Overall banking system of SOCIAL INVESTMENT Bank Ltd

Overall banking system of SOCIAL INVESTMENT Bank Ltd

EXECUTIVE SUMMARY

Banking system of Bangladesh has gone through three phases of development- Nationalization, Privatization, and Lastly Financial Sector Reform. Social Investment Bank Limited has started its journey as a private commercial bank on November 22, 1995.

The whole working process of Principal Branch, SOCIAL INVESTMENT Bank Ltd is divided into 3 sections- (i) General Banking section, (ii) Credit Section, (iii) Foreign Exchange Section. This report has been presented based on observation from each section, which is consisted of various departments. Foremost, the tried to make acquainted with the bank and branch in this report.

General banking is the starting point of all the banking operations. It is the department, which provides day-to-day services to the customers. It opens new accounts, remit funds, issue bank drafts and pay orders etc. Provide customer through quick and sincere service is the goal of the general banking department.

Foreign exchange department plays significant roles through providing different services for the customers. Letters of credit is the key player in the foreign exchange business. With the globalization of economies, international trade has become quite competitive. Timely payment for exports and quicker delivery of goods is, therefore, a pre-requisite for successful international trade operations. To ensure this purpose SOCIAL INVESTMENT Bank Ltd transmits L/C through SWIFT (Society for Worldwide Inter bank Financial Telecommunication) to the advising bank.

SOCIAL INVESTMENT Bank Limited is providing different sorts LC services like L/C opening, lodgment, BLC (bills under letter of credit), Back to back LC etc. Foreign exchange department also provide foreign remittance lie traveler’s cheque, foreign demand draft, endorsement of US$ in passport etc.

Bank credit is an important catalyst for bringing about economic development in a country. Without adequate finance, there can be no growth or maintenance of a stable economy. SOCIAL INVESTMENT Bank Ltd, being one of the largest private commercial bank of the country, has some prejudice to finance directly on priority basis to agriculture, industry and commerce sector for strengthening the economic base of the country. Hence, it is very clear that, SOCIAL INVESTMENT Bank plays an important role to move the economic wheel of the country. Providing different sorts of credit and schemes like loan against imported merchandise (LIM), Trust Receipt, Bank Guarantee, Industrial Loan, SOD, Consumer Credit scheme, Executives Car Loan, House Finance is the main spring of the credit department.

Brief Scenario of Banking Sector in Bangladesh:

49 Banks operate in the financial system of Bangladesh; of which 6 are full-fledged Islamic Banks and 43 are Conventional Banks. A part from the 6 full- fledged Islamic Banks, having a network of 250 branches, 7 conventional Banks have so far established 15 Islamic branches.

The first Islamic Bank was established in Bangladesh in the year 1983. There after, between 1995 to 2001, 5 other Islamic Banks were established. With 4.255 branches, network the Islamic banks’ present market shares of deposits and advances (Investments) are 12% and 10% respectively. The growth rate of both deposits & investment of all the Islamic banks is over 30% as against 16% growth of deposit & 13% growth rate of management position, earnings and profitability and liquidity position of all the Islamic banks excepting one are satisfactory. The overall performances of all the Islamic Conventional Banks are also satisfactory. Being inspired by the success of Islamic banks and the satisfactory growth trend of its own Islamic branches, a Conventional Bank has decided to conventional its whole operations to Islamic system.

The Islamic Banks have introduced a wide range of deposits in the market through which they have been able to mobilize substantial amount of deposits. The Investment operations of Islamic banks are however, limited to a few buying & selling modes and one rent-sharing mode, Islamic Banks finance in the real sector of the economy, particularly in Industry Sector and Service sector are above the level of finance provided by Conventional banks. Due to insufficient branch network, the Islamic Banks could not yet reach up to its expectation to Agriculture Sector in rural areas. Islamic bank Bangladesh Ltd, the pioneer Islamic bank of the country has introduced a Taka 20 thousand (USD 85 to 340) per clients in the rural areas, the recovery rate of which is 99%. This Bank has also introduced various welfare oriented Schemes through a foundation.

Like their counterparts around the world, the Islamic Banks in Bangladesh are also facing some legal and practical constraints. Absences of Islamic money market, shortage of link institutions are some of such constraints.

