Report On Investment Activities of Islami Bank Bangladesh Limited
Report On Investment Activities of Islami Bank Bangladesh Limited
Report On Investment Activities of Islami Bank Bangladesh Limited
The first chapter is Introduction, it includes objective of the study, scope of the
study, origin of the study, methodology of the study, time period of the study,
limitations of the study. The second chapter is Profile of the Organization, it
includes history of IBBL, aims and objectives of IBBL, special features of IBBL,
vision, mission, goals of IBBL, commitments, management, organ gram of IBBL,
financial information etc. The third chapter is Conceptual Framework, it includes
introduction, concept of bank, concept of islami bank, types of bank, function of
bank, objective of islami bank, conventional vs. islami banking, business group of
foreign exchange branch of IBBL and literature review. The fourth chapter is
Analyses and Findings, it includes introduction, modes of investment, investment
1
instrument. The fifth and last chapter includes conclusion & recommendations.
People of our country have no proper knowledge about the activities of IBBL. IBBL
can't invest in all economic sectors which is prohibited by law of Islam. There is a
large amount of money being idle and thus potential profit is not increasing. IBBL has
lack of promotional activates, limited modes and schemes. They can't avoid interest
fully. The applying process of investment is too much lengthy. It has less interested in
Musharaka mode and limited investment schemes. It has less female employees, lack
of proper space for the employees, no female introducer for female customer in the
Foreign Exchange Branch of IBBL. Because of improper, insufficient application of
Islamic Banking rule in our country the investment operations of IBBL cant run
smoothly.
IBBL should take initiative for people to increase Islami Banking Knowledge. They
should investment carefully, more concentrate in Musharaka mode, agricultural sector.
IBBL can introduce new schemes like education investment scheme, shop financing
scheme and so on. They should reduce investment processing time and fees also. The
Foreign Exchange Branch of IBBL should maintain and increase their growth rate,
concentrate in Bai-Muajjal mode, commercial sector. IBBL can consider employing
more female employees in the branch, especially in the investment sector to attract
more female entrepreneur. They should create proper space for employees and can
consider female introducer to solve female customer's problem.
2
Acknowledgement
First of all I remember almighty Allah for making me successfully to prepare this
report. I am very grateful to my parents also to assist me in every step of my work.
Whenever I need them, I found them beside me.
I also would like to thanks and convey my gratitude to my internship supervisor, Mr.
Md. Mahbub-ul-Alam, Assistant Professor of BIU, for providing me continuous
support and guideline to prepare a formal report. I would also like to express my
sincere appreciation to him for his wholehearted support and guidance. His
suggestions and comments to make the report good one was really a great source of
spirit for me.
I would like to thank all the officers of Islami Bank Limited for their cooperation. I
would like to thanks Md. Giasuddin Ahmed (EVP), Mujibur Rahman (VP of GB)
Abdul Malek (VP of Industrial), Abdulla Rashed (VP of Foreign Exchange) at IBBL,
Foreign Exchange Branch. For their constant guidance and help, save my valuable
time placement and termination of internship period.
3
At last I must mention the wonderful working environment and co-operative group
behavior of this bank that has enabled me a great deal to do and observe the banking
activities during my internship period of two months.
-------------------------------------
Fahmida Nusrat
Acronyms
Acronyms Elaboration
4
CIS Car Investment Scheme
GB General Banking
MD Managing Director
PO Principal Officer
5
REIP Real Estate Investment Program
SO Senior Officer
VP Vice President
Table of Contents
Student's Declaration
Official Certification
Executive Summary........................................................................................................i
Acknowledgement........................................................................................................iii
Acronyms......................................................................................................................iv
Table of Contents...........................................................................................................v
6
Chapter-01 : Introduction.............................................................................................1
2.1.3 Vision....................................................................................................................9
2.1.4 Mission..................................................................................................................9
7
2.2.1 SWOT Analysis of IBBL....................................................................................15
3.4 Investment..............................................................................................................18
4.1 Introduction............................................................................................................26
8
4.2.1 Models of Charging Securities............................................................................30
4.5.1 Mudaraba.............................................................................................................34
4.5.2 Musharaka...........................................................................................................35
4.5.2.1 Quard................................................................................................................35
4.5.2.1 Quard-E-Hasana...............................................................................................35
9
4.9.1 Organogram of Foreign Exchange Branch, IBBL..............................................44
4.10 Findings................................................................................................................50
5.1 Recommendations..................................................................................................55
5.2 Conclusion..............................................................................................................57
References...................................................................................................................58
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Chapter-01
Introduction
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1.1 Introduction of the Study
Page | 2
concerned organization is Islamic Bank Bangladesh Limited (IBBL) which is a
prominent private and the first Bank of Bangladesh that based on Islamic Shariah.
Hence I am placed in Dilkusha, Motijheel, Foreign Exchange Branch of Islami Bank
Bangladesh Limited from January 4 to March 2016. In way of delegation,
responsibility of carrying out the study has conferred upon the concerned interns.
