Introduction:
Shahjalal Islami Bank Limited (SJIBL) is a commercial bank. The commercial banks are the heart of our financial structure since they have the ability to co-operate with the Bangladesh Bank to accelerate the money supply of the nation and thus create additional purchasing power. These characteristics set commercial banks apart from other financial institution. By lending and investing money and by transferring funds throughout the nation, even between countries, they make possible a more complete utilization of resources of the nation. Although banks create no new wealth, their lending, investing, and related activities facilitate the economic process of production, distribution and consumption pattern of the economy.
Overview of Islamic Banking Industry:
At birth, Bangladesh inherited an interest based banking system, which was introduced here earlier when the country was a part of British Colony. On the other hand, Islamic banking was successfully tried in Egypt; after the Mit Ghamar Model, Naser Social Bank was in the process of establishment. During the seventies, Islamic Development Bank (IDB) and a number of Islamic banks at national levels were established in the Islamic world. At home, the Islamic groups were vigorously working for adoption of Islam as the complete code of life. They found Islamic banking in ready form of immediate introduction. Two professional bodies Islamic Economics Research Bureau (IERB) and Bangladesh Islamic Bankers Association (BIBA) were taking practical steps for imparting training on Islamic Economics and Banking to a group of bankers and arranging some national and international seminars and workshops to mobilize local and foreign people and attract investors to come forward to establish Islamic banks in Bangladesh. Their professional and right-thought activities were reinforces by a number of Muslim entrepreneurs working under the aegis of Muslim Businessman Society (MBS).
The body concentrated mainly in mobilizing equity capital for the emerging Islamic bank. Due to continuous and dedicated work of the above groups and individuals and active support from the Government, Islamic banking could be established in early eighties. Islamic banks have been operating in Bangladesh for about one and half decade alongside with the traditional banks. Like any other traditional commercial banks, they do mobilize deposits and produce loans. But their modes of operation, based on Shariah, are different from the other traditional commercial banks.
Role of Bangladesh Bank in Promoting Islamic Banking in Bangladesh:
Though there is no complete Islamic Banking Act for controlling, guiding and supervising the Islamic banks in Bangladesh, some Islamic banking provisions have already been incorporated in the amended Banking Companies Act, 1991 (Act No. 14 of 1991). Bangladesh Bank did not set up any separate Department at its Head Office to control, guide and supervise the operation of the Islamic banks. Inspection and supervision of the Islamic banking operations are conducted by the Bangladesh Bank as per the general guidelines framed for the conventional banks. So, ensuring implementation of Shariah principles in the Islamic banks are being conducted by their own Shariah Councils. The role of Bangladesh Bank in controlling, guiding and supervising the Islamic Banks in Bangladesh in accordance with Islamic Shariah is very minimal. In observing the Shariah implementation status of the Islamic banks, Bangladesh Bank examines only the report of the respective banks’ Shariah Councils.
However, the inspectors and supervisors of Bangladesh Bank are not equally familiar with the technicalities of the different operational methodologies of the Islamic banking. This is because of the fact that there is no separate Department to look into this important matter. According to International Journal of Islamic Financial Services Vol. 2 No.1, a committee of experts set up by the Governors of Central Banks and Monetary Authorities of the OIC countries examined the whole range of relationships between the Central Banks and the Islamic Banks and submitted a report in 1981 on the Promotion, Regulation and Supervision of Islamic Banks. The report highlighted the need to provide for central bank assistance to the Islamic banks on a basis compatible with the Shariah.
Theoretical Basis and Business Practice of Islamic Banking:
From the viewpoint of Islamic Shariah, in order to be justified Islamically, the banking system has to avoid interest. Consequently, financial intermediation in Islamic banking between the bank and the client takes place as a partner rather than a debtor-creditor. The financial activities of modern conventional banks are based on a creditor-debtor relationship between depositors and bank on the one hand and between the borrower and the bank on the other. Interest is regarded by conventional banks as the price of credit reflecting the opportunity cost of money. As interest is prohibited in Islam, commercial banking in an Islamic framework could not be based on the creditor-debtor relationship. The other aspect of the theoretical basis of Islamic banking is that the interest free bank is not risk free. This principle is applicable to two main factors of production, i.e. labor and capital. According to this principle,
no payment is allowed to labor, unless it is applied to work, no reward for capital should be allowed, unless it is exposed to business risk.
Organizational Overview:
Brief History:
Shahjalal Islami Bank Limited is named after the name of a saint Hajrat Shahjalal (r) who dedicated his life for the cause of preaching Islam in the east-north part of the subcontinent. It is a Shariah based commercial bank in Bangladesh, was incorporated as a public limited company on 1st April, 2001 under Companies Act 1994.The bank commenced commercial operation on 10th May, 2001 by opening its first branch i.e. Dhaka Main Branch at 58, Dilkusha, Dhaka obtaining the license from Bangladesh Bank, the Central Bank of Bangladesh. Its corporate head office is situated at 10, Dilkusha C/A, Jibon Bima Bhaban, Dhaka-1000, Bangladesh.
