plan”. Sarparast is a Shariah Compliant savings and investments plan exclusively designed to cater to your Takaful needs.


ABPL Auto Ijarah

Shariah compliant.

Quick processing.

Most affordable rentals.

No upfront Takaful (Islamic Insurance) charges.

No upfront registration charges.

No upfront rentals before delivery of the vehicle.

Payable in tenure of 24 to 60 months.

Minimum processing charges.

It is our commitment to put our customers’ values foremost and providing them with the banking solutions that are in line with Shariah Principles.

Al Baraka products and services are approved by the bank’s Shariah Advisor Justice (R) Khalil-ur-Rahman Khan, who has served as Chairman on the Shariat Appellate Bench of the Supreme Court of Pakistan and has been the Rector of the International Islamic University, Islamabad. He is also currently serving as a member of the Shariah Board of the State Bank of Pakistan.


Al Baraka Mahana Barkah

To qualify for Al Baraka Mahana Barkah Account profit rate minimum balance of PKR 10,000 and maximum of PKR 5.0 million is required to be maintained during that month otherwise normal savings account rate will be applicable.

Profit calculation on daily balance and credited in the account on monthly basis.

Free first Al Baraka Union Pay Debit Card.

Free e- statement.

Free Phone banking services through which you can get pay orders, cheque books, stop payments, ATM card replacement, duplicate bank statements at an exceptional discount.

All other charges as per bank’s Schedule of Charges.

Al Baraka Mahana Barkah Account is offered on the basis of Mudarabah principles of Islamic Banking. Mudarabah is a special kind of partnership where one partner gives money to another for investing in Shariah compliant avenues. The investment comes from the first partner who is called Rabb-ul-mal (Customer), while the management and work is an exclusive responsibility of the other, who is called Mudarib (Bank).

The Bank will announce weightages and profits sharing ratios 3 days before the beginning of the month. The Bank will share the profit at the gross income level and will subsequently credit the proportionate profit in the customer’s account at the end of the month. In case of loss, the customer will bear the loss as per the ratio of his investment.

Latest profit sharing ratios and weightages are available on our website or can be obtained from any branch of Al Baraka Bank.


Al Baraka Mahana Amadani

Minimum investment/ saving Rs. 50,000

Profit Calculation: Monthly

Profit payment options: Monthly

Available in Pak Rupee

Tenure: 1 Year to 5 Years

Free ATM/ Debit card with unlimited access through ATMs nationwide.

Additional benefits such as e-Statement, 24/7 Phone Banking, SMS Banking

Al Baraka Mahana Amadani is based on the Islamic concept of Mudarabah. Under this arrangement the customer is Rab-ul-Maal (Investor) and the bank is Mudarib (Fund Manager). Customer deposit is invested in profitable business ventures which are legal and Shariah compliant. The profit/loss is shared on a pre determined ratios. As Fund Manager, the bank is entitled to a part of the profit, whereas profit distribution amongst the depositors and shareholders is made according to the weightages assigned to their investment at the beginning of each month.


Tifl-Young Savers Accoun

Specially designed for children and youngsters to enjoy the benefits of Islamic Banking.

Tifl-Young Savers Account can be opened for any child and teenager aged between one day and 18 years.

Based on Islamic principles of Mudarabah and under the supervision of proficient Shariah Committee.

Available in Local Currency.

Profit calculation on daily balance basis in your account.

Profit accredited to your account on quarterly basis.

No limit for minimum or maximum balance.

Unlimited deposits and maximum of 2 withdrawals (over the counter) are allowed within a calendar month.

Free Al Baraka Union Pay Debit Card.

Al Baraka Tifl- Young Savers Account is offered on the basis of Mudarabah principles of Islamic Banking. Mudarabah is a special kind of partnership where one partner gives money to another for investing in Shariah compliant avenues. The investment comes from the first partner who is called Rabb-ul-mal (Customer), while the management and work is an exclusive responsibility of the other, who is called Mudarib (Bank).

The Bank will announce weightages and profits sharing ratios 3 days before the beginning of the month. The Bank will share the profit at the gross income level and will subsequently credit the proportionate profit in the customer’s account at the end of the month. In case of loss, the customer will bear the loss as per the ratio of his investment.

Latest profit sharing ratios and weightages are available on our website or can be obtained from any branch of Al Baraka Bank.


Housing Musharakah

AlB also provides the facilities of Housing Musharakah to his customer. AlB contribution is 80% of total investment, and client can contribute 20% of the investment. The employee can pay rental and installments to bank in order to get total share of the property or land which they jointly buy. The period is from 1 to 15 year.

Car Ijarah

AlB provide the facilities of car Ijarah/leasing to his customer. AlB provided fund up to 4 million to his customer for the period of 2 to 5 year. No interest concept is involved, therefore profit margin is not announced before transaction .finance on the concept of asset based financing. Therefore no chance of default for bank.