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Depositors Buying Behavior OF SIBL

An Analysis OF Principal Branch

1.0 Introduction

Buying decision behavior varies product to product as well as man to man. In order for the Islamic banking products or facilities to compete in the competitive banking industries, customer preferences and behavior to use Islamic banking facilities need to be satisfied. As financial intermediaries, one of the most important functions of the commercial banks is to extend finance to trade, commerce, industry, and the sundry borrowers. Such financing requires huge funds. The most important source of this fund is deposits. Deposits are often called the life blood of commercial banks. Modern commercial banking starts with deposits from the public followed by lending or financing trade, commerce, and industry. Given the fact that Banking industries either Islamic way or conventional way being very competitive, depositors’ satisfactions and preferences and buying behavior are very important in supporting the Islamic banking industries. For keeping deposits the depositors generally consider some factors like: return on deposit, fast and efficient service, bank’s reputation, and image, and, the speed of transaction, and friendly bank personnel, convenient location. For the Islamic banks some other facts like profit loss sharing, Islamic cultures followed by the bank are also get importance for selecting Islamic bank. Therefore, knowing what are the factors that leads to customer preferences or non-preference to keep deposit in any bank will give a competitive advantage to SIBL in promoting their Islamic banking products or facilities.

1.1 Origin Of The Report

This report on “Depositors Buying Behavior of SIBL, An Analysis of Principal Branch” is initiated as part of’ the Internship Program which is a BBA Degree requirement of Department of Business Administration, Northern University, Bangladesh Dhaka. A 12-week internship at Social Investment Bank Limited, Principal Branch, Dhaka, preceded the preparation of the report. The report topic was selected by the VP and Branch Manager, Dhanmondi Branch, Social Investment Bank Limited.

1.2 Objectives Of The Study

1.2.1 Primary Objective

i. To correlate theoretical learning acquired through classroom study with the real life business situation faced as an internee during the Internship period.

1.2.2 Secondary Objectives

The specific objectives of the study are:

ii. Name, Location, and Historical background of the SIBL.

iii. Mission, Vision, slogan, and objectives of the SIBL.

iv. Organizational Structure and description of various functional departments of SIBL.

v. SIBL’s strengths, weakness, opportunities, and threats.

1.3 Problems Of The Study

For this organization part only secondary data has been used. Secondary data collected from the website of SIBL, Published Journal, newspaper, and the Internet. Data analysis through statistical tools is not done in this objective part.

1.4 Limitations

i. Insufficient Time

ii. Some information that the organization feels confidential for them, unwilling to provide.

1.5 An Overview Of Banking Sector In Bangladesh

The banking system of Bangladesh is a mixed one, comprising nationalized, private, and foreign commercial banks. The financial system of Bangladesh consists of Bangladesh Bank (BB) as the central bank, 4 nationalized commercial banks (NCB), 5 government owned specialized banks, 30 domestic private banks, 10 foreign banks and 28 non-bank financial institutions. The financial system also embraces insurance companies, stock exchanges, and co-operative banks. The commercial banking system dominates Bangladesh’s financial sector with limited role of Non-Bank Financial Institutions and the capital market. (Financial System, 2006)

1.6 The Genesis Of Islamic Banking On Bangladesh

Islamic banks can provide efficient banking services to the nation if they are supported with appropriate banking laws, and regulations. This will help them introducing PLS modes of operations, which are very much conducive to economic development. It would be better if Islamic banks had the opportunity to work as a sole system in an economy. That would provide Islamic banking system to fully utilize its potentials. At birth, Bangladesh inherited an interest based banking system, which was introduced here earlier when the country was a part of British Colony. Since its inception Bangladesh saw a new trend in banking both at home and abroad. Islamic banking was successfully tried in Egypt. 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. 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/workshops to mobilize local and foreign people and to attract investors to come forward to establish Islamic bank in Bangladesh. They concentrated mainly in mobilizing equity capital for the prospective Islamic bank. Due to continuous and dedicated work of the above groups and individuals and active support from the Government, Islamic banking established in early eighties. Now Islamic banks have been operating in Bangladesh for about one and half decade alongside with the traditional banks. Out of over 49 banks only seven banks are Islamic banks. And besides these full-fledged Islamic banks, two conventional banks in the private sector namely the Prime Bank Limited and Dhaka Bank Limited have opened two full-fledged Islamic banking branches and Islamic Banking Counter respectively to deal with the Islamic banking business parallel to their conventional operations. Like any other traditional commercial banks, Islamic banks do mobilize deposits and produce loans. But their mode of operation is based on Shariah, which different from the other traditional commercial banks. However, the seven Islamic banks operating in Bangladesh are: Islami Bank Bangladesh Limited, Al-Arafa Islami Bank Ltd, Social Investment Bank Limited, Oriental Bank Limited, Shahjalal Islami Bank, Bank Al Falah Limited, and EXIM Bank Limited.

2.0 Overview Of The Organization

2.1 A Snap Shot Of The Company

Name of the Company : Social Investment Bank Limited.

Legal Form : A Joint Venture of Islamic Bank

Date of Incorporation : 5th July, 1995

Date of Commencement : 22nd November, 1995

Operation Structure : Three Sector banking system, Formal Sector

Commercial Banking with latest technology;

Non-Formal Sector- Family Empowerment Micro-Credit & Micro-enterprise Program and Voluntary SectorSocial

Capital Mobilization through Cash Waqf and others.