Vision of SJIBL:
To be the unique modern Islami Bank in Bangladesh and to make significant contribution to the national economy and enhance customer’s trust & wealth, quality investment, employees’ value and rapid growth in shareholders’ equity.
Mission of SJIBL:
a) To provide quality services to customers.
b) To set high standard of integrity.
c) To make quality investment.
d) To ensure sustainable growth in business.
e) To ensure maximization of shareholders’ equity.
f) To extend our customers innovative services acquiring state-of-the-art technology blended Islamic principles.
g) To ensure human resource development to meet the challenges of time.
Strategies of SJIBL:
a) To strive for customers best satisfaction & earn their confidence.
b) To manage and operate the bank in the most effective manner.
c) To identify customers’ needs and monitor their perception towards meeting those needs.
d) To review and update policies, procedures and practices to enhance the ability to extend better services to the customer.
e) To train and develop all employees and provide them adequate resource so that the customer needs are reasonably addressed.
f) To promote organizational efficiency by communicating company plan, policies and procedures openly to the employees in a time fashion
g) To cultivate a congenial working environment.
h) To diversify portfolio both the retail and wholesale markets.
Nature and Legal Status of SJIBL:
| Name of the Company | Shahjalal Islami Bank Limited | |
| Legal Form | A public limited company incorporated in Bangladesh on 1st April 2001 under the Companies Act 1994 and listed in Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited. | |
| Commencement of Business | 10th May 2001 | |
| Registered Office | Jibon Bima Bhaban, Front block (4th floor),
10 Dilkusha C/A, Dhaka-1000 |
|
| Telephone No. | 88-02-9570812, 7160591 | |
| Fax No. | 88-02-9570809, 9553562 | |
| Website | www.shahjalalbank.com.bd | |
| SWIFT | SJBL BD DH | |
| sblho@shahjalalbank.com.bd | ||
| Chairman | Alhaj Mohammad Solaiman | |
| Managing Director | Mohammad Ali | |
| Auditors | M/S Syful Shamsul Alam & Co.,
Chartered Accountants, Paramount Heights, 65/2/1 Box Culvert Road (level-6), Purana Paltan, Dhaka-1000 |
|
| Tax Advisor | M/S K. M. Hasan & Co., Chartered Accountants,
87 New Eskaton Road, Dhaka |
|
| Legal Advisor | Hasan & Associates,
Chamber of Commerce Building (6th Floor), 65-66 Motijheel C/A, Dhaka. |
|
| No. of Branches | 52 | |
| No. of Brokerage House | 07 | |
| No. of ATM Booth | 05 | |
| No. of SME Centers | 05 | |
| Off-Shore Banking Unit | 01 | |
| Authorized Capital | Tk. 4,000 million | |
| Paid up Capital | Tk. 2, 246 million | |
| Face Value per Share | Tk. 100 |
Organizational Structure:
There are different wings to consist the organizational structure of SJIBL. They are as follows:
a) Board of Directors
b) Board Committees
c) Executive Committees
d) Policy Committees
e) Management Team
Board of Directors:
There is a board of Directors of 15 members in the bank. The board of Directors is the apex body of the bank. It appears like this-
|
|
Name of the Board of Directors:
| Chairman | Alhaj Md. Solaiman | Director | Alhaj Engr .Md. Towhidur Rahman |
| Vice Chairman | Alhaj Md. Abdul Barek | Director | Alhaj Syed Nurul Arefeen |
| Vice Chairman | Alhaj Md. Sanaullah Shahid | Director | Alhaj Abdul Halim |
| Director | Alhaj Sajjatuz Jumma | Director | Alhaj Akkas Uddin Mollah |
| Director | Alhaj Anwer Hossain Khan | Director | Alhaj Khandoker Sakib Ahmed |
| Director | Alhaj Mohammed Faruque | Director | Alhaj A. K. Azad |
| Director | Alhaj Tofazal Hossain | Director | Alhaj Mohammed Younus |
| Director | Alhaj Md. Harun Miah | Independent Director | Alhaj Nazmul Islam Nuru |
| Director | Alhaj Mohammed Farooq | Managing Director | Mohammad Ali |
| Director | Alhaj Mohammed Hasan | Company Secretary | Md. Emran Hossain |
| Director | Alhaj Mohiuddin Ahmed | Sponsors | Alhaj Md. Abdul Mannan |
Management Hierarchy:
Policy Committee:
Al matters relating to the principles, rules and regulation, ethics etc. for operation and management of the bank are recommended by the committee to the board of directors.
Management Team:
Products and Services of SJIBL:
The bank is managed by a team of professional executives and officials having profound banking knowledge and experience in different sectors management and operation of banking. During the short span of time SJIBL so far introduced a good number of attractive deposit products to broaden the resources base and also investment products to deploy the deposit products. SJIBL always try to introduce a wide verity of attractive deposit, investment and services for suiting taste and requirement of the client.
