What is the Mudarabah model in Islamic banking?

The Mudarabah model is a profit-sharing arrangement where one party provides capital while the other manages the investment. In this case, the customer is the Rab-ul-Maal, providing funds, and Meezan Bank acts as the Mudarib, managing those funds. Profits are shared based on a predetermined ratio, while losses are borne by the capital provider unless caused by negligence from the bank. This model aligns with Islamic finance principles, promoting ethical investment practices.

What types of accounts does Meezan Bank offer?

Meezan Bank offers various accounts, including Current Accounts based on Qard, Savings Accounts under the Mudarabah model, and Islamic Term Deposit Receipts (I-TDRs). Each account type has specific features, profit-sharing mechanisms, and terms of operation. Customers can choose accounts based on their financial needs and compliance with Islamic principles. Detailed descriptions of each account type are available on the bank's website.

How is profit calculated for savings accounts?

Profit for savings accounts at Meezan Bank is calculated based on the distributable profit of the business, which is derived from the income generated from depositor funds. The calculation deducts direct expenses, write-offs, and allocations to reserves before determining the profit share for customers. The bank periodically updates the profit-sharing ratios and weightages, ensuring transparency and compliance with Shariah guidelines. Customers can access this information through bank branches or the bank's website.

What are the customer responsibilities outlined in the terms?

Customers are responsible for providing accurate information during account opening and for keeping their communication details updated. They must also understand the terms of service, including profit-sharing mechanisms and potential risks associated with their investments. Additionally, customers are required to notify the bank of any changes in personal circumstances that may affect their account. Failure to comply with these responsibilities may result in penalties or account restrictions.

What happens if there is a loss in the investment pool?

In the event of a loss in the investment pool, all investors share the loss proportionately based on their contributions. However, if the loss is determined to be due to gross negligence or willful default by the bank, customers will not be liable for that loss. This provision protects customers and ensures that they are not unfairly penalized for circumstances beyond their control. The bank's Shariah Board oversees these determinations to maintain compliance with Islamic finance principles.

Meezan Bank Terms and Conditions for Accounts

1. Relationship between Bank & Customer

1.1. For all profit bearing/Savings Account/Islamic Term Deposit Receipt (the

“I-TDR”) of local or foreign currency, the relationship between Meezan

Bank Ltd. (the “Bank”) and Customer shall be based on the Islamic

principles of Mudarabah, where the Customer is the Rab ul Maal and the

Bank is the Mudarib. The Bank as the Mudarib may invest or disinvest, at

its sole discretion, money/funds received by it from the Customers in any

of the Businesses (the “Business”) which the Bank deems fit with the

approval of Bank’s Resident Shariah Board Member (the

“RSBM”)/Shariah Board of the Bank. There could be several saving

schemes/products and additional features in respect of such schemes and

I-TDRs as may be applicable from time to time which shall be stipulated

in product brochures and at the website of the Bank at

www.meezanbank.com (the “Bank’s website”).

1.2. Funds deposited by the Customer with the Bank under the Current Account

are on the basis of Qard and therefore shall be payable by the Bank upon

demand without any profit. The Bank may at its discretion utilize such

funds as it deems fit with the approval of the RSBM/Shariah Board of the

Bank.

2. Profit & Loss sharing

2.1. The Bank, as Mudarib, will share in the profits of the savings

account/product based on a predetermined percentage of the Business's

distributable profit (the "Mudarib Share"). The "Distributable Profit of the

Business" is calculated as the profit earned on depositor funds i.e., income

of the Business, minus: (i) all direct expenses, write-offs & losses of

investments, (ii) allocations to the Profit Equalization Reserve (the

"PER"), as and when required; and (iii) Bank's share as an investor. The

Customer will receive their share of the profits based on a predetermined

percentage and weightage from the Distributable Profit of the Business,

after deducting the Investment Risk Reserve (the "IRR"), as and when

required. The Mudarib Share applicable to profits may vary periodically in

accordance with RSBM guidelines and Clause 2.3. Updated information

on the Mudarib Share, weightages, PER, and IRR policies is available at

all Bank branches and on the Bank’s website.