Islami Bank Bangladesh Limited has been the nations leading banking specialties of
uncompromising quality with world class banking for the last decade. This leading
banking company of Bangladesh has been making every effort to ensure the
effectiveness and safety of the financing which it makes sure. Islami bank provides
the highest quality financing at comfortable facilities to fulfill the needs of the
millions of people of the country. Regular introduction of innovative system in line
with the needs of customers has been the key to the companys success over the year.
The broad objective of the study is to fulfill the requirement internship and achieving
academic and practical knowledge about how organizations are managed in real life.
This report also has some other specific objectives, these are :
Page | 3
4. to understand the investment policy of IBBL with other banks; and
The scope of this paper is limited to the organizational structure, background, and
objectives, functions, and investment performance of IBBL as a whole. The scope is
also limited to different investment schemes, modes, mechanism, investment proposal
appraisal procedures, monitoring and documentation of IBBL and SWOT analysis of
IBBL.
For achieving the specific objectives of the study, data will be gathered most of from
primary sources and little from secondary sources.
Sources of Data
I have used both primary and secondary sources of data make the report more
meaningful and presentable; both the following sources of data and information will
be used widely:
Page | 4
1. The Primary Sources
Table 01 : Time schedule for dissertation work has been set up by supervisor is given
bellow :
Page | 5
submitted finally.
Objective of the practical orientation program is to have practical exposure for the
students. My permanent status was for only two months, which was somehow not
sufficient enough to gather adequate experience of such vast banking business. After
working whole day in the office it was very much difficult and also impossible to
study again the theoretical aspects of banking. Finally as the banks renovation
activities was going on so the physical working condition was not healthy enough that
we thought it would be the following aspects.
1. Lack of Time : The time period for this study was very short, which was not
enough. So, I could not go in depth analysis. Sometimes the officials were
busy & were not able to give much time.
2. Insufficient Data : Some essentials information could not be collected due to
confidentiality of business.
3. Lack of Supervision : Few officials sometimes felt disturbed, when they were
busy with their tasks. Sometimes, they didnt want to supervise due to pressure
of work load.
Other Limitations
a) The staffs of the branch were some time so busy that they could not help us all
time.
b) Preparing internship report is really troublesome.
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c) This type of report preparation is expensive.
d) Collection of data was not smooth.
e) Analyzing with financial data is much more confusing and complicated than
any other data.
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Chapter-02
Page | 8
2.1 Historical Background of Islami Bank Bangladesh Limited
In August 1974, Bangladesh signed the charter of Islamic Development Bank and
committed itself to reorganize its economic and financial system as per Islamic
Shariah. For the favorable attitude of the government of the peoples republic of
Bangladesh, at present six Islamic Banks operate in Bangladesh Financial market.
These are:
Besides Prime Bank, Dhaka Bank, South East Bank, the Premier Bank, the Jamuna
Bank, HSBC Bank and Standard Chartered Bank also have opened Islamic banking
branches. Islami Bank Bangladesh Limited. was incorporated as the first shariah
based interest free bank in south East Asia on the 13 march, 1983 as a Public
Company with limited liability under the Companies Act, 1913, started limited
operation on 30 March, 1983 and introduced a full package of banking services in
August, 1983. Its board objective is banking business under shariah. Its registered
office is located in Dhaka with prior permission from the Bangladesh Bank, it open
branches anywhere within and outside the country. By December, 2015 IBBL opened
294 branches all within Bangladesh. It is a joint venture of Bangladeshi and
overseas capital in the ratio of thirty six to sixty four. Its overseas capital is owned by
Islamic Development Bank (IDB), nine other institutions and three individuals of
Arab nationality, while the local capital is owned by Government of Bangladesh
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(GOB), Investment Corporation of Bangladesh (ICB), four non profit private
institutions and a good number of private individuals.
Islami Bank Bangladesh Limited is a Joint Venture Public Limited Company engaged in
commercial banking business based on Islamic Shariah with 63.09% foreign
shareholding having largest branch network ( total 304 Branches) among the private
sector Banks in Bangladesh. It was established on the 13th March 1983 as the first
Islamic Bank in the South East Asia. It is listed with Dhaka Stock Exchange Limited
and Chittagong Stock Exchange Limited. Authorized Capital of the Bank is Tk.
20,000.00 Million and Paid-up Capital is Tk. 16,099.90 Million having 33,686
shareholders as on 31st December 2015.
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CFO Mohammed Shahid Ullah, ACA, CDCS
Number of Zones 15
Number of AD Branches 52
Page | 11
2. to conduct foreign exchange business;
2.1.3 Vision
3. Enhance customers trust & wealth, quality investment, employees value and
rapid growth in shareholders equity.