The Islamic Banks in Bangladesh have good prospects too, As the Islamic banks meet both banking & ethical expectation, and the people of the country have reposed a great deal of trust & confidence on them. The initiative, drive, farsightedness and relentless efforts of the people who are associated with the Islamic banking system may give it a great boost & momentum.

Banking in Bangladesh

The march 1971 Bangladesh was a part of Pakistan knows as East Pakistan. A nine- month liberation war results in the creation of Bangladesh on 16 December 1971. At the end of the liberation war, the banking sector of Bangladesh was in total disarray. With the exception of two local banks incorporated in then East Pakistan, all the bigger local banks became in operational. Liberation war left these banks divided and without any corporate offices to guide them as their Head Offices was located outside Bangladesh territory. The overseas banking relationships of these banks were also shattered under such situation. Two local banks and a few branches of the then Pakistani banks were functioning in the country. Starting with such a humble and chaotic condition, the Banking Sector of Bangladesh has grown to a great extent.

At present, there are 49 banks in Bangladesh. The structure of banking in Bangladesh is as under:

1. Nationalized Commercial Banks ——– 4
2. Specialized Banks ——– 5
3. Private Sector Commercial Banks:

i. Conventional Banks —— 25

ii. Islamic Banks —— 5

4. Foreign Commercial Banks:

i. Conventional Banks —— 9

ii. Islamic Banks —– 1

——————

Total 49

List of above 49 Banks & 28 non-bank financial institutions is given in Annexure-A.

Major Indicators of the Banking Sector of Bangladesh as on 31.12.2004

Amount in Million Taka (USD$1=58.80)

Deposits of Islamic Banks stood at TK. 132,170 Million and Credit (Investment) rose to TK. 104,294 million as on 31.12.

Genesis of Islamic Banking in Bangladesh

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.

In January 1981,the then President of People’s Republic off Bangladesh while addressing the 3rd Islamic Summit Conference held at Makkah and Taif suggested, ‘’The Islamic countries should develop a separate banking system of their own in order to facilitate their trade and commerce.’’

This statement of the President indicated favorable attitude of the Government of the People’s Republic of Bangladesh towards establishing Islamic bank and financial institution in the country.

Earlier in November 1982, a delegation of IDB visited Bangladesh and showed keen interest to participate in establishing a joint venture Islamic Bank in the private sector. They found a lot of work had already been done and Islamic banking was in a ready from for immediate introduction. Two professional bodies Islamic Economics Research Bureau (IERB) and Bangladesh Islamic Bankers Association (BINBA) made significant contributions towards introduction of Islamic banking in the country.

They came forward to provide training on Islamic banking to top bankers and economists to fill-up the vacuum of leadership for the future Islamic banks in Bangladesh. They also held seminars, symposia and workshops on Islamic economics and banking throughout the country to mobilize public opinion in favor of Islamic banking.

Their professional activities were reinforced by a number of Muslim entrepreneurs working under the aegis of then Muslim Businessmen Society (now reorganized as Industrialist & Businessmen Association). The body concentrated mainly in mobilizing equity capital for the emerging Islamic bank.

At last, the drawn struggle to establish an Islamic bank in Bangladesh become a reality and Islami bank Bangladesh Ltd. Was established on 30th March, 1983 in which 19 Bangladeshi national, 4 Bangladeshi institutions and 11 banks, financial institutions and government bodies of the Middle East and Europe including IDB and two eminent personalities of the Kingdom of Saudi Arabia joined hands to make the dream a reality.

Later, other 5 Islamic Banks were establishing in the country. 7 conventional banks have so far established Islamic banking branches in some major cities.

Orientation of the Report

INTRODUCTION

Generally, by the word “Bank” we can easily understand that the financial institution deals with money. But there are different types of banks like; Central Banks, Commercial Banks, Savings Banks, Investment Banks, Industrial Banks, Co-operative Banks etc. However, when we use the term “Bank” without any prefix, or qualification, it refers to the ‘Commercial banks’. Commercial banks are the primary contributors to the economy of a country. So we can say Commercial banks are profit-making institutions that hold the deposits of individuals & business in checking & savings accounts and then use these funds to make loans. For these people and the government is very much dependent on these banks as the financial intermediary. As,

Banks are profit-earning concern; they collect deposit at the lowest possible cost and provide loans and advances at higher cost. The differences between two are the profit for the bank.