Principal Branch : 15, Dilkhusha C/A, Dhaka-1000

Telephone : +880 2 9564764, +880 2 9559241

Fax : +880 2 9568098, +880 2 9564944

Telex : 642425 DBL FX BJ


Number of Branches : 28

E-mail :

Web Site :

2.2 History Of Birth Of SIBL

Social Investment Bank Limited is a fourth Islamic Bank in Bangladesh. It was incorporated on 5th July, 1995 and launched its banking operations of 22nd November, 1995. The authorized share capital of the bank was Taka 1000.00 million divided into one million shares of Taka1000.00 each. Social Investment Bank limited (SIBL) started its journey with the concept of 21st century Islamic participatory three sector banking, comprising Formal, Non-Formal & Voluntary Sector. While Formal Sector deals in general commercial banking with latest technology as a scheduled bank, Non-Formal Sector deals in Family Empowerment Micro-credit, Micro- Enterprise and SMEs financing with a view to poverty reduction and unlock the potentials of the “missing middle” who had not been properly addressed by the Corporate Banking Sector. Under Voluntary Sector, the bank is doing “Welfare-banking” through its Cash Waqf Scheme, an innovative financial product for Social Capital mobilization introducing for the first time in the history of banking. Having inspired with the above program, few renowned personalities of the Islamic world namely (i) H.E. Dr. Hamid Al Gabid, Former Secretary General of OIC & Prime Minister of Niger (ii) H.E. Dr. Abdullah Omar Nasseef, Deputy Speaker of Saudi Shoura Council & Ex-Secretary General of Rabeta Al-Islami (iii) H.E. Ahmed M. Salah Jamjoom, Former Commerce Minister of Saudi Government & (iv) Prof. Dr. Ahmad El-Naggar (Egypt) have joined with this noble endeavor to assist the poverty alleviation of Bangladesh.

2.3 Mission, Vision, Slogan, And Objectives of SIBL

2.3.1 Mission of SIBL

A) To provide high quality financial services with the latest technology.

B) To provide fast, accurate and satisfactory customer service.

C) Balanced & sustainable growth strategy.

D) Optimum return on shareholders’ equity.

E) Introducing innovative Islamic Banking products.

F) Attract and retain high quality human resources.

G) Empowering real poor families and create local income opportunities.

H) Providing support for social benefit organizations – by way of mobilizing funds and social services.

2.3.2 Vision of SIBL

“Reduction of Poverty Level” is its Vision.

2.3.3 Slogan of SIBL

“Working Together for a Caring Society”

2.3.4 Objectives of SIBL

A) To establish a partnership relationship with customers and to eliminate the idea of the debtor-creditor relationship of traditional banks.

B) To establish welfare oriented banking system.

C) To mobilize savings towards productive sectors.

D) To invest on profit and risk sharing basis.

E) To invest to those businesses sectors those are found legal from religious point of view.

F) To accept deposits on profit and loss sharing basis.

G) To create employment opportunities by investing savings towards prospective economic sectors.

H) To extend banking services towards the poor, helpless and low-income group of people in the society in order to uplift of their standard of living.

I) To contribute to establishment of a society by equitable distribution of wealth.

J) To establish justice in trade and commerce in the country.

K) To develop morals among the people and to establish the Shariah in the field of trade and commerce.

L) To render services for the economic development of the nation.

M) To contribute towards establishment of an Islamic Economic System in the Country.

2.4 Branch Network Of SIBL

The total number of branches of SIBL is 28. 13 in Dhaka, 1 in Shaver, 1 in Cumilla, 1 in Eleatgonj, 4 in Chittagong, 1 in Khulna, 1 in Sylhet, 1 in Rajshahi, 1 in Bogra, 2 in Shirajganj and 2 in Narayanganj.

2.5 Organization Structure of SIBL

2.5.1 Management of SIBL

The bank is managed by a 24-member Board of Directors including three foreign directors and its sub-committee. The bank has also an 8-member Shariah Council consisting of Fuqaha, Islamic Economist and lawyer. The Council gives decision on Islamic issues which are followed by the bank. The Executive Committee includes Advisors, Chairman, Vice- Chairman, group of Directors, Managing Director. There is another committee of audit. The Executive Committee approves various proposals brought by the management prior to implementation. All proposals are placed to the committee throw the Managing Director of the Bank. All decisions are executed by two separate divisions: operation and business. A number of people are working under the MD; these people belongs to the second stage of the organizational structure, they are- group of Executive Vice president, number of Senior Vice presidents, then Vice presidents, again Senior Assistant Vice presidents, First Assistant Vice presidents and Assistant Vice presidents. The proposals are initiated by the mid level managers and then forwarded to the MD through the Head of Branches or the Head of Divisions.

2.5.2 Organization Chart of SIBL (Figure: 1)

2.5.3 Functional Divisions And Departments

SIBL is mainly operated in 3 Functional divisions/ sector:

a) Formal Sector- Under this sector 3 departments are mainly operated:

I. General Banking Department

II. Investment Department

III. Foreign Exchange Transaction Department

b) Non-Formal Sector – Family Empowerment Micro-Credit & Micro-enterprise program are operated under this sector.

c) Voluntary Sector – Social Capital mobilization through CASH WAQF and others are operated under this sector.

