Internship Report on

Capital Structure of Islamic Bank Limited

Submitted To
Mr. Md. Anhar Sarif Mollah
(Assistant Professor)
Faculty of Business & Entrepreneurship
Daffodil International University

Submitted By
Mily Akter
ID: 171-11-384
Major in Finance
Department of Business Administration
Daffodil International University

Submission Date: 25-08-2020

 Letter of Transmittal

August 25, 2020

Md. Anhar Sarif Mollah
Assistant Professor
Faculty of Business & Entrepreneurship
Daffodil International University

Subject: An Internship Report on Capital Structure of Islamic Bank Limited

Dear Sir,
I would like to thank you for giving me the opportunity to prepare for the Internship on this
topic, "Investment Program at Islamic Bank Bangladesh Limited". I have prepared a report
introducing the different models in Banking & Investment & analyzing it from a market,
financial & prospect point of view. I have tried my best to make a good report and keep the
necessary documents in place to prepare a complete report. Without clear guidance from you, it
is not possible for me to prepare this notice.

I hope you will asses me a complete list of limitations and errors of this study, and confidently
believe you will find this study very interesting and informative.

Sincerely,

………………..
Mily Akter
ID: 171-11-384
Major in Finance
Department of Business Administration
Daffodil International University

Certificate of Approval

This is to certify that Mily Akter, ID: 171-11-384, is a regular student of BBA program,
Department of Business Administration, Faculty of Business & Entrepreneurship, Daffodil
International University. She has successfully completed the internship report titled An
Internship Report on Capital Structure of Islamic Bank Limited as a requirement of BBA
Program.

The report is recommended for submission.

………………………….

Md. Anhar Sarif Mollah

Assistant Professor
Faculty of Business & Entrepreneurship
Daffodil International University
 Acknowledgement
First of all, I would like to express my special gratitude to Allah Almighty for giving me the
time and energy to make the announcement on time.
I apologize a lot to the crowd for their great comments and cooperation. I would like to thank
my Md. Anhar Shrif Mollah, she was so kind to watch over, teach and guide me to complete
my report.
I’m fortunate about ending this journey by another great experience. Islamic Bank Bangladesh
Limited, one of the leading banks in banking sector, gave me a chance to work with their
operation team and to gain the practical knowledge I needed most at this stage. Special thanks
to Mir Rahmatullah, SVP, Branch Manager and Golam Mostofa, VP, Operations Manager, for
giving me this opportunity.
This report, along with all interpretations of the Banking Practices Guidelines for the
Management and Functioning of Banking Operations, will not be available without assistance.
and the involvement of officers involved in the IBBL. They are happy to provide all the
knowledge and interpretation of these alerts easily with the purpose of our BBA program. As
writers, researchers and writers whose notes, notes, notes and notes were written to help me
prepare my work plan.
 Executive Summary

The capital structure, the combination of debt and equity of a business, is important because
borrowing money costs the business. Capital structure is also important due to the different tax
implications of debt versus equity and the impact of corporate taxes on a company's
profitability. Firms need to be cautious in their lending activities to avoid excessive risk and the
possibility of financial hardship or even bankruptcy
A firm's debt / equity ratio also affects the firm's financing costs and shareholder value. The
debt / equity ratio is a measure of a company's leverage calculated by dividing its total liabilities
by its equity. Indicates what percentage of equity and debt the company is using to finance its
business.
A high debt-to-equity ratio generally means that a company has been aggressive in financing its
growth with debt. This can result in volatile gains as a result of the additional interest expense.
The target (optimal) capital structure is simply defined as the mix of debt, preferred stock and
common stock that will optimize the company's stock price. As a company raises new capital, it
will focus on maintaining this target capital structure.
 Table of Content
Letter of Transmittal

Certificate of Approval
Acknowledgement

Executive Summary

1.1 Introduction
6-7
1.2 Origin of the report
07
1.3 Significance of the study
Chapter-One 07
1.4 Scope of the study
Introduction 07-08
1.5 Objective of the study
08
1.6 Methodology of the study
08-09
1.7 Limitation of the Report
09-10
2.1 An overview of Islamic 12-13
Bank
2.2 History of Islamic Bank 13-14
2.3 Concept of Islamic Bank 14
2.4 What is Islamic Bank 15
2.5 Objective Islamic Bank 15-16
2.6 Features Islamic Bank 16-17
2.7 Vision Islamic Bank 17
Chapter-Two
An Overview of 2.8 Mission Islamic Bank 17-18
the IBBL 2.9 Shariah Council IBBL 18-19
 2.10 Strategic Objective 19
2.11 Core Value 20
2.12 Corporate Structure 21
2.13 IBBLNetwork 22
2.14 Production and Services 22-24
IBBL
Chapter-Four 4.1 Introduction 45

