In practice we have two banking systems. One which follows normal interest based practices called conventional banking and second which follow Islamic law and perform interest free activities which is known as Islamic banking. Both these banking systems are distinguished as conventional banks follow the SOPs prepared by their higher authority, their income is interest which is earned by lending money and they transfer the whole risk to others. While Islamic banks follow policies made by Sharia that forbids interest that’s why Islamic banks do not deal with interest and are trade oriented banks and their income is profit which is earned by trading. They share risk with both lenders and borrowers.
In 1991 Allied bank and MCB bank were privatized and the obligation regarding was traded to consortium containing Ibrahim Leasing Limited and Ibrahim group. Obligation regarding was traded to Nishat Group lead consortium in 1991. HBL was privatized in 2003 when governing body of Pakistan steadily handover the organization control to Agha Khan Reserve for Monetary Improvement. In 2002 UBL was privatized with the proprietorship traded to most ideal Way Abu Dhabi cluster. The basic inspiration driving our study is to check the impact of privatization on productivity of banks in Pakistan.
The answer for the first question as explained below: There are some financial products used in Islamic banking and finance industry. The products or instruments, mainly derived from the Quran or prophetic traditions which related to business or interaction between individuals (muamalah), and some of the products are tailored made based on ulama interpretation (ijtihad) on several financial activities in the industry. A financial instrument is also a product, whose term and conditions define the risk-and-return profile of the instrument. This is also applied for Islamic financial instruments. According to Iqbal and Mirakhor (2011), in Islam, an Islamic financial product is considered lawful and legal by the sharia if the terms of the product
3.2 The centralized model The centralized model is based on central Shariah Board, attached to the Central bank which rules on the conformity of products and activities of all the IB must have their own SB, however it should comply with the rules set by the central Shariah Board. The centralized Shariah governance model is practiced in Malaysia, Pakistan and Sudan. In Malaysia , the central financial authorities are the Central Bank which is Bank Negara Malaysia and also Securities Commission. Two Shariah governance structure has been established, comprising a Shariah Advisory Council (SAC) at Central Bank of Malaysia for both financial authorities and Shariah Comitee in each Islamic bank. The Shariah standards followed are those of the SAC of Bank Negara Malaysia and of the Securities Commission.
Provides a more comprehensive view of interest rate risk”. After performing appropriate modifications, leading to an overall coverage of the basic interest sources, the duration gap method can serve as the main instrument for measuring interest rate risk. Dan Armeanu, Florentina-Olivia Bãlu and Carmen Obreja (2008) said in the article: “Interest rate risk management using duration gap methodology” that: the article took a short look at the methods for measuring interest rate risk and then explained and demonstrated how the duration gap model can be utilized for measuring and managing interest rate risk in banks. In “Can an accounting based
B) Interbank Back Office Operations Similar to merchant back-office operations interbank deals are also settled in the back-office. The deals are first confirmed and authenticated by the confirmation documents by the counterparty. Deals are integrated in the system and once authenticated are further processed for settlement. What is the 'Interbank Market'? The interbank market is the financial system of trading currencies among banks and financial institutions, excluding retail investors and smaller trading parties.
It also signifies a bank that act to some extent as an agent of another bank. It is also known as agency bank. It can be any of the below mentioned three types. • The bank in advance syndicate that advises supplementary giving banks of advances seized and adjustments in interest rates for an external or internal borrower • A bank that participates in the credit card plan of one more bank by delivering credit cards and giving supplementary obligations (excluding financing card receivables) • A external bank acting company in the U.S. on behalf of its parent bank, giving such tasks as delivering international letters of credit, but not consenting
TERM REPORT TOPIC 5- Critical Review of the State of Islamic Banking in Pakistan? How it is effecting the economy? SUBMITTED TO: SIR MUHAMMAD ALI JANGDA SUBMITTED BY: Aroosa Amin 1318145 Maheen Khoso 1411223 Shafaf A.Kayani 1411298 Syeda Shifa Faitma Naqvi 1411240 INTRODUCTION: The term “Islamic banking” refers to a system of banking or banking activity that is consistent with Islamic law (Sharia) principles and guided by Islamic economics. Two basic principles behind Islamic banking are the sharing of profit and loss and, significantly, the prohibition of the collection and payment of interest. Collecting interest is not permitted under Islamic law.
INTRODUCTION TO MALAYSIA FINANCIAL MARKET Financial market is a market in which the funds are transferred from those who have surplus funds to those with deficit. The funds are recognized as liability by the borrowers and lenders. There are a process of selling and buying, commodities, asset and securities in the area of financial market at low cost. In Malaysia, its Financial Market is manage or governed and regulated by the Bursa Malaysia. The barometer of Malaysia Financial Market is known as Malaysia Stock Exchange (MYX), which is previously known as Kuala Lumpur Stock Exchange.