Other departments are: Information & Communication Technology Division, Financial Administration Division, International Division, Business Development & Marketing Division, Audit & Inspection Department, Share Department, Human Resources Division, SIBL Training Institute, Law & Recovery Division, Law Department, Board Audit Cell, MIS, Planning & Research Division, Internal Control & Compliance Division and Investment Risk Management Division.

2.6 SWOT Analysis Of Social Investment Bank Limited


A) Up-to-date Technology.

B) 28 branches all over the country with online banking facilities in 20 branches.

C) Correspondent relationship with almost all major 122 Banks of 109 countries of the world.

D) SWIFT at 9AD Branches.

E) Different types of Islamic Banking Products.

F) Experienced management team.

G) Low employees turn over and satisfied management team.

H) Social marketing practices made a good image to the society.


A)Lower customer service quality.

B)Insufficient number of ATM Booth.

C)Inefficient Islamic Investment Risk Analysis and measurement methodology by the employees.

D)Lack of Full-fledged Shariah Audit.

E)Lack of Intention of the Management to be strict with Shariah Guidelines.


A)Increased demand of Islamic banking services.

B)Latent demand of different type of Islamic banking services


A) Lack popularity of PLS mode among the depositors.

B) Increased Competition from fellow Islamic banks and other conventional banks.

C) Declining Profit.

D) Lack of Shariah Manual or Guidelines.

E) Lack of Control and Supervision by the Central bank on the Basis of Islamic Shariah.

F) Economics slowdown and

G) Political Situation of the Country.

3.0 Internship POSITION, Duties and Responsibility

3.1 Problem Statement

Social Investment Bank Limited is an Islamic Bank having 28 branches all over the country with different types of banking services and products. It is developing and expanding its branches in the country with innovating products, and banking services, to gain greater acceptance as an effective and efficient means of intermediation and to contribute to the overall wealth creation. To gain greater acceptance, to contribute to overall wealth creation and compete with other conventional banks, the factors that contribute to depositor’s preference to select SIBL need to be studied.

3.2 Objectives of the Report

The objectives of the project part are:

A) To find out depositors’ preferences factors to select any bank to keep their deposits.

B) To find out the reasons for preferring some specific factors than other factors to keep deposits.

C) To know SIBL’s Depositors’ perception about SIBL as an Islamic bank.

D) To find out SIBL’s depositors’ belief about using Islamic banking services and their level of interest to use Islamic banking services.

E) To find out SIBL’s Depositors’ level of satisfaction and their expected changes about SIBL.

F) To find out the buyer group of deposit products of SIBL.

G) To know SIBL’s major functions, and its products

3.3 Scope of the Report

The scope of the report is limited among the existing deposit product Depositors of SIBL, principal branch, Dilkhusha, Dhaka.

3.4 Methodology

3.4.1 Research Design

The research is descriptive research as because it is designed to describe the characteristics or buying behavior of the population.

3.4.2 Sources of Information

For this project part both primary and secondary data has been used. Primary data has been collected through a survey, which was done on the depositors of SIBL, principal branch with a structured and disguised questionnaire. And secondary data has been collected from SIBL, books and published journal of SIBL.

3.4.3 Questionnaire Design

The questionnaire is a structure and disguised questionnaire. Buying behavior is influenced by different factors and characteristics of the Depositors. Here cultural factors were not considered as all the Depositors of SIBL are Muslim and follow Islami and Bangladeshi culture. And social factors were not considered as it would be difficult to analyze and take long time. To analyze the Personal factors, respondents were asked some personal information through multiple response questions. To analyze Psychological factors such as perception, attitude, questions asked through multiple response questions and belief through a five point Likert scale. To evaluate the Depositors preference factors to keep deposit in any bank, in the questionnaire some common factors (that generally people consider to keep deposit) are given to the respondents to evaluate them according the importance to them to select any banking services for keeping their deposits, in a five point Likert scale. To measure the post purchase behavior, Depositors satisfaction level about SIBL, asked through 5 point Likert scale. Expectations or wants of the respondents about SIBL’s different services are asked through multiple response questions. And there are two open end questions asking the reason for preferring specific type of return on deposit and recommendations by the respondents to SIBL.

3.4.4 Field Work

Data collected through personal interviewing with structured questionnaire by the researcher himself.

3.4.5 Analyzing Of The Findings

For analyzing data Simple tabulation had been done. These data analyzed using the software SPSS 12.0 and MS Excel. Analyzed data represented through pie and bar graphs and some tables are also used to represent the data.. Findings are based on the data analysis. And the core of the report divided into four parts. The first part includes an introduction about Islamic banks in Bangladesh. The second part of the report includes elaborate description about the organization. The third presents a literature survey, an in-depth analysis of the data collected; findings, recommendation and conclusion, and the last part of the report include appended part of the report.

3.5 Limitations

1. The duration of the study is very short and analyzing depositor buying behavior and preference is a very complicated process. So the adequate analytical tools for proper evaluation of depositor buying behavior to select SIBL’s banking facilities could not be used.

2. For time and cost constraints, the sample size had to be restricted to 100 only.

3. It was very hard to fill up the questionnaires as the A/C holders who come in SIBL to use the banking facilities are very busy by nature.