2.1.4 Mission
Islami Bank Bangladesh Limited aims to become one of the leading Banks in
Bangladesh by prudence, flair & quality of operations in their banking sector. The
bank has some mission to achieve the organizational goals. Some of them are :
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7. to ensure human resource development to meet the challenges of the time.
6. to extend co-operation to the poor, the helpless and the low income group for
their economic development;
Strategies
Page | 13
those requirements.
5. To train & develop all employees &provide them adequate resources so that
the customers needs are reasonably addressed.
4. Welfare Banking.
6. Environmental Consciousness.
7. Personalized Service.
Commitments of IBBL
1. To Shariah
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2. To the Regulators
3. To the Shareholders
4. To the Community
5. To the Customers
6. To the Employees
7. To other stakeholders
8. To Environment
No.
02 Mujibur Rahman VP of GB
Page | 15
05 A. B. M. Morshed SPO
Source : Self-Created
Page | 16
Figure 01 : Organogram of IBBL (Source : Self created))
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2.2 Financial Information
Income Statement
Balance Sheet
Page | 18
Authorized Capital 5,000.00 10,000.00 10,000.00 15,000.00 15,000.00
Foreign Exchange
Business
Capital Measures
Page | 19
Supplementary Capital 929.96 1,123.40 1,731.59 1,511.75 1,732.06
(Tier-ll)
Investment Quality
Share Information
Page | 20
Earnings Per Share (Taka) 4.14 2.79 2.38 2.46 2.20
Operating Performance
Ratio
Other Information
Page | 21
Number of Branches 78 88 100 110 119
a) Strength
3. Strong liquidity
b) Weakness
Page | 22
2. IT & e banking is not enough strong
c) Opportunities
d) Threats
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Chapter-03
Conceptual Framework
Page | 24
3.1 Definition of Bank
Bank is a financial intermediary accepting deposit and granting, loans offers the
widest menu of services to any financial institutions.
The institution which accepts the cheques of the persons from whom it collected
money in current accounts is called Bank - H. L. Hert.
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Banking is the business of a banker, the keeping or management of a Bank
-The Oxford English Dictionary
"An establishment for the custody of money received from, or on behalf of, its
customers. It's essential duty is to pay their drafts on it : its profits arise from the use
of money left unemployed by them."
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The functions of banks are briefly highlighted in following Diagram or Chart.
3.4 Investment
The word comes from the Latin word credo meaning I believe .It is a lenders trust
in a persons/firms/companys ability potential ability to command goods or services
of another in return for promise to pay such goods or services at some specified time
in the future. In other word, the purchase of a financial product or other items of value
with an expectation of favorable future returns is called investment. In general terms,
investment means the use money in hope of making more money. The objective of the
investment management is to maximize the performing asset and the minimization of
the non-performing asset as well as ensuring the optimal point of loans and advances
and their efficient management.
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3.5 Factors of Investment
1. Risk
2. Time
3. Interest Rate
4. Security Or Collateral
5. Operating Expense
6. Legal Considerations
7. Inflation.
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6. business cycle can run well only by the help of lending system;
3. to ensure mutual benefit both for the Bank and the investment client by
professional appraisal of investment and monitoring therefore;
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4. to make investment keeping the socio-economic requirement of the country in
view;
7. to invest in the form of goods and commodities rather than give out cash
money to the investment clients.
Investment is the action of deploying funds with the intention and expectation that
they will earn a positive return for the owner. Funds may be invested in either real
assets or financial assets. When resources are used for purchasing fixed and current
assets in a production process or for a trading purpose, then it can be termed as a real
investment. The establishment of a factory or the purchase of raw materials and
machinery for production purposes are examples in point. On the other hand, the
purchase of a legal right to receive income in the form of capital gains or dividends
would be indicative of financial investments. Specific examples of financial
investments are : deposits of money in a bank account, the purchase of Mudaraba
Savings Bonds or stock in a company. Ultimately, the savings of investors in financial
assets are invested by the respective company into real assets in the form of the
expansion of plant and equipment. Since Islam condemns hoarding savings and a 2.5
percent annual tax (Zakat) is imposed on savings, the owner of excess savings, if he is
unable to invest in real assets, has no option but to invest his savings in financial
assets.
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3.10 Definition of Islamic Bank
Islamic banking has been defined in a number of ways. The definition of Islamic bank
approved by the General Secretarial of the OIC is stalled in the following manner.
An Islamic bank is a financial institution whose status, rules and procedures
expressly state commitment to the principle of Islamic Shariah and to the banning of
the receipt and payment of interest on any of its operations.
Dr. Ziaul Ahmed says, Islamic banking is essentially a normative concept and could
be define conduct of banking in consonance will the ethos of the value system of
Islam.
It appears from the above definitions that Islamic banking is a system of financial
intermediation that avoids receipt and payment of interest in its transactions and
conducting operations in a way that it helps achieving the objectives of an Islamic
economy. Alternatively, this is a banking system whose operation is based on Islamic
principle transactions of which profit and loss sharing (PLS) is a major feature
ensuring justice equity in an economy. That is why Islamic banks are often known as
PLS-banks.
