Prof. Umar Qudoos Date of Submission

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1 Assignment on: HABIBMETRO ISLAMIC INVESTMENT CERTIFICATES (HIIC) Bank: HABIBMETRO ISLAMIC BANK Submitted To: Prof. Umar Qudoos Date of Submission Submitted By: Syed Hani Hasnain M.S.C. A&F Roll No: 10 1

2 Assignment Covering Topics: Introduction of Bank Islamic Products Offered By HABIBMETRO Mode of Operations Topic Selected Features OF HIIC What are the problems? Who are the end users of HIIC? Does it have any link with Kibor directly or indirectly? How rate of return is calculated? Who are the Target Customers of HIIC? Conclusion In Form of Table Fatwa on Islamic Product 2

3 Introduction HABIBMETRO Islamic have been a constituent of the successful Islamic banking model in Pakistan. Following its formal launch in March 2002, when the first Islamic Banking license was granted, HabibMetro opened its first Islamic banking branch in At present, we provide Islamic banking services through 6 dedicated branches in Karachi, Lahore and Islamabad, along with 198 desks located in the different branches across the country. We intend to increase our market penetration and access more customers by opening new Islamic Banking branches in other cities of Pakistan in the near future and wish to bring our core strength and expertise of Trade Finance to this cross section of customers. Our Islamic Banking window lays emphasis upon trade product offerings, and innovation therein, designed according to customer needs. HABIBMETRO Islamic is also keen to structure suitable financing arrangements where risk and rewards are aligned in a participation model. The Bank has been a front leader in technological innovation and has witnessed exceptional results in adopting IT as a strategy driver. Islamic banking in Pakistan in particular and the world in general, has to embrace this paradigm of change and strategically focus upon Information Technology, as it is the way forward. We at HABIBMETRO, are fully cognizant of this fact and are working on further developing and fine-tuning our IT platform. We expect this to streamline the Bank s operations and performance, while lending support to the Islamic banking industry development efforts in Pakistan. Islamic Products Offered By HABIBMETRO 1. Murabaha 2. Ijarah 3. Dminishing Musharakah 4. PLS Saving Account 5. Current Account 6. HIIC (HabibMetro Islamic Investment Certificate) 3

4 Mode of Operations Murabaha Mode of Operation Ijara Mode of Operation Murabaha Ijara MBT Diminishing Musharakah Mode of Operation Diminishing Musharakah PLS Savings Account Mode of Operation Musharaka Current Account Mode of Operation Qard HIIC (HabibMetro Islamic Investment Certificate) Mode of Operation Musharaka Topic Selected: HABIBMETRO ISLAMIC INVESTMENT CERTIFICATES (HIIC) HIIC is a term type of product underlying by Islamic mode of Musharaka offered by HabibMetro. The relation of the HABIBMETRO ISLAMIC INVESTMENT CERTIFICATES (HIIC) holder and the bank is Mudarib / Investor, the bank is Modarib (i.e Manager) and the depositors are Rab-ul-Maal (i.e Depositor). Bank Depositor Mudarib Rab ul Maal 4

5 Features Minimum amount of investment is Rs. 25,000/-. All the principles and rules pertaining to HIIC are based strictly on the Islamic principle of Modarabah, Therefore, profits and losses are shared by the partners according to the rules of Islamic Shari ah. HIIC are available in tenures of 1, 3, 6 months & 1, 2, 3, & 5 years. Monthly, Quarterly, Six Monthly profit payment is available for investment of 12 months and above. Monthly profit credit to linked account automatically. Profit is distributed as per predetermined weightages after deducting management fee. HABIBMETRO Islamic Investment Certificates can also be obtained in USD. Who are the Target Customers of HIIC? Individuals, Proprietors, Partnerships Small Medium Enterprises & Corporate etc. excepts for those entities prohibited by Shariah How rate of return is calculated? Profit is paid at maturity according to tenor of FDR (HIIC) on the basis profit rate declared. Does it have any link with Kibor directly or indirectly? Yes, it is linked with Kibor. Islamic Banking is in its initial stage of development, it is using the available benchmark for the banking industry, The benchmark set by Kibor Karachi Inter Bank Offer Rate. It is expected that once it is grown to a sizable level, it would have its own benchmark. It is quite possible that in 2016 IBOR (Islamic Inter Bank Offer Rate) issued by State Bank. 5

6 Who are the end users of HIIC? Incorporations Business Associates Enterprises What are the problems? No proper Knowledge about Islamic products. Low Share in market of Islamic Banking as compared to Conventional Banking. Limited Outreach of Islamic Banking Institutions Capacity Building Non availability of requisite quantity of Shariah compliant instruments CONCLUSION HabibMetro Islamic Investment Certificate HIIC Mode of Operation Minimum Balance Requirement Target Customers Rate of Return Calculation Linked with Kibor End Users Minimum Time Period Maximum Time Period Problems Musharaka Rs.25,000 Individuals, proprietors, partnerships SME and corporate etc. excepts for those entities prohibited by Shariah. On the Basis of Profit rate declared By FDR on maturity YES Incorporation, Business Associates, Enterprises 7 days 5 Years No knowledge about Islamic products, Lack of interest in Islamic banking etc.. 6

7 Fatwa on Islamic Products of: HABIB METRO ISLAMIC BANK 7

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Developing Islamic Finance Secondary Markets

Developing Islamic Finance Secondary Markets By Ahmed Ali Siddiqui Vice President & Manager, Product Development & Shariah Compliance (PDSC) Meezan Bank Limited 2 nd IIFM Conference - June 18, 2007 Islamic