4. The findings of the survey were based on the SIBL’s depositors of principal branch, Dilkhusha, Dhaka City; the results may not reflect the same for other branches of SIBL as well as for other areas of the country.

3.6 Literature Survey

3.6.1 Consumer Buying Behavior

Consumer buying behavior can be formally defined as: the acts of individuals directly involved in purchasing and using economic goods and services, including the decision making processes that precede and determine the acts of purchasing and using economic goods and services. This is a system in which the individual consumers surrounded by an immediate and a wider environment that influences his or her goals. These goals are ultimately satisfied by passing through a number of problem-solving stages leading to purchase decisions. (Kotler & Armstrong, 2003-2004)

The main functions of commercial banks are acceptance of deposits, lending, and investment. And ancillary services include agency services, collection, and payment of cheques, payment on behalf of customers, purchase, and sale of stocks, acting as trustee, opening letter of credit, safe custody, etc. So generally people select any banking services to satisfy the need of keeping their deposit, taking loans, and having other ancillary services. To select any banking services to keep deposits, Depositors will ideally consider Bank’s reputation and image, Availability of wide range of services, Return on deposits, Bank Location and number of branches, Operations hours, Service quality, Service charges, Availability of other facilities (like ATM, online banking etc), type of bank (like MCB, PCB, NCB) etc. There are wide differences between the conventional banking system and Islamic banking system. The main difference is that, profit and loss sharing practice of Islamic banks. So the Depositors of conventional banks and Depositors of Islamic banks consider different factors to keep their deposits. Such as: to select any Islamic bank people may also consider the Banking system (like Shariah based banking system or Traditional banking system), Organization culture, strictness in following the Shariah law to run the banking system etc. (Hegazy, 1995)

So it is imperative for SIBL to understand why people choose which type of banking system, either conventional banking system or interest-free banking system, to satisfy their financial needs.

3.6.2 Model of Consumers Buying Behavior

The task of marketing is to identify consumers’ needs and wants accurately, then to develop products and services that will satisfy them. For marketing to be successful, it is not sufficient to merely discover what customers require, but to find out why it is required. Only by gaining a deep and comprehensive understanding of buyer behavior, marketing’s goals can be realized. Such an understanding of buyer behavior works to the mutual advantage of the consumers and marketer, allowing the marketer to become better equipped to satisfy the consumer’s needs efficiently and establish a loyal group of consumers with positive attitudes towards the company’s products. The central question for marketer is: how do consumers respond to various marketing efforts that the company might use? The starting point is the stimulus –response model of buyer behavior shown below (Figure 2). The figure shows that marketing and other stimuli enter into buyer black box and produce certain responses. The marketer wants to understand how the stimuli are changed into responses inside the consumers’ black box, which has two parts. First, the buyer characteristics influence how he or she perceives and reacts to stimuli. Second, the buyer’s decision process itself affects the buyer behavior. (Kotler & Armstrong, 2003-2004)

Figure 2: Model of Consumers Buyer Behavior

Marketing and Other Stimuli

Marketing Other

Product Economic

Price Technological

Place Political

Promotion Cultural

Physical evidence


Buyer Black Box

Buyer characteristics


Buyer decision Process

Buyer Responses

Product choice

Brand choice

Dealer choice

Purchase Timing

Purchase amount

3.6.3 Characteristics Affecting Consumers Buying Behavior

Consumers’ purchases are influenced strongly by cultural, social, personal, and psychological characteristics (Kotler & Armstrong, 2003-2004). Depositors of SIBL are mostly Muslims who follow Islamic culture. Other characteristics like social factors, personal factors of the Depositors are different. Motivation, perception, learning, and belief about Islamic banks strongly influence the depositors to select SIBL’s services as it an Islamic bank.

3.6.4 Types of Buying- decision Behavior

Buying behavior differs greatly for product to product and man to man. There are four type of buying behavior according to the Depositors’ involvement in purchase and differences found among different brands (Figure 3). (Kotler & Armstrong, 2003-2004)

Figure 3: Types of Buying- decision Behavior

High Involvement Low Involvement

Significant-differences between the brands Complex-buying behaviour Variety-seeking behaviour
Few differences between the brands Dissonance-reducing behaviour Habitual-buying behaviour

Selecting banking services generally shows complex buyer behavior as they are highly involved in a purchase services and perceive significant differences among different banking services. But as buying decision behavior also varies man to man, it may be variety seeking behavior as people generally seek different type of banking facilities and do switching from one bank to another when they found significant differences. Or it may be dissonance buying behavior as people generally have post purchase dissatisfaction and change their bank when they perceive another one better.

3.6.5 The Buyer Decision Making Process

Customers go through a five-stage decision-making process in any purchase. This is summarized in the diagram below: (Figure 4). (Kotler & Armstrong, 2003-2004)

Different types factors that people consider selecting any bank to keep deposit and to get loans. To select any banking services to keep the deposits, Depositors will ideally search information about return on deposit, operation hour, service quality etc. and evaluate these different factors among different banks and then do their purchase.

3.7 Target market of SIBL

The target customers of SIBL’s different deposit products are:

A) Individuals person (lived in both village and city area, age above 18, both male and female and all social classes’ people in Bangladesh)

B) Sole proprietorship, Private limited company, Public limited company, Partnership firm

Co-operative society.