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3.11 Objectives of Islamic Banking
The primary objective of establishing Islamic banks all over the world is to promote,
foster and develop the application of Islamic principles in the business sector. More
specifically, the objectives of Islamic banking when viewed in the context of its role
in the economy are listed as following:
Islam on the other hand, considers a loan to be given or taken, free or charges, to meet
any contingency. Thus in Islamic banking, the creditors should not take advantage of
the borrower.
The basic difference between Islamic Banking and conventional banking is the
contractual relationship. This fundamental difference posed a totally different outlook
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on what happens after that. The contract between a customer and a conventional bank
is simple; a loan where interest is charged upon. But look at an Islamic contract. It is
much more complex.
Table 05 : The distinguishing features of the conventional banking and Islamic banking
1. The functions and operating modes 1. The functions and operating modes
of conventional banks are based on of Islamic banks are based on the
manmade principles. principles of Islamic Shariah.
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4. It does not deal with Zakat. 4. It has become one of the service-
oriented functions of the Islamic
banks to collect and distribute Zakat.
10. Since income from the advances is 10. Since it shares profit and loss, the
fixed, it gives little importance to Islamic banks pay greater attention to
developing expertise in project developing project appraisal and
appraisal and evaluations. evaluations
Page | 34
11. The conventional banks give 11. The Islamic banks, on the other
greater emphasis on credit-worthiness hand, give greater emphasis on the
of the clients. viability of the projects.
12. The status of a conventional bank, 12. The status of Islamic bank in
in relation to its clients, is that of relation to its clients is that of
creditor and debtors. partners, investors and trader.
Source : www.islamibankbd.com
Page | 35
Chapter : 04
Page | 36
4.1 Introduction
Page | 37
4.2 Investment Operation of IBBL
It is to be noted that the client/customer must agree with the banks rules &
regulations before availing investment. Generally, bank analyses the following five
Cs of the client :
a) character,
b) capacity,
c) capital,
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d) collateral, and
e) condition.
At this stage, the bank will collect necessary information about the prospective client.
Documents that are necessary for getting investment of IBBL, Foreign Exchange
Branch are prescribed below :
d) prior three (03) years audited balance sheet (for joint stock company);
j) detailed summary of the sundry debtors and creditors (including both time &
schedule);
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(3) Appraisal stage
Appraisal report is used to the client for gathering all the information.
a) Companys/Clients information,
b) Owners Information,
c) List of partners/directors,
d) Purpose of investment/facilities,
k) Business/Industry analysis,
l) Relationship analysis,
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o) Particulars of the goo down for storing MPI/Murabaha goods,
p) Insurance coverage,
r) Security analysis.
In this case client receives banks sanction letter. IBBL, Foreign Exchange Branch
sanction letter contains the following elements :
c) Purpose of investment,
d) Period of investment,
f) Securities.
The documentation stage, Foreign Exchange Branch of IBBL checks some documents
of the client.
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b) Stock Report
d) VAT Certificate.
a) Aungykar Nama
b) Ghosona Potra
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(6) Disbursement stage
At this stage, bank decides to pay out money. Here, the client gets his/her desired fund
or goods. It is to be noted that before disbursement a site plan showing the exact
location of each mortgage property needs to be physically verified.
Bank can obtain monthly stock report from the client in case of micro investment.
Here, the bank will keep his eye on over the investment taker. If needed, bank will
physically verify the clients operations. Also if bank feels that anything is going
wrong then it tries to recover its investment fund from the client.
The following models of charging securities are applied in the Islami Bank
Bangladesh Limited.
Lien
A lien is right of banker to hold the debtors property until the debt is discharged.
Bank generally retains the assets in his own custody but sometimes these goods are in
the hands of third party with lien market. When it is in the hand of third party, the
third party cannot discharge it without the permission of bank. Lien gives banker the
right to retain the property not the right to sell. Permission from the appropriate court
is necessary. Lien can be made on movable goods only such as raw materials, finished
goods, shares debentures etc.
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Pledge
Pledge is also like lien but here bank enjoys more right. Bank can sell the property
without the intervention of any court, in case of default of loan. But for such selling
proper notice must be given to the debtor. To create pledge, physical transfer of goods
to the bank is must.
Hypothecation
In this charge creation method physically the goods remain in the hand of debtor. But
documents of title to goods are handed over to the banker. This method is also called
equitable charge. Since the goods are in the hand of the borrower, bank inspects the
goods regularly to judge its quality and quantity for the maximum safety of loan.
Mortgage
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2. The Fixed Deposit Receipt is not in the name of minor.