Banking sector is expanding its hand in different financial events every day. At the same time the banking, process is becoming faster, easier and the banking arena is becoming wider. As the demand for better service increases day by day, they are coming with different innovative ideas & products. In order to survive in the competitive field of the banking sector, all banking organizations are looking for better service opportunities to provide their fellow clients. As a result, it has become essential for every person to have some idea on the bank and banking procedure.

Internship program is essential for every student, especially for the students of Business Administration, which helps them to know the real life situation. For this reason, a student takes the internship program at the last stage of the bachelor’s degree, to launch a career with some practical experience

Origin of the Report:

The report entitled “Performance Evaluation of Social Investment Bank Limited” has been prepared as a partial fulfillment of MBA program authorized by the Register, Stamford University Bangladesh.

BACKGROUND OF THE REPORT:

After completing the post graduation as a student of MBA from Stamford University Bangladesh, wanted to do Internship in a reputed Bank, which would be helpful for my future professional career. Got the opportunity to perform internship in the SOCIAL INVESTMENT Bank Ltd. Was sent to Foreign Exchange Branch. It was a three months long practical orientation program.

This report is originated as the requirement of SOCIAL INVESTMENT Bank Ltd.

OBJECTIVE OF THE REPORT:

The primary objective of this report is to comply with the requirement of the SOCIAL INVESTMENT Bank Ltd. However, the objective behind this study is something broader. Objectives of the study are summarized in the following manner:

· To apply theoretical knowledge in the practical field.

· To make a bridge between the theories and practical procedures of banking day-to-day operations.

· To gain practical knowledge by working in different desks of Foreign Exchange branch of social Investment Bank

· To observe the working environment in commercial banks.

· To study existing banker-customer relationship.

· To know the overall functioning of social Investment Bank Limited.

· To have some practical exposures that will be helpful for my future career.

METHODOLOGY:

This report has been prepared on the basis of experience gathered during the period of internship from January01, 2006 to March 31, 2006. For preparing this report, have undergone group discussion, collected data, sent some questionnaires to the selected Officers, and interviewed with some of them. I also studied different circulars and files of the bank.

Hope these criteria will be enough to find out different picture of financial performance of the selected bank (SOCIAL INVESTMENT Bank)

The Process of Preparing the Report

SCOPE OF THE REPORT:

As was sent to SOCIAL INVESTMENT Bank, Foreign Exchange Branch, the scope of the study is only limited to this branch. The report covers its overall department wise function, structure and performance. The report also covers details about SOCIAL INVESTMENT Bank.

JOB ROTATION:

SOURCES OF DATA:

In order to make the report more meaningful and presentable, two sources of data and information have been used widely.

The “Primary Sources” are as follows:

· Face-to-face conversation with the respective officer and staff of the Branch.

· Informal conversation with the clients.

· Practical work exposures from the different desks of the departments of the Branch covered.

· Relevant file study as provided by the officers concerned.

The “Secondary Sources” of data and information are:

· Annual Report of SOCIAL INVESTMENT Bank Ltd.

· Various books, articles, compilations etc. regarding general banking functions, foreign exchange operations and credit policies.

· Different ‘Procedure Manual’, published by SOCIAL INVESTMENT bank.

· Different circular sent by Head Office of SOCIAL INVESTMENT Bank and Bangladesh Bank.

LIMITATIONS:

1. The time, 68 working days, is insufficient to know all activities of the branch and prepare the report.

2. It was very difficult to collect the information from various personnel for their job constraint.

3. As some of the fields of banking are still not covered by our courses, there was difficulty in understanding some activities.

4. Another limitation of this report is Bank’s policy of not disclosing some data and information for obvious reason, which could be very much useful.