3.8 Banking Services of the Social Investment Bank in Bangladesh

Social Investment bank offers different type of services to its target customers. To attract depositors it offers wide range of deposit schemes and other banking services. Here all types of banking services of SIBL are discussed:

3.8.1 Formal banking Services of SIBL Corporate Banking

SIBL offers a full range of tailored advisory, financing, and operational services to its corporate client groups combining trade, treasury, investment, and transactional banking activities in one package. Whether it is project finance, term loan, import or export deal, a working capital requirement or a forward cover for a foreign currency transaction, SIBL’s Corporate Banking Managers offers the corporate clients the right solution. Consumer Banking

Consumer banking programme offers a comprehensive range of Islamic banking products and services matching the need of every discerning customer. Transactional accounts, savings schemes, cash Waqf schemes, or loan facilities from SIBL provide its customers a rare service quality. Deposit Schemes Of SIBL

  • Al Wadiah Current Deposit Scheme: Al Wadiah Current Deposit A/C is opened on proper introduction with minimum initial deposit fixed by the Bank. Al Wadiah Deposit is accepted on Al Wadiah principles which mean Al Amanah with permission to use. According to this principle, Bank can use the fund of the account along with other funds as per Shariah at bank’s own risk. Account holder(s) will not share any profit/loss. The Law and regulation of Bangladesh, usual customs and procedures common to banks in Bangladesh including Islamic Banking Principles shall apply to and govern the conduct of account opened with the Bank.
  • Mudaraba Savings Deposit Scheme: To open a Mudaraba Savings Deposit account in SIBL the following rules and regulations are applied: Mudaraba Savings Deposit of one party and on the basis of operation by another party this deposit is taken, by providing Introducer of the account as required by the bank and by depositing a minimum amount any depositor or multiple depositor can open single or joint account. Any educational institute, Club, Association or Social institutes can open this account, the bank may merge amount collected through this deposit and may invest in any Shariah allowed investments and after determining the annual profit/loss the depositor will get his part of profit.
  • Mudaraba Monthly Profit Scheme: Under this scheme the depositor will get monthly profit on the deposited amount. The scheme provides monthly profit for service holders who may deposit the pension benefit. For those Bangladeshis working abroad willing to deposit once and provide a fixed amount monthly to family and relative residing in Bangladesh.
  • Hajj Scheme: Hajj is one of the most important bases of Islam. Religious Muslims tends to perform Hajj when they gather financial ability. But they find it difficult to gather the required amount to perform as there is no such systematic way of saving the money. To help the Muslim brothers Social Investment Bank Ltd introduced Hajj/Umrah Scheme. Any Muslim Residing in Bangladesh may open an account under this scheme, and this scheme will be accounted under Mudaraba rules. The account holder will have to enjoy the Profit / Loss of the Banks respective year.
  • Mudaraba Double Benefit Deposit Scheme (MDBDS): The features of the scheme are that A/C holders have to keep deposit in every a fixed definite time such as: 1 month, 6 month etc and after a fixed period he/ she will get double of the principal amount. Any desirous person may open the A/C, with minimum Tk 10,000/- or above.
  • Mudaraba Millionaire Scheme: Most of the people of Bangladesh are the followers of Islam. They are mostly interested to make interest free deposits. Taking these facts into consideration SIBL introduced a monthly installment based “Mudaraba Millionaire Scheme”. Tk. 550/-, Tk. 1050/- or Tk. 2050/- is taken as monthly installment under Mudaraba principles of Islami Shariah, Duration of this scheme will be 15, 20 and 25 yrs.
  • Mudaraba Special Savings (Pension) Scheme: Generally people wants save a portion of their income for economic assurance at old ages. Taking the above reasons into account Social Investment Bank Ltd. had introduced monthly installment based “Mudaraba Special Savings (Pension) Scheme”. Under this scheme any person can deposit a fixed amount monthly and after maturity the depositor will get a handsome amount with increased profit. The depositor may encash the total amount at a time or can take as monthly pension until a stipulated time.
  • Mudaraba Education Savings Scheme: Education expenditure especially for higher studies is increasing day by day. In many cases children lose the chance of education as their guardians become unable to adjust with the expenditure. But if proper financial planning is adopted earlier then it is easier for the parents to bear the expenses. For these reasons SIBL has introduced “Education Savings Scheme”, which is based on Shariah Principles. This scheme would enable the parents to bear child’s educational expenses in a planned manner. Any amount of Tk. 25,000/- or multiple is accepted in this scheme.
  • Mudaraba Bashstan Savings Scheme: Housing has become one of the most fundamental needs of human civilization. But most of the people of Bangladesh are lacking to fulfill this basic need. As a follower of Islamic Shariah, Social Investment Bank Ltd focuses forward to help people to fulfill this basic need. The depositor will enjoy earnings from investments under Islami Shariah based Mudaraba rules. As per rules of Islami banking the actual amount may vary from the estimated amount.
  • Mudaraba Term Deposit scheme: Mudaraba Term Deposits are accepted by the bank with a sum of Tk. 5000 or above (multiple of 1000) from individuals (single and joint), firms (proprietorship/partnership), limited companies, autonomous bodies, charitable institutions, association, educational institution, local bodies, trusts, etc, against issuance of non transferable receipts in acknowledgement of MTD account may be opened in the names of minors jointly with their guardians
  • Mudaraba Mohrana Savings Scheme: As every male Muslims has given his wife mohrana after his marriage, SIBL has recently introduced this Scheme; where people can keep their deposit for a certain period with changing profit rate.
  • Mudaraba Marriage Savings Scheme: SIBL recently has introduced this savings scheme to make it easier for people to bear the cost marriage ceremony.
  • Mudaraba Foreign Currency Term Deposit Scheme (MFCTD): Bangladeshi nationals residing, working and earning abroad / foreign nationals residing in Bangladesh and also Foreign Firms registered abroad and operating in Bangladesh / Foreign missions and their expatriate employees may open this account. A/C may be opened in US Dollar, Pound Sterling or other eligible currencies at the option of the A/C holder. Online Banking Services of SIBL