B a i S M h I o a j ad r er e a s M o d e
M u Hd a i g r ha be ra P u r c h a s e
M u Hs h i ga hr ae kr a P u r c h a g e U n d e r S h i r k a t u l M e l k
B a i - M u r a b a h a
B a i - I s t i s h n a
B a i - M u a j j a l
B a i S a l a m
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4.4.1 Bai-Murabaha Meaning
The terms Bai and Murabaha have been derived from Arabic words
Murabahaand Bai. The word Bai means purchase and the word Murabaha means a
in cash Bai-Murabaha means sale for which payment is in cash or in future fixed
date or within a fixed period. In short, it is a sale on cash.
Types of Bai-Murabaha
1. Ordinary Bai-Murabaha
1. Ordinary Bai-Murabaha
If there are only two parties, the seller and the buyer, where the seller as an ordinary
trader purchases the goods from the market without depending on any order and
promise to buy the same from him and sells those to a buyer for cost plus profit, then
the sale is called Ordinary Bai-Murabaha.
If there are three parties, the buyer, the seller and the Bank as an intermediary trader
between the buyer and the seller, where the Bank upon receipt order from the buyer
with specification and a prior outstanding promise to buy the goods from the Bank,
purchases the ordered goods and sells those to the ordering buyer at a cost plus agreed
profit, the sale is called Bai-Murabaha on Order or Promise, generally known as
Murabaha.
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Important features of Bai-Murabaha
a) There are three parties involved in this contract : Bank, Client and Supplier.
The terms Bai and Muajjal have been derived from Arabic words Ajal and Bai.
The word Bai means purchase and sale and the word Ajal means a fixed time or a fixe
period Bai-Muajjal means sale for which payment is made at a future fixed date or
within a fixed period. In short, it is a sale on credit.
Categorization
1. Bai-Muajjal Commercial
2. Bai-Muajjal Industrial
3. Bai-Murabaha Agriculture
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termed as Bai-Muajjal Agriculture.
4. Bai-Muajjal Import
a) Whether the goods that the client intends to purchase are marketable and have
steady demand in the market.
c) Whether the price of the goods is subject to frequent and violent changes.
The terms Bai and Salam have been derived from Arabic words Bai and Salam.
The word Bai means Sale & Purchase and the word Salam means Advance.
Bai-Salam means Advance sale and purchase.
a) Where are two parties involved in the contract : Bank and the clients.
d) Bank may sale out the goods to anybody after getting delivery from the client.
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4.4.4 Bai-Istishna Meaning
The word Istishna has been derived from the word Istishna which means industry
or Manufacturing enterprise. Istishna to goods manufactured by placing orders to a
manufacturer.
a) It gives the buyer the opportunity to pay the price in some future dates or by
installments.
b) It is a binding contract & no party is allowed to cancel the contract after the
price is paid & received in full or in part or the manufacturer starts the work.
4.5.1 Mudaraba
It is a form of partnership where one party provides the funds while the other provides
the expertise and management. The first party is called the Sahib-Al-Maal and the
latter is referred to as the Mudarib. Any profits accrued are shared between the two
parties on a pre-agreed basis and loss is exclusively borne by the partner providing the
capital.
a) Bank supplies capital as Sahib-Al-Mall and the client invest his experience.
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b) The client maintains administration and management.
e) Client cannot take another investment for that specific business without the
permission of the Bank.
4.5.2 Musharaka
Musharaka means equity sharing. The partners share both capital and management
of a project so that profits will be distributed among them as per rations, where loss is
shared according to ratios of their equity participation.
Important feature
a) The investment client will normally run and manage the business.
b) The Bank shall take part in the policy and decision making, supervision and
monitoring the operations of the business of the client.
c) As the investment client shall manage the enterprise, the Bank may pay more
share of profit to him than that of his proportionate capital contribution.
4.5.2.1 Quard
The word Quart is an Arabic word which means loan or credit on advance. The
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literal meaning of Quard is giving Fungible goods for use without any extra value
returning those goods. In banking sector, money is used as Quard. Quard is Halal by
Islam for not to pay any extra or interest in return.
Characteristics of Quard
4.5.2.1 Quard-E-Hasana
Quard-E-Hasana is also one kind of Quard, which is given, with the expectation of
return or not.
Ijara has been defined as a contract between two parties; the Hiree and Hirer where
the Hirer enjoys or reaps a specific service on benefit gains a specified consideration
or rent from the asset owned by the Hiree. It is a hire agreement under which a certain
asset is hired out by the Hiree to a Hirer against fixed rent or rentals for a specified
period.
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Hire purchase under Shirkatul Melk is a special type of contract, which has been
developed through practice. Actually, it is a synthesis of three contracts : Shirkat, Ijara
and sale. Shirkat means partnership. Shirkatul Melk means share an ownership. When
two or more persons supply equity, purchase an asset, own the same jointly, and share
the benefit as per agreement and bear the loss in proportion to their respective equity,
the contract is called Shirkatul contract.
Thus Hire Purchase under Shirkatul Melk Agreement has got three stages.
Side by side commercial and industrial sector IBBL has Some Special investment.
Page | 52
8. Rural Development Scheme (RDS)
(million Tk )
Trend of Investment
600,000
500,000
400,000
General Inv.
300,000
200,000
100,000
0
2011 2012 2013 2014 2015
Page | 53
Graph 01 : Year Wise Investments of IBBL. ( Source : Self Created)
20.00%
15.00%
10.00%
5.00%
0.00%
2012 2013 2014 2015
From the graph we can find out that in 2013 investment growth rate was slow down
by 8.12%. In 2012 the growth rate was 21.93% which was the highest position among
5 years. In 2014 the investment growth rate was 14.95%. In 2015 IBBL's investment
growth rate was 14.40% which was lower than 2014.
Page | 54
Mode 2014 2013
Growth %
Particulars Amount % to total Amount % to total
Investment Investment
Page | 55
% of Mode Wise Investment (2014)
23%
Quard Bai- Salam Mudaraba 62%
Musharaka
Page | 56
Growth % of Mode Wise Investment
150.00%
100.00%
50.00%
0.00%
-50.00%
-100.00%
Graph 05 : Growth of mode wise investment of IBBL, 2014. ( Source : Self Created)
Analysis : In the year 2013 total mode wise investments was Tk. 463,475 million and
in the year 2014 investment was Tk. 530,194 million. In 2014 and 2013 Bai
Murabaha investment was the highest portion among the other mode wise investment.
Then HPSM mode was the second position and the lowest investment was in
Musharaka contract which was 0.07% and 0.61%
From the graph we can find out that in 2014, the Bai-Murabaha investment growth
rate was increased by 17.64%. In 2014, Bai Muajjal investment growth rate was
125.461% which reached highest position from other mode of investment. Bill
Purchased & Negotiation (-50.68%), Quard (-5.90%) & Musharaka (-86.08%) which
growth rate were decreased in 2014.
Page | 57
Sector 2014 2013
Growth
%
Page | 58
% of Sector Wise Investment (2014)
Commercial
9% 10%
12% Real Estate
3% Agriculture
2% Transport
SME
64%
Others
9% 14%
12%
Commercial Real Estate Agriculture Transport
4% SME Others
2%
59%
Page | 59
Growth % of Sector Wise Investment
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
Commercial Real Estate Agriculture Transport
-5.00% SME Others
-10.00%
-15.00%
Graph 08 : Growth of Sector Wise Investment of IBBL, 2014. (Source : Self Created)
Analysis : In 2014 investment of SME sector was increased from 39.25% to 43.35%
which was biggest portion also. The investment of transport sector of IBBL was
1.29% in 2014 which was lower than 2013.
From the graph we can find out that in 2014, SME sectors growth rate was 26.36%
which was best position from other sectors. In 2014, commercial (-12.98%) and
agriculture investment sector (-6.31%) of IBBL's growth rate were declined.
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Scheme (RDS)
Page | 61
Beniyog Prakalpa
Page | 62
Scheme Wise investment of IBBL, 2015
250.00%
200.00%
150.00%
100.00%
50.00%
0.00%
-50.00%
Graph 09 : Growth Analysis of Scheme Wise Investment of IBBL, 2015. (Source : Self Created)
Analysis : Outstanding against welfare oriented investment schemes over the last five
years increased from 10.75% to 11.97% of General Investment.
From the graph we can find out that the growth rate of all scheme were in good
position. Housing Investment Scheme growth was (-20.57%) in 2015 and which
growth rate was lower than other schemes.
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4.9 Investment Information of Branch
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Figure 03 : Organogram of Foreign Exchange Branch (Source : Self Created)
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No. (million Tk) Decrease
Source : Yearly statement of Affairs of the Foreign Exchange Branch, IBBL. (Year 2015)
20000
15000
10000
5000
0
2011 2012 2013 2014 2015
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Growth Rate of General investment
40.00%
30.00%
20.00%
10.00%
0.00%
2012
-10.00% 2013 2014 2015
-20.00%
-30.00%
Graph 11 : Investment Growth Rate of foreign Exchange Branch, (Source : Self Created)
From the graph we can find out that the growth rate was slow down in 2013 but it
was increased in 2014 to 2015.
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4.9.3 Mode-Wise Investment of Foreign Exchange Branch, IBBL
Bai Murabaha
1926.55 4248.04 5450.50 6765.27
(General) 24.12
Bai Murabaha
6627.87 2216.60 1432.75 3132.80
(Post-import) 118.66
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Murabaha
Import Bills 300.41 1335.22 1310.51 1359.28 3.72
(UPAS)
Source : Yearly Statement of Affairs of the Foreign Exchange Branch of IBBL, 2015.