Capital 4.2 Capital Structure 45-48

Structure 4.3 Corporate Attributes 48-49
4.4 Category IBBL 50

4.5 Corporate Financial 50-53

Information
Finding 56

Chapter-Five Recommendation 57
Conclusion 58
Chapter-One

Introduction
1.1Introduction

Banks are at the forefront of the economy in the country. Banking is an important part of modern
life. It plays an important role in the development of the economy in the country and develops
the important structure of the financial system in a prosperous country. In the present time the
global banks have undergone many changes due to deregulation, technology development,
international trade, and so on. To be successful in this changing environment, not only is it
necessary to develop the necessary infrastructure but also to have the expertise of financial
support professionals. maker is key. The Banking Company is one of the most regulated
companies in our country. It is governed by the laws and regulations of the Central Bank of the
country i.e. Bangladesh Bank and Security and Exchange Commission. Banking companies have
been forced to comply with the best market demand. It complies with International Accounting
Standards (IAS). He trades financially every year to get it audited by financial research firms.
Every bank in our country has a division called the Financial Management Authority (FAD)
which handles the financial affairs of the Financial Institutions. Most of the staff who bring these
divisions are background checks. From the financial analysis according to FAD staff who know
the best expenses can help a lot in the bank.

Islami bank Bangladesh Limited is a non-profit and specialized financial company which is the
first of its kind in South East Asia to operate mainly on standard operating banking systems and
investments based on profitability. lost capital that follows the standards of Islamic Shariah.
Islamic banks do not charge depositors. Exchange banks for cooperation with the benefits of
banks. The Financial Institutions involved long-term financial investments through a combination
of financial losses due to the failure to provide lenders with interest rates. IBBL also provides a
variety of health services through its partner organization, the Islami Bank Foundation (IBF).

Jobs in Financial Institutions have become profitable over the years as decision makers and
repayments are made. As a student of BBA, I am proud to be a saver and that is why I chose a
bank for my job. I chose IBBL because it has a good reputation in the banking community.
 I work as a specialist as Islami Bank Bangladesh Limited and I would like to focus on joint
ventures in the lending (capital) operations of IBBL vs other banks in Bangladesh. For my
educational purpose I chose National Bank Limited as an example of a banking institution.

1.2 Origin of thereport

This report completes part of a two-month internship for BBA students at ASA University
Bangladesh (ASAUB). During my time at the time I joined Islami Bank Bangladesh Limited at
the Shyamoli Branch. My College Superintendent Abdullah-al Masum informed me that the
content of my paper would be "Investment of Islami Bank Bangladesh Limited" and prepared
this statement in the organization.

1.3 Significance of thestudy

Islami Bank Bangladesh Ltd. is the largest bank in Bangladesh in the private sector. There are some
numbers of Financial Institutions that can compete with IBBL. The Financial Institutions aim
to achieve the goal of Islamic business by establishing a framework for an Islamic Code of
Conduct. Regarding the use of money Islam has its own clear instructions from some special
instruction. Abstinence (Riba), restricted exercise & other challenges are important tips in
this process. Thus the Islamic Financial Institution operates under Islamic guidelines.

1.4 Scope of thestudy

The capital of these organizations is related to the structure, background, products and services
and financial operations of Islamic Bank Bangladesh Limited and all its importance covers the
capital structure. risk management of IBBL. This information helps us to better understand the
market opportunities of IBBL.

In this report I have focused on all the qualitative which include profiles of IBBL, Investment
mechanism like Bai mechanism, Partnership or Share mechanism and Leasing or Ijara
mechanism, Different types of investment planning, such as home equity planning, real
estate investment planning, transportation planning, automotive planning, medical
investment planning, planning small business, urban development plan etc.

1.5 Objective of thestudy

PrimaryObjective:

 The primary objectives of this report are to represent the “Investment

Mechanism” of Islami Bank Bangladesh Limited and to have a clear conception
about all of the essential parts of the internshipprogram.

SecondaryObjective:

 To apply theoretical ideas in fact.

 To know the investment procedures ofIBBL.
 To analyze sector wise and geographical location wise investment ofIBBL
 To analyze different mode wise investment of IBBL through trendanalysis.
 To identify strength and weakness of lending and investments of overall bankingsystem.
 To identify investment-related issues faced by IBBL and other financial institutions is easy.

1.6 Methodology of thestudy

A methodology is a process or process by which research is being used to gather

information that needs to be combined with research to achieve the conclusion of a
study. For successful and accurate education everyone must follow certain rules &
regulations. The allergy investigation was documented by two sources:

Primary Sources of Data:

I have met with the directors and executives of IBBL, Shyamoli Branch and found
the estimated data used and disclosed in this report. The study was conducted with
the assistance of the Office of Security, Shyamoli branch as per their operations
and market management by request.
 modern and technological urine means. I have also overseen the body of the
relationship regarding investment ventures to be profitable and profitable by Islami
Bank Bangladesh Limited., Shyamoli Branch. Primary sources of data include the
following:

 Practical workexperience,
 Direct Interviews & Conversation
 Officialrecords
 Analyzes of various organizational processes
 The expert thought
 Practical deskwork
 Directobservations

Secondary Sources Data:

I have collected secondary data from the followingsources:

 Annual Report of Islami Bank Bangladesh Limited.

 Training pages provided by Islami Bank Education and Research Institute

(IBTRA).
 IBTRALibrary.
 Files & Folders of IBBL
 Memos & Circulars ofIBBL
 Various publications on Bank,
 IBBL Handbook of Business Practices.
 IBBL Website (www.islamibankbd.com).
 Different letters are sent by the Head Office and the Bank.

1.7 Limitation of theReport

Although I have received full support from the staff of Islami Bank Bangladesh
Limited, Shyamoli Branch and Islami Bank Education and Research Institute but
according to the research I have encountered the following problems, which may be
referred to as restrictions on learning. Some restrictions are as follows:
 The main basis of this study is the uncertainty of the data, which is required
for study. There is a lot of information that a bank employee cannot provide
due to security and other responsibilities.

 All branches of the bank have not been physically visited and all stakeholders
of the bank have not been interviewed.

 No in-depth and in-depth information is available to compile this report.

 Lack of experience.

 Learning all the bank jobs about capital in just 60 days is very difficult.
 Data and information used in this study are mostly from secondarysources.
 Larger research is not possible due to restrictions and restrictions imposed by the bank.

The report faces these limitations which will affect the progress but with constant
diligence, I try to minimize the disadvantages of these limitations.
Chapter-Two

An Overview of the IBBL

2.1 An overview of Islamic Bank

Bank interest rates and technology work great for us. At the time of independence,
Bangladesh gained the interest of companies owed by the British government during the
colonial period. Currently, four national banks, four specialized banks, nine foreign
banks and thirty-one financial institutions are operating in the financial sector of
Bangladesh. But the Islamic State House in Bangladesh dates back to 1983 when Islamic
Bank Bangladesh Limited was established as a watchdog to operate in financial
institutions in accordance with Islamic Shariah law.

Islamic banks have been successfully tested in Egypt. After developing the MitGhamar
Model, Naser Social Bank was in the process of being developed. During the seventh
year, the National Bank for Security (IDB) and a number of Islamic banks in the country
were established in the Islamic world. At home Islamic groups have been working hard
for the adoption of Islam as a means of fulfillment of life. They see Islamic banks in the
form of immediate reports. Two bodies, the Islamic Research Institute of Business
(IERB) and the Islamic Bankers Association (BIBA), have been working to educate
Islamic banks and banks. A group of bankers and organizes a number of national and
international seminars / workshops to present local and foreign investors and attract
investors to establish an Islamic bank in Bangladesh. Their professionalism and rights
need to be strengthened by a number of Muslim businessmen working within the aegis of
the Muslim Businessman Society. The body is concentrated mostly in mobilizing equity
capital for the Islamic bank. Due to the constant and dedicated work of the above groups
and individuals and the strong support from the government, the Islamic Bank could be
established as early as the eighth year.

Islamic banks have operated in Bangladesh along with the traditional banks. Like any
other traditional business, they save money and create loans. But there are operating
models, according to Shariah, different from other traditional business models. However,
eight Islamic banks operating in Bangladesh are:

 Al-ArafahIslami Bank Limited

 Import Company Limited of Bangladesh Limited
  First Security Islami BankLimited
 ICB IslamiBank
 Islami Bank Bangladesh Limited
 Shahjalal Islami Bank Limited
 Social Islami Bank Limited
 Union Bank Limited

The Organization of Islamic Conference (OIC) defined an “Islamic Bank as a

financial institution whose statutes, rules and procedures expressly state its
commitment to the principles of Islamic Shariah and to the banking of the receipt and
payment of interest on any of its operation.”

According to the Islamic Law 1983 of Malaysia, and Islamic Bank is a company that
specializes in Islamic Banking. The work does not involve an element that is not
approved by Islam.
From those definitions, we can find some characteristics of Islami Banking as:

 This is a financial institution.

 This is a business institution.
 It operates for free from interest.
 The regulation is operated in accordance with the rules developed and amended by the
Shariah Council.
 The Islamic bank is not a business product, but running a business for money.
 It is a for-profit business organization.

The main purpose of Islamic banking is not only to make a profit, but also to do
people good and prosperity. Islam maintains the idea that money, income and
property belong to Allah and that this wealth should be used for the benefit of
society.

2.2 History of Islamic Bank of Bangladesh Limited

The creation of the Islamic Development Bank (IDB) by OIC member countries in
1975 has proven to be a breakthrough in the expansion of Islamic sharia-based finance
and the banking system in particular around the world. As a founding member of the
IDB, Bangladesh has also committed to the establishment of Islamic banks, which has
been reflected in the various steps taken by the country’s governments. OIC members
agreed with their proposals for the introduction of the Islamic economy and banking
system in their respective countries, in 1978, in Dakar, and in 1980 at Islamic
Ministerial Conferences in Islamabad. At its 3rd summit in Makka in 1981, the OIC
approved Bangladesh's proposal to introduce a separate banking system following
Islamic ideology. According to the decision, the GOB sent representatives to the
countries of the Middle East to get acquainted with the banking systems operating in
those countries.
In the private sector, the Islamic Economic Research Bureau (IERB) was the first
organization to take an active initiative in this regard. A national seminar on Islamic
economics and the banking system was held in 1979, and inspired by the discussion
and papers presented at the seminars, some local bankers set up the “Islamic Banking
Working Group”. In 1980, the IERB again organized an international seminar. After
the seminar, the Dhaka-based “Muslim Businessman Society” (later called the
“Association of Craftsmen and Businessmen”), led by renowned industrial
entrepreneur Abdur Razzaque Lasker, initiated the establishment of an Islamic bank
and applied to the government for permission. At this stage, the GOB granted the
necessary permission in 1983 and the “Islamic Bank Bangladesh” Company Act was
finally registered, in which 19 Bangladeshi nationals, 4 Bangladeshi institutions and
11 banks, financial institutions and Central and Eastern European government bodies
were registered. including the IDB and two prominent personalities of the Kingdom of
Saudi Arabia, they made their hands to make the dream a reality.

2.3 Concept of ‘Islamic Banking

The bank is based on the principles of Islamic law (also known as Sharia) and is
governed by Islamic trade. The two principles of Islamic banking are the sharing of
profits and losses, and the importance of prohibiting the collection and payment of
interest. Collecting money is not allowed under Islamic law.
Since the establishment of this bank has adopted a belief in Islamic principles, all
functions of the bank follow Islamic practices. Thus, it can be said that the financial
transformation in Islamic banks is a culture of diversity (for example, investments
associated with
Alcohol, gambling, pork, etc. are prohibited). Dubai Islamic Bank is a variant of the
world's first Islamic bank, established in 1975.

2.4 What is Islamic Banking?

“Islamic bank is a financial institution whose status, rules and procedures expressly
state its commitment to the principle of Islamic Shariah and to the banning of the
receipt and payment of interest on any of its operations”. -OIC

Ziauddin Ahmed says, “Islamic bank is essentially a normative concept and could be
defined as conduct of banking in consonance with the ethos of the value system of
Islam.”
It seems from the above points that Islamic bank is a financial intervention system
that avoids the acquisition and payment of interest on its operations and directs its
operations in the way in which it helps to achieve the goal of Islamic trade. In other
words, this is a banking company whose role is to comply with Islamic principles of
the practice of money loss and sharing (PLS) is essential, ensuring fairness. morality
and integrity in business. That is why Islamic bank is often known as PLS-shore.

2.5 Objective of “Islamic Banking”

The main objective of the establishment of Islamic banks worldwide is to promote,

support and improve the application of Islamic principles in business. More
specifically, the objectives of Islamic financial institutions when looking at the details
of its role in the business are listed as follows:
To provide financial assistance now in parallel with Islamic Shariah;
To promote economic development and prosperity in the principles of Islamic justice

Distribution of income is not limited to a small amount of money

To help ensure a fair distribution of funds.

 To conduct interest-free banking.

 To create a consolidation shines do not spend money on interference to the debt-debt

consolidation contract.
 Borrow money at a loss.
To contribute to the achievement of the ultimate goal of Islamic economics.

These objectives are discussed below.

 Offer Financial Services: Bank interest, which is considered to be the practice of

Riba in the exchange of money, is considered to be anti-Islamic. That means all
changes in banks are illegal according to Islamic Shariah. Thus, the emergence of
Islamic banks has clearly seen the preparation for Shariah-approved financial
reforms.

 Islamic Banking for Development: Islamic banking has guaranteed to be more

constructive than equitable. The concept of revenue sharing is a constructive
development in support since it creates a direct relationship through the return of
investment and the successful completion of the project. traded by entrepreneurs.

 Optimum Allocation of Resources: Another important goal of Islamic banks is to

maximize profits. The basis of the Islamic company process is that it promotes
financial investment for operations that are considered to be the most profitable and
profitable for the industry.
 Islamic Banking for Equitable Distribution of Resources: Perhaps they should
have the main purpose of Islamic banks is to ensure a fair distribution of income and
assets of the participants: banks, depositors and investors

2.6 Features of 'Islamic Banking

Islamic Bank Bangladesh Limited (IBBL) was incorporated on 13.03.1983 as a public liability
company with low liability as the company did, 1913. The bank began operations with effect
from 30.03. 1983 as the first Shariah-based bank in South-East Asia.
The bank is committed to running all of its operations under Islamic Shariah. IBBL through its
continuous success and continuous success, by now, has gained a reputation as one of the
self-employed enterprises of the country. The differences of IBBL are as follows:
  All his activities were done without interest according to Islamic Shariah.
 Investments are made by various sources according to Islamic Shariah.
 The investment-income bank has partnered with Mudaraba depositors as a
comparison to ensure a reasonable repayment of their deposits.
 Its purpose is to promote health protection and also to promote fairness and integrity
in the business of all activities.
 He extended Grants - Financial and financial assistance to the poor, hopeless and low-
income groups of people for their economic support especially in remote areas. City.
 It plays an important role in human resource development and job creation especially
for unemployed youth.
Its aim is to achieve balance growth & equitable development of the country through diversified
investment operations particularly in the priority sectors and in the less developed areas.

2.7 Vision of IBBL

IBBL Vision is always striving to achieve the best performance of the financial services industry,
considering it as an Islamic company with a reputation and excellence. In order to achieve
our goal, we identified the following strategic objectives:

 Our mission is to develop and manage modern business strategies, to ensure the voice
and improvement of the economy in accordance with Islamic principles and to
become a strong organization and Work with professionals, working for the benefit of
people, as accountability, transparency and fairness to ensure financial stability.
 IBBL will try to promote savings in the form of direct investment.
 We will also try to encourage special investments in projects, which will often lead to higher
performance.