Products:
Bank means mobilizing fund from surplus unit and deployment of fund for deficit unit. SJIBL mobilize its fund from surplus unit through different types of deposit schemes and deployment this fund for deficit unit through various investment schemes. So the main products of SJIBL are different kinds of deposits and investment schemes.
Deposit Scheme:
Deposit is the “life-blood” of a bank. Bank has given utmost importance in mobilization of deposits introducing a few popular and innovative schemes. The mobilized deposits were ploughed back in economic activities through profitable and safe investment.
This type of deposit schemes of SJIBL are:
a) Mudaraba Monthly Income Scheme
b) Mudaraba Double/Triple Benefit Scheme
c) Mudaraba Monthly Deposit Scheme
d) Mudaraba Millionaire Scheme
e) Mudaraba Hajj Scheme
f) Mudaraba Housing Deposit Scheme
g) Mudaraba Cash Waqf Scheme
h) Mudaraba Lakhapoti Deposit Scheme
i) Mudaraba Mohor Deposit Scheme
j) Mudaraba Education Deposit Scheme
k) Mudaraba Marriage Deposit Scheme
Other than these deposits schemes SJIBL also operate some traditional deposit schemes these are:
a) Al-Wadia Current Deposit
b) Mudaraba Saving Deposit
c) Mudaraba Short Notice Deposit
d) Mudaraba Term Deposit Receipt
e) MTDR-Special Scheme
f) Mudaraba Foreign Currency Deposit
The total deposit of SJIBL stood at TK. 36,484.24 million as on 31st December, 2009 as against TK. 22,618.19 million of 31st December, 2007, registering increase of TK. 13,866.05 million. The deposit mix of the bank as on 31st December, 2009 is as bellow:
Table: Deposit Mix of 2010
Investment Schemes:
The special feature of the Investment policy of SJIBL is to invest on the basis of profit loss sharing system in accordance with the tenets and principles of Islamic Shariah. Earning of profit is not only the motive and objective of the bank’s investment policy rather emphasize is given in attaining social good and in creating employment opportunities.
The investment and credit department is very important department of a bank as the money mobilized from ultimate surplus units (Investors) are allocated through this department to the ultimate deficit unit (Borrowers). The success of this department keeps a great influence over the profit of a bank. Failure of this department may lead the bank to huge losses or even to bankruptcy. So, special care should be given to this department.
The bank entertains good investment clients, having credit worthiness and good track record. The bank has different profitable investment projects these are:
a) Mudarabaha
b) Bi-Muajjal
c) Hire Purchase and Ijara
d) Investment Against L/C
e) Bill Purchase/Discounted
f) Investment Against Scheme Deposit
g) Quard
h) Others
The bank has got a few investment schemes to provide financial assistance to comparatively less advantage group of people; which are:
a) Household Durable Scheme
b) Small Business Investment Scheme
c) Small entrepreneur Investment Program
d) Medium Entrepreneur Program
e) Housing Investment Scheme
f) Rural Investment Program
g) Car Investment Scheme
h) Woman Entrepreneur Investment Scheme
Total investment of the bank stood at TK. 32,918.77 million as on 31 December, 2009 as against TK. 20,616.61 million of 31 December, 2007 registering an increase of TK. 12,302.16 million. Mode wise investment portfolio of SJBL as on 31 December, 2009 is given below:
Table: Investment Portfolio Of 2008
| Sl. No. | Mode of Investment | Taka
(in Million) |
Percentage of
Total Investment |
| 1 | Murabaha | 7,353.61 | 22.34% |
| 2 | Bi-Muajjal | 13,224.94 | 40.17% |
| 3 | Hire Purchase & Ijara | 5,463.44 | 16.60% |
| 4 | Investment Against L/C | 106.13 | 0.32% |
| 5 | Bill Purchase/Discounted | 3,721.76 | 11.31% |
| 6 | Investment Against Scheme Deposit | 557.61 | 1.69% |
| 7 | Quard | 168.33 | 0.51% |
| 8 | Others | 2,322.95 | 7.06% |
| Total | 32,918.77 | 100.00 |
Services:
Shahjalal Islami Bank Limited is an industry standard, Islami Shariah and latest technology based modern bank. The bank is equipped with state-of-the-art technology and committed to provide technology based modern banking to its valuable customers. Services provided by SJIBL are:
a) On-Line Banking Services
b) SJIBL VISA Card
c) SMS / Push Pull Service
d) Personnel Management Information Systems (PMIS)
e) SWIFT
f) REUTERS etc.
- On-Line Banking:
To provide better services to the valued customers using the latest technology and electronic media competing with other private banks to set and establish full automated, on-line, centralize banking systems interfacing (connecting software) with all delivery channels link, like: ATM (Automated Teller Machine), POS (Point of Sale-Fund Transfer Machine for purchasing at any shop/service center etc.), any branch banking, Home banking, Tele banking, and Internet banking etc.
- SJIBL VISA Card:
Card is considered as a new dimension of product resulting from technological development in the banking arena. In line with our affiliation with VISA International for VISA ATMs and POS, VISA Cards are already introduced.
- SMS / Push Pull Service:
This is a service provided by the bank through mobile phone. This new technology based service will helps the bank to attract new customer base. Through SMS or Pull Push service client will be facilitated with cell phone based banking service with a fast secured and economical way.
- SWIFT:
Society for Worldwide Inter-Bank Financial Telecommunication (SWIFT) is a bank owned co-operative serving the financial community worldwide. The SWIFT Transport Network (STN) is a dedicated global network for secure communication between SWIFT Customers. SJIBL has introduced this SWIFT alliance entry system firstly in October 2002 and introduced SWIFT alliance access in October 2003.
Current Position of SJIBL:
Despite changing macroeconomic condition and volatile money market and foreign exchange market SJBL was successfully in achieving much higher than national growth in deposit, investment (loan), export, and import and remittance business. The bank has maintained and achieved strong position in all key areas covering capital adequacy, asset quality, sound management, good earning and strong liquidity. Here shows current position of SJBL in different areas.
Equity:
The Bank’s Equity is divided into two parts i.e. Tier-I and Tier-II capital. Tier-I includes paid-up capital, reserve and retained earnings and Tier-II includes general provision on unclassified investments and exchange equalization account. The authorized capital of the bank is TK. 4,000 million and paid-up capital of the bank is TK. 2,246 million as on 31st December, 2008. Total equity was TK. 4,069 million as on 31st December, 2008.
The competitive position of Equity for the year 2008 and 2007 is given below-
Table: Total Equity
| Sl. | Particulars | 2008 | 2007 |
| Tier-I Capital (Core Capital): | |||
| a) | Paid-up Capital | 2,245.98 | 1,871.65 |
| b) | Statutory Reserve | 823.55 | 510.39 |
| c) | Retained Earnings | 535.91 | 405.69 |
| Sub Total | 3,605.44 | 2,787.73 | |
| Tier-II Capital (Supplementary Capital): | |||
| a) | General Provision | 463.48 | 252.98 |
| b) | Exchange Equalization | 0.17 | 0.17 |
| Sub Total | 463.65 | 253.15 | |
| Total Equity | 4,069.09 | 3,040.88 | |
Capital Adequacy:
Total equity of the bank as on 31st December, 2007 was TK. 3,040.88 million and total equity stood to TK. 4,069.09 on million at 31st December, 2008, which was 13.81% of the Risk weighted Assets as against the requirement of 10.00%.
The core capital was 12.24% of Risk weighted Assets as on 31st December 2009 as against requirement of 5%.
Branch Network:
The bank has been operating with a network of 44 branches all over the country. In 2009, the bank has opened 11 new branches. Among these branches, 5 are located in Dhaka and rest of them is in other districts of the country. Here shows zone wise branch distribution of SJIBL:
Table: Zone-wise number of Branches
| Zone | Number |
| Dhaka | 26 |
| Chittagong | 6 |
| Sylhet | 5 |
| Khulna | 2 |
| Rajshahi | 4 |
| Offshore Banking Unit (OBU) | 1 |
Human Resources Development:
The Bank always laid emphasis on human resource development. The Bank believes in the factor that helps the banks survive is closely interlinked with the quality of service and satisfaction of the requirements of the client and that directly depends on the qualification and efficiency of the employees. To attract and retain qualified and efficient staff, the Bank has formulated a number of well thought policies for the welfare of its employees, in the form of Gratuity Fund, Social Security Fund, Employees House Building Investment Scheme, Employees Car Financing Scheme, Benevolent Fund & Employees House Furniture Allowance etc. Total number of manpower of the Bank is more than 1,100 now against 878 as on 31st December, 2009.
Information Technology:
Main objective of the bank is to take care of different economic group of the society and meet their all type of banking requirements stretching its service to the door step of the people with the help of information technology gradually. SJBL is providing customer service through online facilities. SJIBL’s ultimate aim is to enable its respected and valued clients to shop under the same roof. In line with that SJIBL VISA Card, SMS/Push Pull services have already been introduced. Beside these, clients are also being facilitated by the service of REUTERS, SWIFT, and Western Union Money Transfer etc.
Corporate Governance:
The Board of Directors of the bank consists of successful distinguish personalities emerging from area of trade, commerce and industries. The bank conducts it’s business and operations under the policy, directions and guidelines of the Board. The bank has also a Shariah Council consisting of prominent Faquih, Economists, Lawyers, Bankers to advise and guide the Board and the Management of Shariah matters relating to the business and operations.
Under the able guidance of the Board of Directors and the Shariah council, the professional management team carries out the business operation of the bank, ensuring good governance practicing sound, best corporate and risk management process. The result that was achieved by the bank so far is due to the constant guidance, cooperation and support of the Board and Shariah Council and devoted, dedicated and hard work of the management team and all functionaries of the bank.
Highlights of Performance of SJIBL:
Despite challenging macroeconomic condition and volatile money market and foreign exchange market, SJIBL was successfully in achieve much higher than national growth of deposit, investment(loan), export, import and remittance business.
The Highlights of Performance of SJIBL for the year 2009 against 2008 is given bellow through a table:
Income:
Investment Income: Total Investment Income of the bank as at 31st December, 2009 was TK. 4,428.89 million as against TK. 3071.41 million of the preceding year registering 44.20% growth over last year, which was 83.80% of the total income against 85.58% of 2007.
Non-Investment Income: Total Non-Investment Income of the bank was TK.856.49 million at 31st December,2009 against TK. 517.43 million of the preceding year registering 65.53% growth rate over last year, which was 16.20% of the total income compared to 14.42% of 2007.
Expenditure:
Profit Paid on Deposit: Bank distributed profit of TK. 2,962.40 million among the Mudaraba depositors in the year 2008 against TK. 1960.02 million in the year 2007 which is 66.89% of the Investment Income earned from deployment of Mudaraba fund and 85.23% of total Expenditure of 2008 against 86.20% of 2007.
Operating Expenses: Total operating expenses as on 31st December, 2008 was TK. 513.19 million against TK. 313.82 million of 2009, which was 14.77% of the total expenditure of the year 2008 against 13.80% of 2009.
Operating Profit:
A summary of operating result of the bank as on December 2008 vis-à-vis the position of December 2008 is shown below:
Table: Operating Result of 2007 & 2008
(Amount in Million Taka)
| Particular | 2009 | 2008 |
| Total Income | 5,285.39 | 35,88.84 |
| Less: Total Expenditure | 3,475.59 | 22,73.83 |
| Net Profit Before Provisions & Taxation | 1,809.80 | 13,51,01 |
| Less: Provisions | 244.00 | 98.70 |
| Net profit Before Taxation | 1,565.80 | 12,16.31 |
| Less: Provisions for Taxation | 748.09 | 569.32 |
| Net Profit | 817.71 | 646.99 |
| Appropriation: | ||
| Statutory Reserve | 313.16 | 243.26 |
| Retained Earning | 504.55 | 403.73 |
An Overview of college Gate Branch of SJIBL:
College Gate Branch of SJIBL started its operations on 14th May 2009. The branch is located at Union Centre (1st Floor), 1/5 Mohammadpur Housing Estate, College Gate, Mirpur Road, Dhaka-1207. Office floor is spacious that can accommodate good number of customers comfortably.
Now under the charge of SAVP, Md. Hasan Imam, the branch has been performing very well. Under his efficient handling, the branch has already been able to introduce itself as one of the best performers among all other branches of SJIBL.
Future Outlook of SJIBL:
“Business policy and six years perspective plan” of the Bank from 2007 to 2012 has been formulated to attain the financial strength, sustainable growth and operational efficiency. To protect the interest of the stakeholders, bank has formulated the six years perspective plan for consolidation of the growth and profitability. During the period of perspective plan, Bank has the main objective to attain the height operational excellence and consolidation to turn the bank into a dynamic Islamic Bank in the country. During the period from 2007 to 2012, The Bank has the plan to regain its excellence in all the core areas of operations and business. During this period, new and potential avenues of Business in all areas of operation to be explored and expanded through the network of existing 26 branches and more new branches to be opened gradually during the plan period subject to permission of Bangladesh Bank.
The financial position and overall achievement of the Bank shall be reviewed and evaluated in the light of the Annual Budget and Business plan on a quarterly basis in every year. Necessary change, adjustment, modification & re-allocation shall be made after periodical review keeping the real scenario in view. All out efforts shall be made for promotion and improvement of quality-investment through effective supervision, control, follow-up and monitoring in order to lessen the quantum of over dues, to arrest further over dues and to recover, regularize the over dues and declassify the classified investments. Adequate care & caution to be exercised for compliance with 05 core risks as per Bangladesh Bank’s Policy/instructions during the planned period. Asset-Liability of the Bank shall be managed effectively through ALCO to avoid Liquidity Risk, profit rate risk, operational risk and other risks. SJIBL is looking forward to see such a bright day in the years to come.
Social Welfare Activities of SJIBL:
With a view to proving financial assistance to the poor and needy people of the society and also for the welfare of the community, Bank has established “Shahjalal Islami Bank Foundation” the foundation among others has also objective to provide health care, relief & rehabilitation, education, dawa, distribution of winter cloths during the winter etc.
At present “Shahjalal Islami Bank Foundation” has a planning to establish the following projects soon:
a) Shahjalal Islami Bank International School & College
b) Shahjalal Islami Bank Hospital
Manpower Position of SJIBL Foreign Exchange Branch:
Significant Accounting Policy:
Foreign Currency Translations: The transactions in foreign currencies are converted into equivalent Taka currency using the ruling exchange rates on the dates of such transactions. At the balance sheet date related assets and liabilities are converted to Taka using exchange rates prevailing on that date.
Basic Earnings per Share: This has been calculated by dividing the basic earnings by the weighted average number of ordinary shares outstanding during the period as per IAS 33 Earnings per Share”. Diluted Earnings per Share is not required to be calculated for the year, as there exists no dilution possibilities during the year.
Statement of Liquidity: The liquidity statement of assets and liabilities as on the reporting date has been prepared on residual maturity term as per following basis;
a) Balance with other banks and financial institutions, investment in securities are on the basis of their maturity term.
b) Investments (Loans & Advances) are on the basis of their residual maturity term.
c) Fixed assets are on the basis of their useful life.
d) Other assets are on the basis of their adjustment.
e) Financing (borrowing from Bangladesh Bank as per their maturity
f) Deposit and other accounts are on the basis of their maturity term and behavioral past trend.
g) Other long-term liability on die basis of their maturity term.
h) Provisions and other liabilities are on the basis of their settlement.
Off Balance Sheet Items: Under general banking transactions, liabilities against acceptance, endorsement and other obligations and bills against which acceptances have been given and claims exist there against, have been shown as Off Balance Sheet items.
Taxation:
a) Current Tax: Being a financial institution the bank is in practice of keeping provision for income tax in accordance with income tax ordinance 1984 now in force in Bangladesh. For current year tax rate applicable for the bank is 45% on taxable income.
b) Deferred tax: The Bank has adopted deferred tax accounting policy as per Bangladesh Accounting Standard AS) 12. Accordingly deferred tax liability/asset is accounted for all temporary riming differences arising between the tax base of the assets and liabilities and their carrying value for financial reporting purpose. Deferred lax is computed at the prevailing tax rate as per Finance Act 2007.
Retirement Benefits:
a) Provident Fund: Provident fund benefits are given to the eligible staffs of the Bank in accordance with the rules of the provident fund. The Fund is administered by a Board of Trustees and is funded by fixed contributions equally from the employees and the bank.
b) Gratuity: Gratuity fund benefits are given to the staff of the bank in accordance with the approved Gratuity fund rules. The gratuity fund is under process with National Board of Revenue (NBR) to he recognized gratuity fund. The fund is operated by a Board of trustees consisting of 3 (Five) members of the hank. The gratuity is calculated on the basis of last basic pay and payable at the rate of one month’s basic pay for every completed year of service, Gratuity so calculated are transfer to the fund and charged to expenses of the batik.
c) Benevolent Fund: The Benevolent Fund for the regular and confirmed employees of SJIBL was established in the ear 2007. This fund is mainly used for payment of scholarship to the meritorious students among the children of SJIBL’s officers and sub-staff to allow short-term quard/grant for the unexpected and certain needs of the staff of SJIBL like accident, clinical treatment marriage ceremony of the sub-staff and their dependents.
Areas of Operation of SJIBL:
The whole activities of the Foreign Exchange Branch of SJIBL are divided in to three major areas. These are:
General Banking: General banking is the starting point of all the banking operations. This department does the most important and basic works of the bank. It is also the department, which provides day-to-day services to the customers. All other departments are linked with this department. It also pays a vital role in deposit mobilization of the branch. SJIBL provides different types of accounts, locker facilities and special types of saving scheme under general banking.
Investment: The special feature of the Investment policy of Shahjalal Islami Bank Limited is to invest on the basis of profit loss sharing system in accordance with the tenets and principles of Islamic Shariah. Earning of profit is not only the motive and objective of the bank’s investment policy rather emphasize is given in attaining social good and in creating employment opportunities.
Foreign Exchange: Foreign Exchange means foreign currency and it includes any instrument drawn, accepted, made or issued under clause (13), Article 16 of the Bangladesh Bank Order, 1972. All deposits, credits and balances payable in any foreign currency and draft, travelers cheque, letter of credit and bill of exchange expressed or drawn in Bangladeshi currency but payable in any foreign currencies.
General Banking:
General banking is the starting point of all the banking operations. This department does the most important and basic works of the bank. It is also the department, which provides day-to-day services to the customers.
All other departments are linked with this department. It also pays a vital role in deposit mobilization of the branch. SJIBL provides different types of accounts, locker facilities and special types of saving scheme under general banking. For proper functioning and excellent customer service this department is divided into various sections namely as follows.
Accounting Opening Section:
Bankers and Customer relationship established through opening an account. It binds the banker and customer into a contractual relationship. There are two types of account i.e. deposit account and investment account. Generally account opening means to open a deposit account. Deposits are the lifeblood of a bank, which is invested, in a bank through opening an account. This section of general banking of the SJIBL deals with opening of different types of accounts. It is also deals with issuing of checkbooks and different deposits books to the different accounts openers. A customer can open different types of accounts through this department.
Cash Section:
Cash is the lifeblood of all financial activities. Cash section is a very sensitive point of the branch. This section deals with all types of negotiable instruments and it includes vault, used as the store of cash, instruments. The vault is insured up to TK.20 lac. Insured amount yet to be enhanced to Tk. 40 lac. Operation of this section begins when the banking hour starts. Cash officer begins his/her transaction with taking money from the vault, known as the opening cash balance. Vault is kept in a more secured place. The amount of opening cash balance is entered into a register. After whole days’ transaction, the surplus money remains in
The cash counter is put back in the vault and known as the closing balance. If the cash stock goes beyond this limit, the excess cash is then transferred to SJIBL Foreign Exchange branch. The main functions of this section are –
a) Cash Receive
b) Cash Payment
Cash department is the most vital department of a bank and it is call blood of a bank. It is a platform to communicate with customers. Cash department receives & pays cash directly.
In the cash department there are following register:
a) Vault register
b) Cash receive register
c) Cash payment register
d) Cash balance register
e) Rough cash balance book
f) Cash remittance register
g) Key register
h) Cash position memo
Cash Receive: Cash is the life of a bank. Different types of from are use for cash deposits for different types of accounts. Cash may be received by the following ways:
a) Current of Savings account pay-in-slip
b) Credit voucher
1. Different types of instrument remittance (TT, DD, PO etc.) are received by respective forms.
c) Bills like National Life Insurance Co. Ltd.
d) Share collection
e) Different types of scheme
Cash payment: Cash is paid in payment counter against the following instrument:
a) Cheques
b) Cash debit voucher
c) Pay-in-slip
d) Pay Order, DD etc.
e) Bank’s expense also paid to outsider through cash debit voucher.
Procedure:
a) Receive of the cheques with a signature behind it.
b) Scrutinize it by an authorized officer.
c) Submit to computer-to-computer section for checking the available balance.
d) Cancelled & seal up “Pay in Cash” and cancellation through sign up.
e) Again submitted to computer section for debiting the party A/C and seal up “Posted”.
f) Send to cash counter – payment officer.
g) Cash officer checks the cancellation, seal and seal up “Cash Payment”
h) Entry the payments register.
i) Take another signature of payee behind the cheque and pay cash.
Cash Balance: At the end of the transactions, the following tasks are to be completed:
a) Sum of total received
b) Sum up total payment
c) Total receiving + Opening balance – Total payment = Closing balance for that day & opening balance for the next day.
d) Check it with computer sheet.
e) Counting cash.
f) Entry the cash balance register.
g) Write cash position memo with denomination.
- Sorting and Stitching:
Sorting: At the end of the day, the amount of cash has to be sorted out in order to identify the different types of notes, say- 500, 100, 50, 20, 10, 5 and so on. Hundred pieces of any type note create a packet and ten packets make a bundle. In this way, the cash is actually sorted out.
Stitching: After sorting out the cash, packets are stitched along with a slip bearing the name of the bank, total number of notes and the signature of the cash-in-charge. Two round seals are given at both sides of the packet.
- Vault Opening:
The vault opened with three different keys of Three respective authorized officers. The officers are:
a) Manager of the Branch
b) Deputy Manager of the Branch
c) Cash – in – Charge Office
Strong room has two keyholes opened by three officers respectively by three keys of cash. Generally sub-manager of the Branch bears authority absence of manager. Grill door one keyhole opened by – two keys of two officers and bring out following thing: Cash, Vault register, Receive register, Payment register, Balance Book, security station. Enter the amount of cash withdrawal from the vault register.
Vault limit: Vault is the very secret place to keep money in the bank. Usually vault is made of very hard material like iron or steel, generally it is fireproof, damp-proof. The vault has a fixed limit too. The limitation depends on the regular transaction of the branch. If the amount exceeds its limit, the extra money should be sent to the Bangladesh Bank. The vault limit of the College Gate Branch is Tk.1 (one ) crore.
Vault Closing: As far as the vault closing concern, the concerned officer should look to the following points carefully:
a) Cheque receives, Payment, Cash balance, Vault register signature.
b) Signature of the computer sheet.
c) Count physical cash.
d) Keep cash in safe.
e) Bundle in safe.
f) Loose peak of the tray.
g) Loose cash notes & coins on the tray.
h) Keep different registers.
i) Keep security stationeries.
j) Close Safe.
k) Check the rifle & cartage.
l) Count cartage & entry in register.
m) Close Grill door & Vault room’s door.
Clearing Section:
According to the Article 37(2) of Bangladesh Bank Order, 1972, the banks which are a member of the clearing house are called as Scheduled Banks. The scheduled banks clear the cheques drawn upon one another through the clearing house. This is an arrangement by the central bank where every day the representative of the member banks sits to clear the cheques. For clearing there is a department in every Bank. This department receives cheques, drafts and like instruments from its customers for the purpose of collection with a deposit slip over the counter crediting their accounts. Clearing of cheque is done through the clearing house in Bangladesh Bank. Every day the first hour starts at 10:00 a.m. and returns house at 6:00 p.m.
Here are the types of cheque clearing:
Inward Clearing Bills: Inward Clearing Bills refers the instruments drawn on SJIBL,College Gate. Branch received from other banks in the clearing house by their representative(s).