SIBL is providing Online Banking Service to its clients since January 2004 amongst 20 branches of SIBL through which its customers have access to their A/C from another branch. The Bank has deployed this On-Line Banking system through V-Sat communication. The Information & Communication Technology (ICT) Department is closely monitors the online transactions. Online Transactions are executed by the PcBANK2000 integrated banking software through a secured database and worldwide tested V-Sat Communication Link. ATM & Credit Card Services of SIBL

SIBL has introduced E-Cash ATM Debit Card service since June 2004 through E-Cash ATM booths within Dhaka, Chittagong, Sylhet, Rajshahi, and Cox’s Bazaar city. Any body, who has a Current/Savings/Short Notice Deposit Account in SIBL in any branch, he/she can apply for E-Cash ATM Debit Card from that branch. Customer can get 24-hour Cash Withdrawal service including holidays and can pay Grameen, Aktel and City Cell mobile phone bill through E-Cash ATM Booth. Now the bank has only 14 ATM booth in Dhaka city and 4 in other cities. Ancillary Services of SIBL

§ Locker Service: Safe locker service is available at its Dhanmondi Branch & Gulshan Branch. Client may keep his/her valuable ornaments, documents etc. into the locker against a nominal yearly fee.

§ Utility Bill Receive: In the formal corporate sector, this Bank would, among others, offers the most up-to date banking services through collection of bills like as gas bill, WASA bill, Bangladesh Telephone & Telegraph bill, and Electric bill. Correspondent Banking of SIBL

It have correspondent relationship with almost all major 122 Banks of 109 countries of the world like Standard Chartered Bank, American Express Bank Limited, HSBC, HBZ Finance, Mashreq Bank PSC, Dresdner Bank AG and with local banks in Pakistan, India, Nepal and Bhutan etc. with whom it had advising, reimbursing and add confirming arrangement. Loan, Advances, and Credit Facilities of SIBL

SIBL has mainly three types of loan and credit facilities:

o Bai-Muazzal: Bai-Muazzal is a contract between Buyer and Seller under which the seller sells certain specific goods ( permissible under Shariah and Law of the country ), to the Buyer at an agreed fixed price payable at a certain fixed future date in lump sum or within a fixed period by fixed installments. The seller may also sell the goods purchased by him as per order and specification of the Buyer. This mode is applicable for working capital financing. SIBL gives this type of loan in four sectors: commercial, house hold, Real estate, and Trust receipt where loan is allowed in the form of cash credit against hypothecation of goods & collateral security.

o HPSM: Hire Purchase (Participatory Ownership) is a Special type of contract which is a synthesis of three contracts:

a) Shirkatul Melk: Shirkat means partnership. Shirkatul Melk means participation in ownership. SIBL and other parties 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 Melk contract.

b) Ijarah: The term Ijarah has been derived from the Arabic words Ajar and Ujrat which means consideration, return, wages, or rent. This is the exchange value or consideration, return, wages, rent of services of an ASSET. Ijarah has been defined as a contract between two parties, the Hiree and Hirer where the Hirer enjoys or reaps a specific service or benefit against 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. SIBL act as a hirer.

c) Sale: This is a sale contract between a Buyer and a seller under which the ownership of certain goods or asset is transferred by seller to the buyer against agreed upon price paid / to be paid by the buyer. Here SIBL act as seller who buy the goods as an agent of a party and sold the good to the party at the previously determined price.

Thus in Hire Purchase (participatory ownership) mode between SIBL and its clients supply equity in equal or unequal proportion for purchase of an asset like land, building, machinery, transport etc. Purchase the asset with that equity money, own the same jointly; share the benefit as per agreement and bear the loss in proportion to their respective equity. The share, part, or portion of the asset owned by the Bank is hired out to the client partner for a fixed rent per unit of time for a fixed period. Lastly the Bank sells and transfers the ownership of it’s share / part / portion to the client against payment of price fixed for that part either gradually part by part or in lump sum within the hired period after the expiry of the hire agreement.

(1) Murabaha: Murabaha is a contract between a Buyer and Seller under which the Seller sells certain specific goods permissible under Islamic Shariah and Law, to the Buyer at a cost plus agreed profit payable in cash on any fixed future date in lump sum or by installments. The profit marked-up may be fixed in lump-sum or in percentage of the cost price of the goods. In case of Murabaha SIBL procures the goods as per indent of the customer, retain it in its custody and sell the same part by part or at a time to the client who gave indent for the goods. Foreign Exchange Transaction Services of SIBL

Foreign Exchange Trade of SIBL is dealt with its 9AD branches out of which 4AD branches are in Dhaka and the remaining 5AD are in Chittagong, Khulna, Sylhet, Rajshahi, and Bogra.

  • Export Finance: To facilitate the import obligation of the Bank as well as considering the requirement of foreign currency of the country it encourage potential exporters to do their export business with them. It provides working capital on their requirement. Presently its export finance is extended for RMG and for non-traditional item that is handled by a number of experienced bankers. It offers competitive exchange rate for foreign currency to our valued exporters.
  • Import Finance: SIBL also deals in import business and its import business is extended to commercial importers (traders) for import of various Shariah approved items and industrial importers (Users) for import of raw cotton, yarn, clinker, pharmaceutical raw materials, TV parts, Computer parts etc raw materials for their industries. It also provides post import finance.
  • Foreign Remittance: SIBL is playing an important role in the Foreign Remittance sector also. It has correspondent relationship with almost all major 122 Banks of 109 countries of the world. Visitors of SIBL’s website can download its Foreign Currency Current Account (FCCA) Opening Form from the Download Section to open FCCA account to send remittances.
  • SWIFT: SIBL is the member of SWIFT and it has 9AD SWIFT workstations in its 9AD branches. Besides its 24 branches are equipped with online banking. It is trying to keep all the SWIFT workstations under online system. Inward remittances are credited to the beneficiary’s account on the same day of receipt if the beneficiary maintains A/C with them or within next 24 hours on receipt of the same from our overseas correspondents. All correspondences of foreign trade both export and imports are communicated through SWIFT. As a result foreign exchange trades become expeditious and instant.

3.8.2 Non Formal banking Services of SIBL

A) Family Empowerment Micro-Credit Program: Family Empowerment Micro-Credit Program is designed to develop the Socio-economic condition of the grass-root people committed to build a caring society by reducing poverty through income generation for small and low-income families, under which financing is provided without collateral.Family empowerment Micro-Credit Program is a group-based lending. Investment is provided for maximum three years @ 10% return per annum at flat rate where maximum ceiling of Investment is Tk.25,000/-.

B) Family Empowerment Micro-Enterprise Program: Family Empowerment Micro-Enterprise program is introduced to enhance the Socio-economic condition of the potential entrepreneur, small and medium Businessmen, successful Micro-Credit graduates through income generating activities. Ceiling of investment is from Tk.50, 000/= to Tk.5, 00,000/= @ 10% return per annum at flat rate for maximum three years. Investment up to Tk.50, 000/= is provided without collateral. In case of investment of above Tk.50, 000/= minimum collateral security is required.

C) Family Empowerment Micro-Enterprise Program (SMEs): Considering the potentiality of SMEs sector, SIBL has launched Family Empowerment Micro-enterprise program (SMEs) to fulfill the diversified need of SMEs clients. Investment ceiling under this program is from Tk.2, 50,000/= to Tk.5, 00,000/=@ 14% return per annum for one year on revolving basis.

D) Small, Medium and Micro-Enterprise Development Program jointly with JOBS project, USAID: On the basis of Memorandum of Understanding (MoU) signed in 2001 between Social Investment Bank Ltd. and Job Opportunity and Business Support (JOBS), collaborative efforts are being made to create easy access to business capital for the Small Medium and Micro-Enterprises (SMEs) through enhancing the capacity and performance of the entrepreneurs with available technical assistance from JOBS to be financed through Social Investment Bank Ltd. under Family Empowerment Micro-Credit and Micro-Enterprise Program.

3.8.3 Voluntary Banking Services of SIBL

A) Cash Waqf Scheme: SIBL had introduced Cash Waqf Certificate, a new product for the first time in the history of banking in Bangladesh. Cash Waqf provides a unique opportunity for making investment in different religious, educational and social services. Savings made from earning by the well off and the rich people of the society can be utilized in our organized manner. Income earned from these funds will be spent for different purposes like the purposes of the Waqf properties itself. Cash Waqf is an endowment in conformity with Shariah, bank manages the Waqf on behalf of the waquif and Waqfs are done in perpetuity and the A/C is opened in the title given by the waquif. Waquif have the liberty to choose the purpose(s) to be served either from the list of 32 purposes identified by the bank, covering (a) family empowerment credits, (b) Human resource development, (c) Health and sanitation and social utility services, or any other purpose(s) permitted by Shariah. Cash Waqf amount earns profit at the highest rate offered by the Bank from time to time. Cash Waqf amounts remain intact and only the profit amount is spent for the purpose(s) specified by the waquif. Unspent profit amounts automatically added to Waqf amount and earn profit to grow over the time. Waquif can also instruct the Bank to spend the entire profit amount for the purpose specified by him/her.

B) Mosque Waqf Property Development Scheme: As a declared corporate policy, the Bank intends to help mosque and Waqf property holders with free consultation & technical support so as to make it economically & socially self-sustained. The bank has completed a small project for development of a mosque property at Uttar Khan, Dhaka. (Social Investment Bank Limited, 2006)

4.0 Analysis of the Data and Survey Findings

The results found after analyzing the data which were collected through interview with the structured questionnaire, are described here:

Importance of Different Factors for Selecting any Banking Services to Keep Deposits

Respondents were given 12 different factors (that people generally consider to select any bank to keep deposit) to evaluate the factors according to importance to them to select any banking services to keep their deposit. After analyzing the data the following results are found (Figure 5):

1. 40% of the respondents evaluate bank reputation and image as very important, 30% evaluate as not important and 30% evaluate as not very important

2. Banking system evaluated as very important by 30% respondents, important as 20%, moderately important by 20%, not important by 30%.

3. Availability of wide range of services evaluated as very important by 20% respondents, important by 10%, moderately important by 50% and not very important by 20% respondents.

4. Return on deposit evaluated as very important by 60% respondents, important by 20%, not important by 10% and not very important by 10% respondents.

5. Organization culture evaluated as important by 20% respondents, moderately important by 70% respondents and not very important by 10% respondents.

6. Bank location and number of branches evaluated as important by 40% respondents, moderately important by 40% respondents and not important by 20% respondents.

7. Operations hour evaluated as very important by 10% respondents, important by 70% respondents and moderately important by 20% respondents.

8. Service quality evaluated as important by 30% respondents, important by 40% respondents and moderately important by 30% respondents

9. Service charge evaluated as very important by 10% respondents, important by 30% respondents, moderately important by 20% respondents, not important by 30% and not very important by 10% respondents.

10. Availability of other facilities (like ATM, online banking etc) evaluated as important by 40% respondents, moderately important by 30% respondents and not important by 30% respondents.

11. Ownership type of bank (like MCB, PCB, NCB) evaluated as important by 10% respondents, moderately important by 10% respondents, not important by 40% and not very important by 40% respondents.

12. Other factors evaluated as moderately important by 10% respondents, not important by 20% respondents and not very important by 70% respondents.

After calculating the sum and average of the factors, it is found that, Banking system, Return on deposits, Operations hours and Service quality are important factors; Bank’s reputation and image, Availability of wide range of services, Organization culture, Bank Location and number of branches, Service charges and Availability of other facilities( like ATM, online banking etc) are moderately important; Ownership type of bank( like MCB, PCB, NCB ) is not important and Other factors is not very important to select any banking services to keep deposit to the respondent. (table 1: Sum, Average, and rank of the Factors for selecting any banking services and example of average calculation are given in appendix, page 47, table 5)

Table 1, Sum, Average, and rank of the Factors for selecting any banking services

Factors Sum Average Round value Importance Rank (according to average)
Bank’s reputation and image 290 2.9 3 Moderately Important 8
Banking system 350 3.5 4 Important 4
Availability of wide range of services 310 3.1 3 Moderately Important 6
Return on deposits 410 4.1 4 Important 1
Organization culture 300 3 3 Moderately Important 7
Bank Location and number of branches 320 3.2 3 Moderately Important 5
Operations hours 390 3.9 4 Important 3
Service quality 400 4 4 Important 2
Service charges 300 3 3 Moderately Important 7
Availability of other facilities( like ATM, online banking etc) 310 3.1 3 Moderately Important 6
Ownership type of bank( like MCB, PCB, NCB ) 190 1.9 2 Not Important 9
Other factors 140 1.4 1 Not very Important 10

After calculating the sum and average of the factors, it had been ranked in the following way according to the value of average: (table 1)

1) Return on deposits

2) Service quality

3) Operations hours

4) Banking system

5) Bank Location and number of branches

6) Availability of other facilities (like ATM, online banking etc) and Availability of wide range of services

7) Service charges and Organization culture

8) Bank’s reputation and image

9) Ownership type of bank (like MCB, PCB, NCB)

10) Other factors

From the ranking of the factors, it is seen that, return on deposit is the most important factor for selecting any banking services to keep deposits, and then service quality and then operations hour are important to the respondents. Ownership type of the bank and other factors are least important factors for selecting any banking services to keep deposits to the respondent.

5.0 Demographic Information Analysis

Respondent were asked some personal information to analyze the personal factors.

5.1 Age

10% of the respondents’ age is below 25, 50% of the respondents’ age is between 25 to 34, 20% of the respondents’ age is between 45 to 54 and 20% of the respondents’ age is 55 or above 55 (Figure 23). So most of the respondents are young people and others are middle age people who are using the SIBL’s deposit products and other banking services.

5.2 Gender

80% of the respondents are male and other 20% of the respondents are female (Figure 24). In Bangladesh most of the women are not financially independent and influenced by the male partner in their important purchase decision like banking services. So it may be the reasons why the female respondents’ ratio is low. And SIBL also need to consider these social factors to develop their deposit products.

5.3 Marital Status

80% of the respondents are married and 20% of the respondents are single (Figure 25). SIBL need to consider this factor to develop their deposit products, as married and single people have a very different life style. A single person may be willing to take risk but a married person may not be willing to take risk related to his/ her deposits( such as unensured return on deposit, which may give a lower return) as he/ she have the responsibility of his/ her family.

5.4 Educational qualification

30%of the respondents have done masters, 30% of the respondents have done bachelor degree, 10% of the respondents have completed higher secondary school, 10% of the respondents have completed secondary school, 10% of the respondents’ current qualification is below secondary school, and 10% have other type of qualification (Figure 26). So it