5. Because of the limitation of information, some assumption was made. So there may be some personal mistake in the report

6. The carried out such a study for the first time, so inexperience is one of the main constraints of the study.

ORGANIZATION OF THE REPORT:

This is a short report covering all that experienced while working at bank. The report has seven parts. The first part is the introductory chapter. The second part contains information about SOCIAL INVESTMENT Bank. The third part gives information about Foreign Exchange branch where have worked. General Banking is described in forth part. In fifth and sixth part, the discussed about Foreign Exchange and Advance Section respectively. The last part named ‘conclusions’ ends the report.

Organizational Overview:

Historical Background of SOCIAL INVESTMENT Bank Limited:

SOCIAL INVESTMENT Bank Limited was established under the rules & regulations of Bangladesh bank & the Bank companies’ Act 1991, on the 22nd November 1995 with the leadership of Mr. Dr. M. A. Mannan founder chairman who had a long dream of floating a commercial bank which would contribute to the social-economic development of our country. He had a long experience as a good banker. A group of highly qualified and successful entrepreneurs joined their hands with the founder chairman to materialize his dream. In deed, all of them proved themselves in their respective business as most successful star with their endeavor, intelligence, hard working and talent entrepreneurship.

Vision:

Social Investment Bank Limited started its journey with the concept of 21st century Islamic participatory three sector banking model:

· Formal Sector- Commercial banking with latest technology;

· Non-formal Sector- Family empowerment Micro-credit & Micro enterprise program and

· Voluntary Sector-Social Capital mobilization through CASH WAQF and others.

Finally, ‘’Reduction of Poverty Level’’ is our vision, which is a prime object as stated in Memorandum of Association of the Bank with the commitment ’Working Together for a Caring Society’’

Mission:

• High quality financial services with the latest technology.
• Fast, accurate and satisfactory customer service.
• Balanced& sustainable growth strategy.
• Optimum return on shareholders’ equity.
• Introducing innovative Islamic banking products.
• Attract and retain high quality human resource.
• Empowering real poor families and create local income opportunities.
• Providing support for social benefit organizations- by way of mobilizing funds and social services.

· Capital:

The bank started with an authorized capital of Tk.1000 million in 1995 and as on 31 December 1998 paid up capital stood at Tk. 126.00 million. The paid up capital stood at Tk.585.00 million as on 31 December 2004.

Analysis of capital structure:

Capital structure of Social Investment Bank has changed from year to year. The components of the capital structure are paid-up capital; proposed issue of dividend, share premium, statutory reserve, proposed cash dividend, retained earnings and other reserve.

Authorized and Paid up capital of Social Investment Bank:

Capital Position of Social Investment Bank:

Components of capital structure and correspondent contributions:

The bank achieved the Tk.1.00 Billion Capital requirement ahead of the deadline set by Bangladesh Bank. Capital base of the bank as on 31 December 2004 stood at Tk1023.86 million as against Tk. 971.06 million as on 31 December 2003. But we could not maintain minimum Capital Adequacy ratio of 9% at the end of 2004 due to faster growth of assets, particularly investment. Meanwhile, in order to maintain the ratio, the Board of Directors of your Bank recommended to issue 1:1 Right Share at par. Subject to approval in Extra Ordinary General meeting scheduled to be held on 28 August 2005. However, comparative position of Capital Base of the year 2004 and2003 is given below:

(Figures in million taka)

Deposit:

Although the deposit trend of the Bank was almost same as on 31 December 2004 (TK. 19,704.17 million) compared to the year-end 2003(TK. 19, 09.31); the deposit mix has significantly been improved. During 2004, Bank deposit received from other commercial Bank reduced to Tk. 6243.44 million against 7,445.44 million on 31 December 2003.On the other hand, Customer deposit increased to TK. 13460.73 million as on 31 december2004 against TK. 7445.44 million as on 31 December 2004 against TK. 12263.87 million of 2003, registering growth rate of 9.76%.

Deposit:

· Al-Wadiah Current Deposit Account

· Mudaraba Term Deposit Account

· Mudaraba Notice Deposit Account

· Foreign Currency Account

· Social Fund Deposit Account

· Shelter Finance Deposit Account

· Cash-Waqf Deposit Account

· Voluntary Sector Development Deposit account

Deposit Position of Social Investment Bank:

Deposit in Social Investment Bank:

· Investment:

The investment stood at TK. 12887.27 million in various sectors as at 31 December 2004 against TK. 10059.11, million of 2003 registering a growth by 28.12%, which signifies the confidence of the clients having on their bank. At the same time, we are concentrating our efforts to increase fee based and Exchange based investments to facilitate the earnings of the Bank.