Figure: Settlement Process of Inward Clearing Bills
Outward Clearing Bills: Outward Clearing Bills refers the instruments drawn on the other banks received by Shahjalal Islami Bank Ltd. Branch. They are of three kinds as follows:
Figure: Settlement Process of Outward Clearing Bills
Deposit Mobilization of SJIBL:
Bank account is a contractual relationship between a bank and the customers. It is the best way for a customer to build relationship with the bank. Like interest-based conventional banks, the main function of Shahjalal Islami Bank Limited (SJIBL) is to mobilize saving and provide financial support to the entrepreneurs. Depositors receive interest in a predetermined rate for their deposits make with an interest based banks, where SJIBL neither pay not receive interest and mobilizes saving of the common people in line with Islamic Shariah.
Deposit account can take in a various forms. such as:
a) Al – Wadiah Current Deposit (ACD)
b) Mudarabah Savings Deposit (MSD)
c) Short – Notice Deposit (SND)
Al-Wadiah Current Deposit (AC):
Shahjalal Islami Bank Limited receives deposits in its Al – Wadia Current Account. It has some similarity with the current account of conventional bank. The term Al – Wadiah Current Deposit means deposit of money allowing somebody to sue it. Banks being trustee preserves and keeps or in safe custody of what is deposited. Depositors feel safe in keeping their money with the bank and take transaction facilities. Bank provides assurance of returning money to the depositors on demand.
In the process of opening Al-Wadiah Deposit, the bank gets approval of the depositors regarding the use of the deposited money and earns profit out of their development. Any losses incurred by way of such investment are totally borne by the bank. Thus, the depositors don’t take the risk of losses with Al-Wadiah Current Deposit; they also don’t expect any profit from it. Depositors are provided with chequebook. They can withdraw or deposit any amount as and when they like. Bank may charge a fee in the account. Al-Wadiah Deposit are short terms and very uncertain, thus banks have to be very useful in the investment of money from this account.
Mudaraba Saving Deposit (MSD):
Mudaraba Saving Deposit (MSD) is open by the lower and middle people who wish to save a part of their incomes to meet their future need intend to earn an income from their savings. It aims at encouraging savings of non-trading persons(s), institution(s), society, etc. by depositing small amount of money in the bank.
Restriction on withdrawals and deposit:
a) The number of withdrawals over a period of time is limited. Two withdrawals per week are permitted. But more than that no interest will be paid on rest amount for that month.
b) The total amount of one or more withdrawal on any date should not exceed 25% of the in the accounts unless 7 (seven) days advance notice is given.
c) The customer may deposit any amount in the savings bank account subject to a minimum of Tk.2000/- in the account.
Payment of Profit: Shahjalal Islami Bank Limited is proving 4% profit on Mudaraba Saving Deposit.
Opening a Saving Account: For Operating a Mudaraba Saving Deposit following documentation are required:
a) Two copies of passport size photographs of accountholder and one copy passport size photo of nominee.
b) Introductory reference.
c) National ID Card.
General Precautions of opening an MSD Account: After opening an account and before issuing a Cheque book the authorized officer should check the account operating form for the complete information, which is given by the customers:
a) Name of the account holder.
b) Photos of the account holder.
c) Date of opening
d) Types of account.
e) Present and permanent address
f) Name of the nominee and their address.
g) Initial deposit
h) Specimen signature in the form in the “Specimen signature card”.
i) Name, address and the account number of the introducer.
Mudaraba Short Notice Deposite (MSND):
Shahjalal Islami Bank Limited also receives term deposit from the clients. The SND account is different from the interest-based banks. It is also a Time Deposit account. The formalities for opening of this account are similar to those required for Al-Wadiah Current Account. The only difference is that seven (7) days notice is required for withdrawal of any sum and profit is paid. The rate of profit for this account is 3.50%. If the withdrawal on demand is desired, it may be paid subject to the for-feature for the period of notice or the expired of notice.
The Shahjalal Islami Bank Limited (SJIBL) is containing some Deposit Scheme, which are the really profitable for bank and customer. The Bank maintains Shariah –based transaction with their customer by different Scheme those are:
a) Monthly Deposit Scheme (MDS)
b) Mudarah Term Deposit Receipt (MTDR)
c) Monthly Income Scheme (MIS)
d) Multiple Profit Deposit Scheme (MPDS)
e) Millionaire Scheme (MS)
f) Hajj Palon Scheme (HS)
Monthly Deposit Scheme (MDS/DPS):
This account open very easy and there are no fixed day to open. Account holders do not need any savings account if he/she directly pays their monthly installment. Account holders carefully complete the MDS form and attests two copies passport size photograph one nominee and other own with form. Account holders can pay advance to continue their installment or can give permanent instruction from his/her savings account. In this term, the account holders are bound to pay Tk.50 for transferred and Tk.5/- for service charge. If the account is close before the maturity then profit will be calculate according to saving rates. If a depositor fails to pay calculate as Savings rate. But for the first six-month no profit will be calculate. Nominee will enjoy the profit will in absence of the accountholder.
Depositor will get the profit after the matured according to following table:
| Installment
Period |
100 | 250 | 500 | 1,000 | 2,000 | 5,000 | 10,000 |