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Graph 13 : Growth Rate of Investment modes in Branch, (Source : Self Created)
Analysis : HPSM investment was satisfactory position in 2012 to 2015. In 2014 and
2015, Bai Murabaha (General) investment was better position from previous two
years. The Bai-Muajjal investment of Foreign Exchange Branch of IBBL had less
concentrate in (2012-2015).
From the graph we can find out that in 2015, Bai Murabaha (Post Import) growth rate
was 118.66% which was better position from other modes and Bai Muajjal investment
was decreased and growth rate was (-74.04%).
During this short spend of time the bank of time had been successful to position itself
as a progressive and dynamic financial institution in the country. The bank had been
widely acclaimed by the business community from small businessmen, entrepreneurs
to large tracers and industrial conglomerates, including the top rated corporate
borrowers for forward looking business outlook and innovative financing solutions.
Following are performance & analyzing given.
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02 HDS 0.52 0.002%
Source : Yearly statement of Affairs of the Foreign Exchange Branch of IBBL, 2015
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Sector
SSDS Wise Investment
HDS Foreign
Exchange Branch of IBBL (2015)
SHBIS Industrial
Others
Graph 14 : Sector Wise Investment of Foreign Exchange Branch 2015. (Source : Created)
Analysis :From the graph we can fimd out that in 2015, the Foreign Exchange
Branch of IBBL was invested Tk. 22807.91 million in industrial sector which was
highest invest amount from other sectors. commercial sector was the second
investment position and other investment was lower comparatively and the total
sector wise investment was Tk. 25417.69 million.
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4.10 Findings
a. Most of the people in our country have a bad impression of IBBL's operations
regarding indirect generation of interest which meaning no difference between
investment of IBBL and loan/Credit/advance of conventional banks for this
reason, they are not too much interested to make investment with IBBL.
c. This Bank cant invest in all economic sectors like Alcohol Industry, Tobacco
factory etc. These sectors are prohibited for the bank to invest.
d. Sometimes IBBL cant invest its assets in proper portfolio due to insufficient
and unskilled manpower in these regards. As a result, there is a large amount
of money being idle and thus potential profit is not increasing.
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e. IBBL has no strong promotional activities to increase motivate its present and
potential investment client.
i. Day by day new upcoming banks are coming with their new investment
services, which could be the threats for IBBL, because IBBL has limited
investment schemes.
j. Though IBBL is committed to avoid interest but they cant do this fully.
k. The trend of investment of IBBL was near doubling of the figure in 5 years.
In 2012 the growth rate was 21.93% which was the highest position among 5
years. In 2013 investment growth rate was slow down by 8.12% but now it's
gradually increasing. In 2014 the investment growth rate was 14.95%. In 2015
IBBL's investment growth rate was 14.40% which was lower than 2014.
l. In 2014, IBBL increased Bai-Muajjal investment which growth rate was
125.46% but their highest investment was Bai-Murabaha then HPSM . On the
other hand lowest investment was in Musharaka contract which growth rate
was decreased by 86.08%.
m. In 2014, SME sectors of IBBL growth rate was 26.36% which was highest
position. The investment in commercial and agriculture sector growth was
decreased by 12.98% and 6.31%.
n. In 2015, Housing Investment Scheme of IBBL growth rate was (-20.57%) and
which growth rate was lower than other schemes.
o. In 2015, the trend of investment shows the Foreign Exchange Branch of IBBL
was satisfactory position from previous 4 years and growth rate was 30.76%.
p. In (2012-2015), investment of Foreign Exchange Branch, IBBL had more
concentrate in HPSM and less concentrate in Bai-Muajjal mode. In 2015, the
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growth rate of Bai Murabaha (post Import) increased by 118.66% and Bai
Muajjal decreased by ( -74.04%) which was lower than other modes.
q. In 2015, investment in industrial sector of Foreign Exchange Branch, IBBL
was highest than any other investment, commercial sector was the second
investment position and other investment is lower comparatively.
Working in IBBL in Foreign Exchange Branch of IBBL as an intern was the best
opportunity for me to acquire practical knowledge about banking sector. I worked the
all department of this branch. It was tremendous journey for me to go through the
actual experience of banking sector. Real word is far away different from the
theoretical knowledge. As in intern of IBBL I had experience of so much new things. I
knew actual work of bankers and observed how the works are being done according to
serve to serve the customer properly.
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We were three intern in Foreign Exchange Branch of IBBL and I got chance to work
in general banking.
1. Account opening
2. Cheque book issue
3. DD, PO issue
4. Clearing section
5. Remittance
6. Alternative delivery channel.
1. Import Section,
2. Import Section and
3. SCA section.
My Observation
Foreign Exchange Branch of IBBL should evaluate for a better working plan due to
its environment and employees. During my 2 month internship program I really
enjoyed a healthy and worm atmosphere there but there was short-coming too.
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Shorts of IBBL
a. The bank need to open more ATM booths in different places as it has a huge
number of customers.
b. IBBL should develop Information Technology to ensure better service for
customer.
c. Increase Space for all department of Foreign Exchange Branch of IBBL.
d. The bank can consider employing more female employees in the branch,
especially in the investment sector to attract more female customers.
e. They can consider female introducer to attract more female customer and they
can easily solve female customers problem.
f. Increase the number of employee in customer service desk.
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Chapter-05
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5.1 Recommendations
According to my findings and knowledge think the authority of the IBBL should take
some step which can help them to survive in the banking sector even economic world.
Everything needed modification for the competitive world.
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with the help of these skilled personnel.
c. Islami bank can invest in all economic sectors if those projects is not haram so
that those project should be helpfull for the people. So, people who want to
start a business should be honest and peacefull. If people are honest, Islami
bank will be interested more in all halal economic sectors.
d. IBBL cant invest its assets in proper portfolio due to insufficient and
unskilled manpower in these regards. As a result, there is a large amount of
money being idle and thus potential profit is not increasing. For this reason,
they have to appoint some skilled manpower & have to be trained about
investment so that this trained people can give knowledge to the people.
e. IBBL should take strong promotional activities so that it can increase &
motivate its present and potential investment client. Thats why client will be
invested more next time.
f. Islami bank widely uses the Bai-Murabaha mode. They should increase their
use in other investment modes. It may be fill up the diverse needs of people.
g. Since investment operations of IBBL are hampered due to increase, dishonest,
indiscreet, hypocritical nature of people, so bank have to identify the real
people for investment.
h. The bank should more invest in safe sector & choosing most credit worthy
borrower.
i. The IBBL should invest more in musharaka which is the most ideal
investment mode according to Shariah and initiates different investment
modes according to changing/diverse needs of clients by conducting huge
research and study.
j. Our country is agro based for that reason IBBL should invest more in
agriculture sector. Now our commercial sector is developing day by day. So
IBBL can more investment in commercial sector.
k. IBBL should make its investment schemes more attractive for availing high-
return projects and may arrange monthly/quarterly training courses/workshops
for the prospective clients selected by the branches in order to promote
Investment schemes at desired level.
l. IBBL should introduce new schemes like Education Investment Scheme, Shop
Financing scheme and so on to cope with the competitive market.
m. The Foreign Exchange branch of IBBL should maintain and increase their
growth rate.
n. In (2012-2015), investment of Bai-Muajjal mode was lower position than
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other modes. So they should more concentrate in this mode.
o. The Foreign Exchange Branch, IBBL growth investment can grow up by
concentration of Bai-Muajjal mode investment of Foreign Exchange Branch.
p. The Foreign Exchange Branch of IBBL can more concentrate in commercial
sector to involve profitably in this sector for the development of the branch as
well as the economy.
q. They can introduce online application, submission and personal credit
processing facility; reduce investment processing time and fees to attract more
prospective clients.
r. The bank should provide emphasis to maintain documentation process
properly and should concentrate on to minimize disbursement time of
investment.
5.2 Conclusion
Islami Bank Bangladesh Limited (IBBL) was incorporated on 13, March, 1983 as a
public company with limited liability under the companies act, 1913. The bank started
functioning with effect from 30, March, 1983. IBBL is the first interest (Riba) free
banking in South Asia. The establishment of this bank conducted new age in
Bangladesh, the 3rd largest Muslim country in the world. The bank is committed to run
all its activities as per Islamic Shariah. IBBL through its steady process and continued
success has, by now 2016, earned the reputation of being one of the leading private
sector banks of the country. The bank has shown steady process in this important
sector. Main items of import (by the help of IBBL) are machinery, garments, fabrics
and accessories, ships for scarping, rice pharmaceuticals etc. Whereas main items of
exports are jute goods, readymade garments, leather, frozen fish, fertilizer, etc. Still
now hear about 301 Islamic banking and financial institutions in about 49 countries of
Asia, Africa, Europe, America and countries like Pakistan, U.K., U.S.A., Germany,
Argentina, Denmark, Luxembourg, Switzerland and India have been established. The
banking system of Pakistan and Iran was totally remodeled on the basis of Islamic
Shariah services. IBBL will be more effective in our economy by lunching new
financial products to attract deposit as Consumer Credit Scheme, Pension Scheme,
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Child Education Scheme, Plastic Money ATM and Online service etc
References
Books
1. Gordon & Natarajan (2010). Banking Theory, Law & Practice. 11th Edition
New Delhi, India : Himalaya Publishing House.
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Prospectus
Website
1. http://www.educarnival.com/islami-bank-bangladesh-limited/
2. www. wikipedia
3. www.islamibankbd.com
4. http://www.assignmentpoint.com/business/finance/investment-management-
of-islami-bank-bangladesh-limited.html
5. http://www.islamibankbd.com/annual_report.php
6. http://kalyan-city.blogspot.com/2011/04/functions-of-banks-important-
banking.html
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