Investment Activities of Social Investment Bank:

Family Empowerment Micro-Credit Program:

A special investment program generating employment and income opportunities for small & low-income families (SLF).

Objectives:

• Targeting poverty families to be identified through socio-economic survey within 15 kilometers area of the branches.
• To organize the target families and formation of family cluster.
• To provide informal training for increasing their capabilities.
• To provide finance through custom tailored Micro-Credit package to the urban and rural poor both in farming and off farming sectors.
• To mobilize savings increasing their saving habit and thereby assist in the formation of their own capital.
• To integrate men and women in income generating activities and to create employment opportunities, thereby firming up family tie, which will steadily increase self-reliance.
• To provide participatory economic activity and sustainable social security for a caring society.
• To expand banking activities through investment in small businesses, agriculture, livestock, heath and so on at the grass-root level.

Family Empowerment Micro-Enterprise Program:

A special investment program generating employment and income opportunities for small& medium entrepreneurs (SME).

Objectives:

• To promote and development Micro and small enterprises to generate employment on a self-sustainable basis.
• To create savings habit and to provide investment resources to the potential entrepreneur to increase their business who have no access to the formal banking.
• To provide necessary investment to new entrepreneurs who want to be self-employment.
• To enroll the successful Micro- Credit graduates into Micro-Enterprise Program.

Modes of Investment:

The following modes may be selected depending upon the sector and purpose of investment:

• Mudaraba: Trust Finance Partnership

• Musharaka: Participation Financing / Equity Financing

• Murabaha: Cost plus Sale

• Bai-Muajjal: Sale Under Deferred payment

• Bai- Salam: Forward Purchase

• Leasing: The Bank leases out Machineries, Transports, Houses, Ship etc. for an agreed period of time, the company being the legal owner and the lessee having the right to use the property for the duration of the contract.

• Direct Investment: This bank directly invests capital on medium and long-term basis in Industry, Agriculture, Trade, Transport, Immovable property and construction of houses etc.

• Hire Purchase: In this system of business the bank invests for purchasing durable assets like machineries, equipment, transport, land and building etc. along with the client with the stipulation that the client shall pay off the principal amount with rent ( at the agreed rate ) in installment.

· Foreign Exchange Business:.

Handling the amount of Foreign Exchange Business:

Handling Of Foreign Exchange Business in Social Investment Bank:

Special Banking Services:

In additional to sale and purchase of foreign currencies the Bank issue Guarantees, accept certificate and shares, accept articles & valuable documents, for safe custody locker service, discharge responsibility as investment trustee, act as client’s agents for recovery of client’s demand and carry on transactions on their behalf within the stipulated period, work as correspondent of local and Foreign Banks and other Financial institutions, act as; Banker to issue on behalf of the companies, provide consultancy service to the customers and all other Banking Services.

Special Service for Bangladesh Living Abroad:

Provide financial assistance to the Bangladeshis for the travel to the place of employment outside the country, prepare projects for investment of wage earn, accept housing projects and provide other necessary services to them.

Social Fund:

The Social Investment Bank considers man not with money but with a human face approach. So, this Bank is firmly committed to provide a human face approach in all its activities. This Bank builds a Social Fund with the part of the profit earned by the bank and collects all kinds of gifts, Zakat and Sadakah from clients. This fund is invests in projects for betterment of the less fortunate and poor people of the society.

Non- Formal Sector:

The Bank’s special program is directed mainly to up –lift the socio- economic conditions of rural and urban poor. In order to achieve this of local resources and the surplus labor mainly from within and provide employment opportunities to the unemployed and the landless besides investing in N.G.O. activities etc. Social Fellowship Program for students has already been introduced; Family health service cheque is being introduced.

