Diversification of Islamic Financial Insturments
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Comparative savings accounts interest rates offered by the largest conventional
banks in Pakistan – March 2017
National Bank of
Pakistan
3.75% 3.75% - 5.55% -
Habib Bank
Limited
4.04% 5.00% - 7.23% -
Source: Banks' websites - declared profit rates and weightages
To illustrate the different saving account instruments used, extracts from the ‘Pool Distribution
sheet’ for Pakistan’s two largest full-fledged Islamic banks, Meezan Bank and Bank Islami, for
March 2017 is shown below. As the Table earlier illustrates, the simplest kind of saving
account (with no restrictions on amount, tenure etc. and with monthly frequency) is quoted.
However, the actual profit rates varied from 2.4% to almost 6.0%. Depositors with, for
example, more than PKR 1 million are offered a higher profit rate (as their weightage is
higher). Instruments such as Mudarabah-Certificates are also found, where the saver fixes the
deposit for one, three or six months, or one to three years, receiving a higher return.
Depositors willing to take profit payment only annually or at maturity of the instruments are
awarded an even higher rate. The highest profit rate product is hence the Mudarabah
certificate (called Term Deposit) of over 0.1 million PKR that is fixed for seven years.
Figure 9: Different Saving Account Instruments
Source: Extract from Meezan bank's profit rates for August 2017