2.8 Mission of IBBL

 To develop Islamic Banking by introducing health management practices.

 To ensure integrity and fairness in all business operations.
  In order to achieve equitable growth and development by utilizing different functions
especially in key functions and low-improvement areas.
 To support economic and financial development for low-income communities,
especially those in rural areas.

2.9Shariah Council ofIBBL

Profile of Council Members:

The Shariah Council of Islamic Bank generally consists of experts from the following
fourareas:

1. Fuqaha: Individuals representing this group should be well acquainted in the Quran,
Sunnah and have a dialogue with the views of all schools of Islamic ideology and
Islami law and order. They should view Islam as a whole way of life and living
religion.
2. Banker: Must have a strong background in banking law and practice and have
extensive experience in the Banking industry including foreign trade.
3. Economist: A member of this group does not have to be an Islamist fundraiser to
begin with. But if he is an accountant in Islami it is worth more. What is important is
that it requires a real experience in modern business with in-depth study in the
community, which the bank can solve. He must have current knowledge in the
development of the modern world.

4. Lawyer: A member representing this group must be a successful lawyer. He should

be well versed in business law including company policy. In consultation with the
fuqaha and the Treasurer of the membership, it should be possible to enter into such
agreements, which would be limited by the principles and principles of Islami land.

Objectives of Shariah Council:

The role of the council is to provide insights and perspectives on issues related to the bank at
a given time. The council has the right to request a letter from the bank and to check whether
it is in accordance with Islamic law.
 The shariah council assists the Board of Trustees by advising them on issues related
 to the shariah.
 The opinion of the members usually taken into account in the opinion of the council
that the proposal was supported by at least three Muftis of the council.
 The members manage its archives and have a good library, the Treasury Department,
which keeps a record of all of its procedures and decisions.
 The supervisory board, when deemed necessary, shall form a committee to refer to the
council.

2.10Strategic Objectives

 To ensure customer satisfaction.

 To monitor the health of banks.

 To establish a set of management principles and to implement the latest reforms to achieve the
successful development of Islamic banking is a stable financial institution.
 To take care of the beneficiaries.
 To ensure diversity by Sector, Large, Targeted Business & Regional Value Investment and
expand thinking based on Retail and SME / Women market investments.

 Invest in push and pull and market share.

 Want to work hard to become an employer of choice and supervision & development
skills in leadership.

 To pay more is important in human capital in addition to financial capital.

 To avoid zero tolerance of negligence in matters of Shariah compliance and
governance issues.
 To train & develop human resources on an ongoing basis & provide adequate logistics services to
customers.

 Make the best of the service for minimizing community and regional improvements.

 To support the team to become a member for all activities.

 To ensure the improvement of the patient and satisfied.

 To promote sound quality and improve future employees.

  To achieve international success.

2.11 Core Values

 Trust in AlmightyAllah
 Caution of Islamic Shariah
 The highest level of work ethic, Integrity & Integrity
 Security Assistance
 Equality and Justice
 Cons Consideration Environment
 Service Private Services
 Op Accepts Change Technology
 Good Representatives

2.12 IBBL Networks

As a bank of many people and delivering its financial services to every door possible, IBBL has
banks all over the world by setting up its branches in almost every branch. appropriate place
in the country. Another Channel (ADC) with 450owned & 4000 integrated ATM booths has
expanded the network. As part of a gradual shift to key business centers both in urban and
rural areas, the Financial Institutions opened 8 branches in 2014 raising all branches to 294
from 286 of the previous year. Aiming to achieve sustainable development in the moving
economy of the country and boosting the economy in rural areas, IBBL has the highest
numbers in the rural branch of the first generation of hired money. Out of 350 Branches,
73.35%, i.e. 216 are branch cities and 27%, i.e. 84 is the City Branch.

2.13 Products and Services of Islamic Bank BangladeshLimited

 Deposit Schemes:

• Al-Wadeah Current Account(AWCA)

• Mudaraba Savings Account(MSA)

• Mudaraba Term Deposit Account(MTDR)

 • Mudaraba Special Notice Account(MSNA)

• Mudaraba Special Savings (Pension) Account(MSSA)

• Mudaraba Hajj Savings Account(MHSA)

• Mudaraba Savings Bond Account(MSBA)

• Mudaraba Waqf Cash Deposit Account(MWCDA)

• Mudaraba Monthly Profit Deposit Account(MMPDA)

• Mudaraba Muhor Savings Deposit Account(MMSA)

• Students Mudaraba Savings Account(SMSA)

• Mudaraba Farmers Saving Account(MFSA)

• Mudaraba NRB Savings Bond (MSNB)

• Mudaraba Foreign Currency Deposit Account(MFCD).

 Investment Scheme:
• Home Purpose Durables (HDS)

• Investment Scheme for Doctors (ISD)

• Transport Investment Scheme(TIS)

• Car Investment Scheme(CIS)

• Small Business Investment Scheme(SBIS)

• Micro Industries Investment Scheme(MIIS)

• Agricultural Implement Investment Scheme(AIIS)

• Real Estate Investment Program (REIP)

• Real Estate Investment (Commercial & WorkingCapital)

• Agricultural Investment ofIBBL

• NRB (Non Resident Bangladesh) Entrepreneurs Investment Scheme
(NEIS)

• Women Entrepreneurs Investment Scheme (WEIS)

 Rural Development Scheme

Foreign Exchange Scheme:

• Central Crediting of Funds,

• Payment from 3rd Bank sent by TT & PO,

• Payment Options - Online and Web-based,

• Central Bank Debt Management,

• SMS Notification, SMS Push PullService,

• Maintain payments to NRD & NRT.

 Special Service:

• Locker Services
• AT Services
• M-cash
• I Banking
• Online services.
Chapter-Four

Capital Structure
Of Islamic Bank
4.1 Introduction

Return on equity (ROE), companies can use a variety of strategies and procedures. One way
is capital investment. The combination of capital and ROE is truly a priority for every
company. The purpose of this paper is to examine the impact of capital investment on
Islamic bank performance in Asia. The best way to check the performance of each bank is
through a financial statement. Because the financial statement is directly linked to the work
of the bank. Some researchers have found that financial data has a positive effect on bank
performance. Some analysts have argued that the business model and operation of a bank
has been closely related. Some researchers give the argument for the differences used in
capital models to measure the performance of companies such as DEBT RATIO, LEVEL,
VOLUME MULTIPLIER RATIO AND DEBT EQUITY RATIO and so on.
In order to demonstrate the benefits of setting up a business and operating a different bank.
Budget structure is the most important factor in finance. The process for determining the
investment model is often difficult for any bank. Modigliani and Miller (1958) argued for
the most appropriate model in the area of finance. In order to determine the highest level of
good business model, the financial manager faces a number of challenges. The goals of
high-end design are to maximize the value of the organization by minimizing the cost.
Because running companies run smoothly the business deserves many forms of loans.
Financial tools are the most important factor for measuring the SWOT finances (strength,
weakness, timing, and threat) .on other design tools are the most important determinants. for
companies. Mujahid, Zuberi et al. (2014). The investment process is a combination of
quantity and equity investment that completes the investment. Because funding is a model
for building capital that is used for acquiring assets or development. Because this capital
model has put content into costs, assets are better and costs are longer. Nasimi (2016).
 4.2 Capital Structure

Corporate Information of Capital IBBL

Particular BDT(TK.)
Authorized Capital 20000.00 million
Paid-up Capital 16099.91 million
Equity 79079.70 million
Reserve Fund 40941.78 million
Deposits 946291.53 million
Investment(Including 953150.85 million
Investment in share)

Foreign Exchange Business BDT(TK.)

Import 399884 million
Export 234443 million
Remittance 305514 million

Paid-up Capital & Reserve

The Bank's Authorized Capital is € 20,000.00 million and the Paid-up Capital is € 16,099.91
million as at 31/12/2019. The paid-up capital was Taka 67.50 million in 1983. The Bank's
Reserve Fund has grown steadily. On December 31, 1983, it was 0.36 million Taka and
stood at

Date Amount of TAKA

31/12/2019 16099.91 million
31/12/2018 16099.91 million
31/12/2017 16099.91 million
31/12/2016 16099.91 million
31/12/2015 16099.91 million
31/12/2014 16099.91 million
31/12/2013 14636.28 million
31/12/2012 12509.64 million
31/12/2011 10007.71 million
 31/12/2010 7413.12 million
31/12/2009 6177.60 million
31/12/2008 4752.00 million
31/12/2007 3801.60 million
31/12/2006 3456.00 million
31/12/2005 2764.80 million
31/12/2004 2304.00 million
31/12/2003 1920.00 million
31/12/2002 640.00 million
31/12/2001 640.00 million
31/12/2000 320.00 million

Equity

According to the capital adequacy policy prescribed by Bangladesh Bank, the country's
central bank, the banks retained 12.95% equity on its risk-weighted assets against which the
bank's total equity as of 12/31/2019 was 79,079.70 million. This was:

Date Amount of TAKA

31/12/2019 79079.70 million
31/12/2018 69618.58 million
31/12/2017 57958.08 million
31/12/2016 50556.47 million
31/12/2015 47845.33 million
31/12/2014 48569.86 million
31/12/2013 45511.90 million
31/12/2012 38803.30 million
31/12/2011 32318.63 million
31/12/2010 28400.03 million
31/12/2009 23619.81 million
31/12/2008 18572.08 million
31/12/2007 14957.74 million
31/12/2006 10425.96 million
31/12/2005 8331.14 million
31/12/2004 6691.12 million
31/12/2003 5266.47 million
31/12/2002 3540.52 million
31/12/2001 2993.24 million
 31/12/2000 2671.06 million

Equity Capital of Islamic Bank (2014-2018)

Year Amount of Equities(BDT)

2014 6433.60 M
2015 8375.79 M
2016 9697.54 M
2017 10759.84 M
2018 11770.74 M

Equity Capital
14000

11770.74
12000
10759.84
10000 9694.54
8375.79
8000
6433.6
6000

4000

2000

0
2014 2015 2016 2017 2018

Amount of Equity

Analysis: We can see that the equities have increased continuously between 2014 - 2018.
This is a good sign of IBBL. Because equity capital has no obligation to pay. As a result, the
bank will free from the risk of bankrupt. On the other hand, the dilution of the company has
increased because equity investors typically have the right to vote on important company
decisions.

Debt Capital of Islamic Bank (2014-2018)

Year Amount of Debt Capital(BDT)

2014 155420.14 M
2015 196299.71 M
2016 246604.94 M
2017 290608.81 M
2018 332375.69 M

Amount of Debt(millions)
350000 332375.69

300000 290608.81
246604.94
250000
196299.71
200000
155420.14
150000

100000

50000

0
2014 2015 2016 2017 2018

Debt (M)

Analysis: IBBL had increased its debts capital deliberately. On the chart we can see
difference between taking loan on 2014 to 2018. This indicates that the investment is
increasing day by day and the bank is trying to strong its capital structure. But in this
process the company’s risk has been increased.

Share issue of Islamic Bank Ltd. (2014-2018)

 Year Share issues (BDT)
2014 4114.38 M
2015 4114.38 M
2016 6788.78 M
2017 6788.74 M
2018 7128.17 M

Amount of Share Issues in MIllions

8000 6788.74 6788.74 7128.17
7000
6000
5000 4114.38 4114.38
4000
3000
2000
1000
0
2014 2015 2016 2017 2018

Amount of shares

Analysis: IBBL is increasing the amount of share use after 2 years. This indicates that the
bank is much concern about collecting money from shareholders. If the bank collects more
money it can be invested to earn more profit. Shareholders are the real owner of the
company in that sense the if the bank’s issuing share has increased the more authority will
be transferred to the shareholders.

4.3 Corporate Attributes

Branches of Islamic Bank (2014-2018)

Year Number of Branches

2014 294
2015 301
2016 305
 2017 342
2018 350

no. of branches
360 350
350 342
340
330
320
310 301 305
300 294
290
280
270
260
2014 2015 2016 2017 2018

no. of branches

Analysis: IBBL is expending the banking service country wide. The branch has been set up
in different district. The bank should more focus on set up branch. The bank should establish
branch in rural areas to give the banking facilities among the rural people.

4.3 Category / Islamic Bank

The Islamic Bank started its operation on 25th October 1989 as a conventional bank. During
the year 2008, the company has successfully completed its IPO for 1,15,00,000 Ordinary
shares of Tk. 1,15,00,00,000. The company got tremendous responses from the General
public, institutions and Non Resident Bangladeshi category investors. The shares of the
company have been listed with both Dhaka and Chittagong Stock Exchanges.

4.4 Corporate Financial Information

Net profit of Islamic Bank:

 Year Company's Net Profit (Million)
2014 766.48 M
2015 694.28 M
2016 853.54 M
2017 1410.33 M
2018s 1389.92 M

Net Profit in Millions

1600 1410.33 1389.92
1400
1200
1000 853.54
766.48
800 694.28
600
400
200
0
2014 2015 2016 2017 2018

Net Profit

Analysis: A company’s net profit represents how much the company earns money from the
investment. Every company’s common goal is to maximize the profit. IBBL is not so much
successful in this way. The profit of the bank was down fallen in 2015 as well as in 2018.

Return on Assets of Islamic Bank:

Year Return on Assets (Million)

2014 0.42%
2015 0.38%
2016 0.31%
2017 0.51%
2018 0.41%
 ROA in percentage
0.6
0.51
0.5
0.42 0.41
0.4 0.38
0.31
0.3

0.2

0.1

0
2014 2015 2016 2017 2018

ROA

Analysis: Return on assets represents after investing the money a company how much
capable of returning the investment. The graph chart represents that in 2017 Islamic Bank
had returned their assets more comparatively from the previous and next two years.

Return on Equity of Islamic Bank:

Year Return on Equity (Million)

2014 11.74 %
2015 8.29 %
2016 8.80 %
2017 13.11 %
2018 11.81 %
 ROE in percentage
14 13.11
11.74 11.81
12
10 8.8
8.29
8
6
4
2
0
2014 2015 2016 2017 2018

ROE

Analysis: IBBL gave most importance on return on asset and equity in 2017.We can easily
notice on the graph that in 2017s the company’s return was most than previous and next two
years. The bank should focus much to return their equity. If the bank is able to return their
equity more the bank will invest the money to the profitable sector.

Return on Investment of Islamic Bank:

Year Return on Investment (Million)

2014 0.68 %
2015 0.46 %
2016 0.05 %
2017 0.62 %
2018 1.51 %
 ROI in percentage
0.8
0.68
0.7 0.62
0.6
0.51
0.5 0.46
0.4
0.3
0.2
0.1 0.05
0
2014 2015 2016 2017 2018

ROI

Analysis: IBBL should give more importance on return on investment. We can easily notice
on the graph that in 2016 the company’s return was most less than previous and next two
years. The bank should focus much on return their investment.

Earnings per Share of Islamic Bank:

Year Return on Investment (Million)

2014 1.89
2015 1.02
2016 1.26
2017 2.08
2018 1.89

Earnings per Share

2.5
2.08
2 1.89 1.89

1.5 1.26
1.02
1

0.5

0
2014 2015 2016 2017 2018

EPS
Analysis: In the modern concept of finance every company’s common goal is to maximize
the value of the share rather than maximizes the profit. IBBL is not much successful to
increase the EPS value in 2015 and 2016. Bit in 2017 the EPS improvement represents that
the bank is very much dedicated to their objectives. It is a good sign for any organization

Chapter-Five

Major Findings, Recommendations & Conclusion

Findings

The main objective of the report is to analysis the capital structure of Islamic Bank
Bangladesh Limited (IBBL). The study of investment activities of Islamic Bank
Bangladesh Limited reveals the following major findings:

 We can see that the equities have increased continuously between 2014 to 2018.
This is a good sign of IBBL.As a result, the bank will free from the risk of
bankrupt. Because equity capital has no obligation to pay.
 This indicates that the investment is increasing day by day and the bank is trying to
strong its capital structure. But in this process the company’s risk has been
increased. Can see difference between taking loan on 2014 to 2018.
 IBBL is increasing the amount of share use after 2 years. This indicates that the
 bank is much concern about collecting money from shareholders.
 IBBL is expending the banking service country wide. The branch has been set up
in different district. The bank should more focus on set up branch. The bank should
establish branch in rural areas to give the banking facilities among the rural people.
 IBBL is not so much successful in this way. The profit of the bank was down fallen
in 2015 as well as in 2018.
 Return on assets represents after investing the money a company how much
capable of returning the investment. The graph chart represents that in 2017
Islamic Bank had returned their assets more comparatively from the previous and
next two years.
 IBBL gave most importance on return on asset and equity in 2017.We can easily
notice on the graph that in 2017s the company’s return was most than previous and
next two years. The bank should focus much to return their equity.
 IBBL should give more importance on return on investment. We can easily notice
on the graph that in 2016 the company’s return was less than previous and next two
years. The bank should focus much on return their investment.
 IBBL is not much successful to increase the EPS value in 2015 and 2016. Bit in
2017 the EPS improvement represents that the bank is very much dedicated to their
objectives. It is a good sign for any organization.
 Recommendation

Islamic Bank Limited has some problems in general banking, investment and foreign
exchange. I would like to offer some recommendations for overcoming IBBL problems.

• It should improve its asset management techniques.

• Market for different investment modes should be watched time to time return the

market share.

• It should increase its marketing promotion.

• Staff and officers should be aware of modern customer service.

• The bank should consider the customer complaining when raising any issues.

•The bank should develop its own decoration system so that the customer can easily obtain their
information.

• Efforts should be made to increase bank's investment under Mudarabah & Mishawaka modes.

The next important factor in Islamic banking is advertising. As said, people are very
misguided about Islamic banking. So Islamic Bank Limited (IBBL) must plan a good
advertising and promotional campaign for Islamic banking. The campaign must make sure
that it conveys the message clear to the customers. For medium of advertising, brochures,
newspaper ad will be very helpful.
 CONCLUSION

The Islamic banking system has enormous potential and prospects in Bangladesh. The
Islamic banking concept introduced by the Islamic Bank Bangladesh Ltd. has popularized
the Shariah based banking system so much that the most proliferated and distinguished
banks both national and multinational open their Islamic banking wings such as Standard
Chartered, Export Import Bank of Bangladesh Limited , The City Bank, Dhaka Bank, etc.,
are successfully conducting Shariah based banking business. Private banking is a strong
source of economy. It is gaining popularity due to its immense importance. Banking
activities are modernized with the technological advancement of commercial transactions.
Private Banks apply modernized techniques and sophisticated banking tools to attract the
customer and achieve their goal. Entering the Bangladesh Private Banking scenario, IBBL
constantly seeks to overcome the obstacles regarding typical business-oriented ideas and
propose innovative solutions limited to the needs of its customers to reap maximum
benefits.
The main philosophy of the IBBL bank is to decrease interest and expenses or pay fixed
interest on loans or deposits and at the same time establish an egalitarian society based on
the principle of social justice and equity instead of interest on deposits drawn by predators,
IBBL bank offers proof of depositions as an agreed report. Where, conventional interest-
based banks pay fixed interest on savings and deposits and grant interest-bearing loans for
any purpose. Islamic banks can provide efficient banking services to the nation if they are
supported by appropriate banking laws and regulations. This will help them introduce PLS
modes of operation, which are very conducive to economic development. It would be better
if Islamic banks had the opportunity to work as a single system in an economy.

Reference

 https://www.islamibankbd.com/abtIBBL/abtIBBLCorpInfo.php
 https://www.islamibankbd.com/abtIBBL/paidup_capital.php
 https://www.islamibankbd.com/abtIBBL/equity.php
 https://www.islamibankbd.com/abtIBBL/price_sen_discluser.php
 https://www.islamibankbd.com/index.php
 https://en.wikipedia.org/wiki/Islami_Bank_Bangladesh_Ltd
 https://www.islamibankbd.com/upload_dir/shareholder_info/Affairs%20of%20the%20issuer
%20alongwith%20of%20its%20business.PDF