Islamic Voluntary sector:

This Bank has a special program of development of various religious and social service oriented institutions. Within this program, Mosque, Maktab, Waqf, charitable organizations etc. will be modernized and activated. All properties under this program will be utilized in productive activities on participation basis. Besides, hajj (pilgrimage) and Kurbani (sacrifice of animals according to dictates of Islam) schemes are included in the program of Social Investment Bank Ltd. Cash waqf certificate has already been introduced for the first time in history. Various methods of compulsory and voluntary Islamic distribution of finance, such as Zakat, Sadakah, Waqf etc. will be institutionalized.

SWIFT Service:

The SWIFT services helped the bank in sending, receiving the messages and instructions related to our NOSTRO account operations, and L/C related matters. We have brought 6 of our Branches under SWIFT network. Other Branches will come under the network hopefully by the year 2004. Besides, we have BKE arrangements with 430 Bank Branches in 100 countries.

Values of SOCIAL INVESTMENT Bank limited:

· To be one SOCIAL INVESTMENT by holding and guiding the following values:

· To have a strong customer focus and to build relationship based on integrity, superior service and mutual benefit.

· To strive for private and sound growth.

· To work as a team to serve the best interests of the organization.

· To work for continues business innovation and improvements.

· To value and respect people and make decisions based on merit.

· To provide recognition and reward on performance.

· To value open and honest communication.

Liquidity:

Liquidity maintained in the form of Balance with Bangladesh Bank, Sonali Bank ( as the agent of Bangladesh Bank) and cash in hand including foreign currency notes stood at TK. 1308.54 million as at 31st December 2004 against TK. 1168.14 million of last year to maintain cash & statutory liquidity requirement of Bangladesh Bank. The Bank has always tried to maintain the required balance in managing asset & liability portfolios in order to maximize the profit.

Corporate Governance:

Corporate Governance ensures to bring transparency, accountability and professionalism in the Management system of a corporate body that enhances the credibility and acceptability to the shareholders, employees, potential investors, customers, lenders, governments, society at large and all other stakeholders. Under a good Corporate Governance system, goals are sets by the Board, review the result by the Board on regular interval, business decision taken by the Board and the Member of the Board discharge their duties for the best interest of the Company.

Branch Network:

Organizational Structure of SIBL:

Board of Directors:

Board of Directors consists of twenty-one Directors, Chairman, Vice Chairman and Managing Director.

Chairman:

• Mr. Kamal Uddin Ahmed

Vice Chairman:

• Mr. Abdul Awal Patwary
• Mr. Munshi Akhtaruzzaman

Directors:

• Mr. Ahmed Akbar Sobhan
• Mr. Mohammad Shamsuzzaman
• Al-Haj Sultan Mahmood Chowdhury
• Major (Retd) Dr. Md. Rezaul Haque
• Mr. Md. Shah alam
• Al-Haj Nasiruddin
• Al-Haj Sk. Mohammad Rabban Ali
• Mr. Mohammad Azam
• Mrs. Nargis Mannan
• Mr. Anisul Haque
• Mrs. Zohara Alam
• Mr. Sadat Sobhan
• Mr. Md. Humayun Kabir Khan
• Mr. Md. Sayedur Rahman
• Al-Haj Mohammed Afzal Hossain
• Mr. Noor-A-Alam Chowdhury
• Mr. A.K.M. Imran Khan
• Mrs. Fatema Begum
• Mrs. Taslima Akhtar
• Mr. A.R.Rashidi
• Mrs. Umme Kulsum

• Performance of SOCIAL INVESTMENT Bank:

In year, 2003 SOCIAL INVESTMENT Bank ltd. made commendable in all business arenas like Deposit, Credit, Fund Management, Investment and Foreign Exchange related business.

Year-wise performance analysis of SOCIAL INVESTMENT Bank in different business arenas is shown below:

Information and Communication Technology:

ICT has an important and great bearing over the policies and procedures of an organization towards management of bulk amount of data, facts and figures, MIS and information processing as well. It has just been introducing some new means of developed operating system in day-to-day operation of an organization especially of a Bank. To keep track on recent development of ICT and adjustment thereon could enable a Bank to use the ICT in an efficient way. SIBL is also not behind of using ICT like other contemporary Banks. Introduction of Islamic Banking Version Integrated Pc BANK 2000 software at SIBL enables to provide better service to our valued clients. We facilitate our customers Online Banking Facilities through intranet using V-SAT and Radio Link Connectivity. Out of 24 Branches, we have already brought 20 Branches under the network and within 2005we would be able to bring rest of the 4 branches under online. Moreover, using of SWIFT at 9 nos. of our AD branches has added something new and improved means of overseas communication system. To expand the area of services towards the customers, SIBL has joined the ATM network under the management contract of M/S Electronic Transaction Limited (ETN).There are 20 ATM booths situated at metropolitan city of Dhaka, Chittagong & Sylhet and the customers are able to enjoy 24 hours remote banking facilities through using of SIBL ATM Debit Card. Above all, Management of SIBL is very keen to facilitate its customers IT based banking services like Remote banking facilities , EFT(Electronic Fund Transfer) Service i,e, SMS Banking, Phone banking etc., and considering the present and upcoming setup of IT, we have established a separate ICT Department staffed with some experienced computer professionals, who are directly responsible for the overall management of ICT within the bank and to explore the ideas of future innovation.

Following are the important historical events of this unique model Bank:

February 02, 1989: The concept and three-sector model of Social Investment Bank Limited was formally presented and discussed with his Excellency Late. Prof. Dr. Ahmed Al-Nagger as well as Prof. Dr. A. Wadoed Shalaby of Al-Azhar University, Cairo.

April 21, 1989: The concept of this Bank was presented and then a series of discussions took place with His Excellency Dr. Abdullah Omar Nassseef of Saudi Arabia, Vice Chairman, Majlish e- Shura, the Kingdom of Saudi Arabia, former President of the King Abdul Aziz University and Secretary General of the World Muslim League.

July 04, 1989: This model of Banking was presented and then a serious of discussions took place with His Excellency Dr. Hamid Al- Gabid, Secretary General of the Organization of Islamic Conference(OIC) of 53 Muslim Countries.

July 27, 1989: Memorandum (85) on this Bank was formal submitted to the Prime Minister of the Government of the People’s Republic of Bangladesh.

August01,1989: Formal memorandum on this Bank was formal submitted to the Hon’ble President of the People’s Republic of Bangladesh.

September 24, 1989: Formal presentation of this model was before the full council of ministers at President House from about two the President in the Chair.

September 30, 1989: The proposal of this Bank was submitted to Governor, Bangladesh Bank.

December 06, 1994: The Letter of intent for establishing this Bank was issued by Bangladesh Bank.

July 05, 1995: The Memorandum and Articles of Association were duly incorporated under the Companies Act of 1994 to implement this Model of this Bank as conceived and developed by Prof. Dr. M.A. Mannan.

August21, 1995: Permission to open First Branch of the Social Investment Bank Ltd at Dhaka was given by Bangladesh Bank.

November22, 1995: After a long journey, SIBL was formally opened at 15, Dilkusha C/A, by the Hon’ble President of the People’s Republic of Bangladesh in a grand ceremony.

Authorized capital of the company is taken 1,000 million.

June 2003: The board change SIBL concept. Old was “A Three sector Unique Model Joint Venture Bank” & present concept is “A Joint Venture Islamic Bank”

Management of SOCIAL INVESTMENT Bank:

For any financial and non-financial organization, Management is the most valuable and important resources of any kind of organization. And, a well-organize management provides the organization to reach its ultimate goal. Management means planning, organizing, staffing, directing and controlling of all financial and non-financial resources of an organization. Different aspects of management practice in SOCIAL INVESTMENT Bank are discussed below.

· Planning:

SOCIAL INVESTMENT Bank has done its planning within the purview of the corporate plan. The overall planning approach in SOCIAL INVESTMENT Bank is top-down. Each branch can plan according to the goal imposed by the corporate level. It doesn’t plan independently. And, SOCIAL INVESTMENT Bank has a planning division. This department is mainly responsible for the overall planning.

· Organizing:

Social Investment Bank is organizing as per the existing business locations. It has nineteen branches, each of which is a separate entity. Each unit is responsible for its own performance and a Senior Vice President (SVP) followed by Manager heads each. He is directly responsible for the performance of their unit. Within each branch, it is organized functionally.