2.2. The Bank may at its option also participate in the Business as an investor.

The Bank’s share in profit as an investor will be in proportion to the Bank’s

equity invested in any pool before distribution of profit between Rab-ul-

Maal and Mudarib.

2.3. All the Customers/I-TDR Holders shall be assigned weightages (profit

distribution ratio for weighted average investment) based on the features

of the saving scheme/product and/or I-TDR(s) held by the Customers, such

as tenure, profit payment options and other applicable features for the

purposes of calculation of profit. The weightages applicable to all saving

schemes/products/I-TDRs shall be announced at the end of every month

and shall be available at Customer’s request and/or at Bank’s website. The

weightages shall be announced at least 3 working days before the

beginning of the period concerned and shall not be changed during the

period.

2.4. In case of Savings Accounts, unless otherwise indicated by the Bank, profit

would be applied on monthly basis. All accounts are finalized at the end of

the month by the Bank for calculation of profit or loss.

2.5. Profit calculation method used as per the deposit product specification are

on a daily product basis (i.e. daily day end balance maintained in such

accounts calculated with the respective weightages applicable). Such

method associated with the respective deposit products is mentioned in the

product brochure as well as available on Bank’s website.

2.6. In the event of loss on either the capital or revenue account in respect of

the Business, all investors of the investment pool shall share in such loss

on a pro rata basis proportionately as per their investments. However, if

after due consideration of the matter, the RSBM/Shariah Board determines

that the loss incurred by the Business was caused by the gross negligence

or willful default of the Bank, the Customers will not be liable to share in

such loss.

2.7. Redemption of any amount subject to I-TDRs/Savings Accounts by the

Customer shall mean the transfer of its respective share in the Business

along with all related risks and rewards as such redemption shall be on the

basis of the principal value of the investment, subject to the provisions in

respect of Profit in Clause 2.1 and Loss in Clause 2.6 hereof.

2.8. The I-TDRs issued by the Bank shall be governed by these terms as well

as the Terms and Conditions for Islamic Term Deposits (the "I-TDR

Terms"). To the extent that these terms are not inconsistent with the I-TDR

Terms, they shall apply to the same extent and effect as if the I-TDR

Holder is a Savings Account Holder of the Bank and the funds invested in

the I-TDRs are considered as amounts available in the Savings Accounts

of the I-TDR Holders.

2.9. No profit will be paid on Current Accounts (Pak Rupees/Foreign

Currency) as these are on the basis of Qard.

3. General

3.1. Current & Savings Accounts hereinafter shall be called as (the “Account”).

3.2. Upon receipt of duly filled Account Opening Form and the documentation

and information required thereunder or otherwise by the Bank and

biometric verification of Customer along with due diligence/verification

of Customer inter alia in compliance with State Bank of Pakistan (the

“SBP”) rules and regulations, the Bank may, at its sole discretion, open an

Account and/or agree to provide the allied banking services (the

“Services”) to the Customer. In case the Customer is or becomes visually

impaired/physically or mentally handicapped, with shaky or simple

signature or illiterate, the Customer shall provide/execute additional

documents as per the requirements of the Bank and Account operations

shall remain subject to the policies of the Bank, as amended from time to

time.

3.3. In case of any change in the communication addresses and/or number

(including mailing address, electronic mail (the “Email”),

telephone/mobile number(s), etc.), (the “Communication Details”), the

Customer shall immediately notify the updated Communication Details to

the Bank. The Customer shall be solely responsible to get his/her

Communication Details updated for each of his/her Account(s) and

Service(s). The Bank shall not be liable for any wrong, incorrect, and/or

non-delivery of communication and/or any losses suffered by the

Customer, as a result of the Customer failing to notify the Bank of the

change in his/her Communication Details.

3.4. The Bank may accept cheques, drafts and other instruments payable/or

endorsed to the Customer for collection entirely at the Customer's own

risk. Uncleared instruments, though credited, shall not be drawn against,

and if the same is allowed to be drawn against, the Bank shall have the

right to debit the Account of the Customer without any intimation and/or

notice and without prejudice to Bank’s rights, if the proceeds of the

instruments are not realized and/or credited in Customer’s Account.

3.5. The Customer, with his/her free will, authorizes the Bank to debit any

Account of the Customer maintained with the Bank and the Bank shall

subsequently inform the customer for all expenses, fees, commissions,

taxes, duties, Zakat, overdue against any finance facility/Services,

overdrawn amounts, international transactions in respect of conversion

rates of foreign currency, erroneous transactions, fraudulent banking

transactions, parallel banking, reversal of credit entry erroneously made

due to bona fide error by the Bank or any other bank, and/or other charges

and claims, damages, actual losses incurred, suffered or sustained by the

Bank in connection with the opening/operation/maintenance of the

Account including withdrawals/transactions through the use of Internet

Banking, Mobile Banking, and/or ATM/Debit/Charge Card, whether

through ATM, POS or internet and/or providing the Services and/or for

any other banking services including Internet Banking, which the Bank

may extend to the Customer unless exempted by SBP, Federal or

Provincial competent authorities.

3.6. Zakat shall be deducted from Customer's Savings Account(s) and I-

TDR(s) on individual investment basis under Zakat & Usher Ordinance

1980 unless exempted in accordance with the provision(s) of the relevant

law. Nevertheless, the Customer is advised to perform their own

calculation, in accordance with the injunctions of their respective Fiqah

and pay Zakat accordingly.

3.7. In case sufficient amount is not available in the Account for settlement of

overdue against any finance facility, the same shall subsequently be

reported in the Credit Information Bureau (CIB) of SBP as overdraft

extended on no markup/zero profit rate, as deemed necessary by the Bank.

3.8. The Customer authorizes the Bank and gives unconditional consent to

share personal data and details/information/documents of Customer, its

Accounts and transactions with any court, law enforcement agency, tax

and/or other governmental authority and consultants/service providers of

Bank without requiring any further consent/prior intimation to the

Customer. The Bank shall not be liable for any loss or damages suffered

by Customer due to disclosure of such information by Bank.

3.9. The Customer may perform withdrawal transactions through Bank’s

official Internet Banking and Mobile Banking application. Withdrawals

can also be made through cheque and Debit Cards supplied by the Bank

upon specific written request of the Customer. Cheques and other payment

instructions are to be signed as per specimen signature supplied to the Bank

and alterations therein are to be authenticated by the Customer's complete

signature. Any stop payment instructions shall be entertained by the Bank

if the instrument is not encashed or debit entry is not made from

Customer’s Account. All cash withdrawals in a currency/currencies other

than Pakistan Rupees shall be subject to the availability of sufficient

currency notes with the Bank at the time of withdrawal. In case of

bouncing of cheque(s) for multiple times, whether on various grounds or

otherwise, the Bank may at its discretion close any Account(s) with

immediate effect by sending an intimation letter to the Customer. Any

funds lying in such Account shall be sent to Customer in accordance with

clause 3.16 below.

3.10. If the Account is opened in the names of two or more persons, the balance

to the credit thereof at any time shall belong to the Customers jointly. Such

persons shall be jointly and severally liable for all liabilities incurred on

the Account and the Services obtained by the Customers from Bank.

3.11. Accounts with “Either or Survivor” operating instructions can be operated

by any authorized signatory without the need of joint signatures/approval

of all Account Holders. Herein, Account operations include execution of

transaction(s) of whatsoever nature and/or obtaining Account related

services such as I-TDR, locker, debit card, etc. Such transaction(s) and/or

service(s) will be binding on all Account Holders. However, in order to

close such Account, signature of all Account Holders would be required.

3.12. In case of Joint Account, whether with either or survivor operating

instructions or otherwise, in the event of the death of any of the Customers,

the balance shall be disposed of in accordance with the law/regulation

prevalent at that time. The Bank shall not be liable for any transactions,

loss or damage that arise as a result of Bank acting in relation to the account

prior to the date on which the notice of the Customer’s death is received

by the Bank in writing.

3.13. Notwithstanding anything contained herein or in any Customer's

instructions (including instructions for operation account on either or

survivor) or in Bank's policies, the operation and maintenance of joint

account shall be subject to (i) principles, as enunciated in Shariah, (ii)

prevailing laws, including laws on inheritance/succession and (iii)

applicable judgments of superior courts.

3.14. Any Account including similar account opened for any product/Services

including Foreign Currency Account that has no customer-initiated

transaction (debit or credit) or any customer-initiated activity for more than

12 months shall be designated as Dormant Account (the “Dormant

Account”). Debit/Credit of Bank’s system generated transactions of

money in the Dormant Account(s) shall not reactivate the Dormant

Account. Similarly, credits received in Account on account of inward

remittances, clearing, cash deposits or other such transactions shall not

reactivate the Dormant Account. Withdrawals from the Dormant Account

shall be subject to the approval of the relevant Branch Manager/Manager

Operations or in accordance with the Bank’s prevailing policies on the

subject. Dormant Account of a Customer shall be reactivated by the Bank

upon receiving Customer’s specific request (all Customers in case of joint

operating instructions) from registered channels and also fulfilling other

formalities as required by the Bank for reactivation of Customer’s

Dormant Account. In case an Account remains inoperative for ten (10)

years, the funds lying in the Dormant Account shall be surrendered to the

SBP in compliance of prevailing rules and regulations. Accordingly, the

Mudarabah agreement shall be considered terminated on 31

March of the

year of surrendering such funds to SBP and after the conclusion of this

activity, the Bank shall close the Account.

3.15. The death of a customer should be immediately informed to the Bank

irrespective of the nature of Account and/or Account operating

instructions. Upon receiving notice of the demise of a Customer and/or

becoming aware of the fact from any reliable source, the Bank shall

immediately mark the Account as deceased and also shall not be obliged

to allow any operation and/or withdrawal except on the production of

evidence of entitlement or right to operate the Account as per Bank’s

satisfaction.

3.16. Bank reserves the right, at its sole discretion, to close Customer’s Account

without any reason/cause by giving 15 days advance written notice. If the

funds available in the Account are not withdrawn within the notice period,

then after expiry of 15 days, the available balance in the Customer’s

Account will be sent through Payorder at the mailing address of Customer

available in Bank’s record. Furthermore, the Bank may also close the

Account(s) having zero balance for a continuous period of 03 months.

3.17. The Customer may provide a written request on Bank’s prescribed form to

close his/her Account. Such request shall be entertained if the Account is

free from all restrictions as per Bank’s policy and related regulations.

3.18. Once an Account is closed, all the Services associated with the Account

will automatically stand terminated.

3.19. On closure of an Account, the Customer shall return the unused cheques

and ATM/Debit/Charge Card(s) pertaining to the Account forthwith to the

Bank. Alternatively, for cheques, it may be confirmed to the satisfaction

of the Bank in writing that the unused cheques have been destroyed.

3.20. In respect of an Account opened in the name of minor, the Bank shall be

entitled to act as per the request and/or on the instructions received from

the person(s) whose name is given as guardian at the time of opening the

Account and accept the same as correct, accurate and duly authorized.

3.21. On the date, the minor attains the age of majority (18 years in case of

natural guardian or 21 years in case of guardian appointed by court),

minor’s Account shall be marked as “Debit Blocked” and the guardian will

be required to close minor’s Account. In case the guardian fails to

officially close the minor Account, the Bank shall have the discretion to

close this Account and pay the credit balance (if any) in the Account to the

erstwhile minor. However, orders of the court shall be followed by the

Bank, in case the guardian had been appointed by court.

3.22. In the event of death of a guardian of minor Customer before the minor

has not attained age of majority, the Account operation shall be suspended

until the minor attains age of majority or a guardian is appointed by the

court or a direction for operation of such account is issued by a court, in

accordance with a certified copy of court order. On attaining age of

majority, the minor Customer shall be required to open a new Account and

the balance in minor’s Account shall be transferred to such new Account.

3.23. In the event of death of minor Customer, the Account shall be treated in

accordance with succession law/law of inheritance and in similar manner

if the Customer was not a minor.

3.24. The Customer may request the Bank to allow operations of Account

through a third-party by submitting Bank’s prescribed mandate form.

However, it shall be subjective to the judgment of the Bank to reject or

approve such request. The Bank also reserves the right to revoke its

approval of the third-party mandate at any time, irrespective of approving

Customer’s mandate request earlier. All mandates and powers shall cease

to exist on death of Customer.

3.25. The Customer shall make all transactions through prescribed channels and

immediately get official receipt of transactions. The Bank shall not be held

liable for losses sustained by the Customer while dealing with Bank's

employees on personal/private/non-official terms and matters.

3.26. Safe custody of access tools of Customer(s) Account(s) such as

ATM/Debit/Charge Card(s), PIN, T-Pin, Cheque(s), e-banking

username/password, other personal information, etc. is exclusively

Customer’s responsibility. The Customer shall not disclose any such

confidential information with any person irrespective of their confirmed

capacity or posing as Bank’s employee(s), SBP official(s) and/or

official(s) of any other government department in any mode of

communication. The Customer shall be solely responsible for any kind of

loss/damage/fraud that arises in case of disclosure of any such

personal/sensitive information from Customer’s end either through call,

SMS, mail, Email, whaling, phishing, vishing, pharming, spoofing,

shoulder surfing, any virus/malware in Customer’s device(s), and/or

through any such medium whatsoever.

3.27. In case of loss or theft of cheque book/cheque, the customer shall

immediately notify the concerned branch of Bank in writing for such

loss/theft. The Customer takes the liability for any loss or damages, if the

incident of loss/theft of cheque book/cheque is not reported to the

respective branch before payment.

3.28. The Customer declares that all sums deposited, held and/or transferred in

his/her Account along with all transactions in the Account shall not be in

contravention of applicable laws, including but not limited to Benami

Transactions (Prohibition) Act, 2017.

3.29. The Bank reserves the right to block operations of Customer’s Account(s)

in case of any suspicious/fraudulent transaction(s) and/or in compliance of

policies of the Bank, all prevailing laws, instructions from governmental

agencies, SBP’s regulations, rules, directions, circulars, decrees, by-laws

applicable to the Bank, RSBM/Shariah Board guidelines, dispute by joint

accountholder(s), and also due to any reason/cause where the Bank deems

fit to block the Account(s) without any necessary intimation to the

Customer. The Account operations may be restored by the Bank after the

Bank is completely satisfied with such restoration. The Bank shall not be

liable for any loss or damage that may arise due to Customer’s Account(s)

being blocked by the Bank.

3.30. The Bank may transfer the Account(s) of its customer(s) to any of its

branch and/or change the location of branch as and when required with due

intimation to the Customer(s) through any appropriate mode of

communication selected by the Bank.

3.31. The Customer shall be under obligation to solely bear any and/or all taxes,

duties, levies and charges in relation to the Services, deposit, credit, debit,

transfer of amount(s) in/from Account and/or in respect of operation and

maintenance of Account. The Customer unconditionally assumes all

obligations in respect of payment of stamp and other duties,

chargeable/payable on signing/execution of account opening form and/or

on any connected and ancillary document(s)/instrument(s).

3.32. The Customer undertakes that he/she will only use the Account for

Shariah-compliant activities or transactions and shall not conduct any

Shariah non-compliant activity or transaction through this Account.

3.33. Customer shall abide by terms & conditions of other products and Services

subscribed by Customer, in addition to these Terms and Conditions.

3.34. The charges/fees for providing services will be recovered on such rate and

frequency as decided by the Bank as per prevailing Schedule of Charges

(the “Schedule of Charges”) and no request or claim for refund would be

entertained. The Bank reserves the right to discontinue/suspend the

Services due to non-payment/non-recovery of associated charges.

3.35. The Customer agrees and undertakes that any transaction authorized by the

Customer shall not be from or for benefit of the entities, individuals or

organization banned/ restricted by any national or international authorities.

The Customer shall ensure strict compliance of prevailing laws, SBP’s

rules, regulations and/or circulars for opening, operating and maintaining

of Account including but not limited to Anti Money Laundering and

FATF. The transactions shall not be in contravention of SBP’s Anti-

Money Laundering, Combating Financing of Terrorism & Countering

Proliferation Financing (AML/CFT/CPF) Regulations as amended from

time to time.

3.36. For Meezan Digital Asaan Account, and the maximum credit balance limit

and monthly debit limit of PKR 1,000,000 shall be followed.

3.37. For Meezan Digital Remittance Account, the maximum credit balance

limit is PKR 3,000,000, which includes a local credit limit of up to PKR

1,000,000. The cash withdrawal limit and fund transfer limit per day is

PKR 500,000. No commercial remittances shall be deposited in the

account.

3.38. The maximum monthly amount of debit and maximum credit balance limit

in the Meezan Digital Asaan Account and Meezan Digital Remittance

Account shall be as per Bank’s prevailing Key Fact Statement available in

branches and at Bank’s website. Any transaction exceeding the maximum

monthly limit shall not be allowed.

3.39. Customer can open either one Meezan Digital Asaan Account or one

Meezan Digital Remittance Account.

3.40. Interpretation of the Terms and Conditions by the Bank will be considered

final and binding. In case of any dispute(s), matter shall be referred to the

SBP and decision of the SBP will be final and binding.

3.41. The Bank has applied maximum limit on daily credit balance of PKR 1

Billion (or equivalent in case of foreign currency) on all types of checking

accounts. The Bank has the right to refuse and/or to return the amount over

and above said limit of PKR 1 Billion to the account holder by issuing a

Pay Order or through any other means, as deemed appropriate by the Bank.

Provided that in case of Saving Accounts, the Bank shall also have the

right to transfer amount over and above said limit of PKR 1 Billion, in a

non-remunerative (Qard based) account on last day of the month.

4. Alternate Distribution Channels

4.1. The Customer consents that Bank is entitled to communicate with the

Customer to market its products and services via SMS, Email(s) and other

channels.

4.2. The ATM/Debit/Charge Card (the “Card”) represents a Shariah-

Compliant Business entity and shall not be in any way used for purchase

of Shariah non-compliant products or services (both locally and

internationally). The declaration of a product or service as Haram by the

RSBM/Shariah Board shall not be challengeable by the Customer. The

Bank reserves its right to discontinue the Card Service and/or Business

relationship with the Customer if non-compliance is encountered.

4.3. The Card shall only be used by the Customer personally and is not

transferable. If the Customer authorizes any other person to use his/her

Card, despite this prohibition, then the Customer shall be exclusively

responsible for all risks and consequences; this includes usage of Card at

ATM, POS terminals, internet and/or any other manner whatsoever.

4.4. In the event of loss or theft of the Card, the Customer shall immediately

notify the Bank for such loss and/or theft by making contact to Bank’s 24/7

Call Center at (+92-21) 111-331-331 and (+92-21) 111-331-332 (the “Call

Center”) for the purpose of reporting loss/theft and deactivation of the

Card. The Customer may also deactivate his/her Card through Bank’s SMS

Banking Service, Internet Banking, and Mobile Banking application. The

Customer shall be liable for any unauthorized use of the lost or stolen Card

in case of delay in notifying the Bank of the loss or theft of the Card.

4.5. For security reasons, international/overseas transactions requiring physical

presence of Card (such as POS, ATM, cash withdrawals, etc.) are disabled

on Cards. Customer can enable/disable these international transactions

through Bank’s Call Center. The international transactions which do not

require physical presence of Card (such as e-commerce, etc.) are enabled

by default for international transactions. International/overseas

transactions in foreign currency shall only be made for personal use and

the transactions must be within the annual/periodic limit prescribed by the

Bank and/or SBP from time to time.

4.6. Customer acknowledges that SMS facility, Mobile Banking, and Internet

Banking is dependent on telecommunications infrastructure, connectivity

Overview

Meezan Bank Terms and Conditions for Accounts

Meezan Bank's Terms and Conditions outline the relationship between the bank and its customers, emphasizing Islamic banking principles such as Mudarabah and Qard. This document details profit-sharing mechanisms, account types, and customer responsibilities. It serves as a comprehensive guide for customers navigating banking services, including savings accounts and Islamic term deposits. The terms are designed for individuals seeking to understand their rights and obligations while engaging with Islamic financial products. Updated policies and procedures are also included to ensure compliance with regulations. Key Points Explains the Mudarabah profit-sharing model used in savings accounts. Details the responsibilities of customers regarding account management and communication. …

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Meezan Bank Terms and Conditions for Accounts

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