· Staffing:

The recruitment in Social Investment Bank is doing in two ways. One as a “Probationary Officer” for the management program and it has a probation period of one year. Another one is non- management level as “Trainee Officers”. Probationary Officer is recruited in officer category and their career path is headed towards different managerial jobs.

· Directing and controlling:

The management approach in Social Investment Bank is top-down or authoritative. Information just seeks through lower management layer. Works are designed in such a way that one cannot leave without clearing the tasks as he is assigned for a day. Sitting arrangement in all office is done in a way that the superior can monitor the subordinate all time. Budgeting, rewarding, punishing, etc. are also practiced as control mechanism.

· Risk Management :

SIBL is much concerned about the business risk and its proper management so that the risk and return could be optimized. Now –a-days, in the very complex and unstable finance market; regular tracking on undiversifiable risk and in-depth analysis on diversifiable risk a is must especially in the banking sector. Bangladesh Bank has undertaken a project to install Core Risk Management System in every Bank to defeat the risk factors that seriously affect return and accordingly SIBL has already taken some initiative as a part of its integrated Core Risk Management system around the Bank at its both operational and Managerial Level and many other steps are underway to be considered for adoption. Our ‘’ Management Committee’’, ‘’assets Liability Committee’’ and ‘’Anti-Money Laundering Committee’’ ensure that the senior management shall pay special attention to many qualified issues of the bank, which shall ultimately reduce our risk to an acceptable level. Besides that, prudent control over bank’s assets and asset monitoring system on regular interval,, Maturity grouping analysis of assets and liabilities, limiting of Investment exposure and clients, Internal audit Department, Board Audit Cell and above all, regular holding of Board Meeting etc. shall enable us to plan for an effective Risk Management inside the Bank.

Human Resources Practices in SOCIAL INVESTMENT Bank:

Employees are the core resources of any organization. Without them, one cannot run their organization. And, human resources approach is concerned with the growth and development of people toward higher level of competency, creativity and fulfillment. It helps employees become better, more responsible persons, and then it tries to create a climate in which they may contribute to the limits of their improved abilities. It assumes that expanded capabilities and opportunities for people will lead directly to improvements in operating effectiveness. Essentially, the human resources approach means that better people achieve better results.

Recruitment:

The set-vice rule of SOCIAL INVESTMENT Bank states the recruitment policy of the bank. In, general the board of directors determines the recruitment policy of the bank from time to time. The minimum entry-level qualification for any official position other than supportive management is a Bachelors degree. However, informally the management prefers a minimum master’s degree for the appointed of probationary officers in the Executive Officer position. The recruitment for entry-level positions begins with a formal written test, which is conducted and supervised by the Institute of Business Administration, University of Dhaka. After successful completion of the written test, a personal interview is conducted for the successful candidates by a panel of experts comprising of renowned bureaucrats and prominent bankers of the country.

HUMAN RESOURCE DEVELOPMENT:

The total number of employees of the Bank stood at 651 as on 31 December 2004 as against 597 as on 31 December 2003. The manpower positions of last 7 years are given below:

Our Training Institute had undertaken various training programs, workshops/seminars during 2004 for developing the skill, Skill, efficiency, knowledge and competence. Besides a considerable number of employees of the Bank were sent to attend various training, workshop and seminars both at home and abroad.

SOCIAL INVESTMENT Bank at a Glance:

Name: Social Investment Bank Limited

Essence: Working Together for a Caring Society

Nature of Business: Banking service and Profit oriented

Registered office: 15, Dilkusha Commercial Area,

Dhaka-1000, Bangladesh.

Phone # 9559014,9565647,9568275,9557499,

Telex: 671557-8 SIBL BJ,

Fax: 880-2-9568098, 9564944

E-mail: sibl@bdonline.com

Web Site: www.siblbd.com

Date of Incorporate: 22 November1995

Inauguration of first branch: 22 November 1995

Chairman: Dr. M.A. Mannan

Secretary: Md. Azizul Haque

Managing Director: Md. Monowar Hossain

Number of Branch: 24

Total Manpower: 651

Authorized Capital: Taka 1000 million (Up to December 2004)

Paid up Capital: Taka 585.00 million (Up to December 2004)

Social Investment Bank at a Glance: