General Banking Activities of First Security Islami Bank Ltd.
Executive Summary:
This report is based on my working experience at First Security Islami Bank Ltd (FSIBL) as a part of the internship program. During my internship period, Got the opportunity to work at the General Banking Department of Mirpur branch of the bank. In order to incorporate the practical knowledge I have chosen to prepare report on General Banking Activities of First Security Islami Bank Ltd.
The report is aimed to exhibit general banking activities of the bank, how it works and to what extent the customers are satisfied with the service of the bank. The report also offers some suggestions for the improvement of providing services in terms of revenue and in order to achieve a superior level of customer satisfaction.
First Security Islami Bank Limited (FSIBL) was incorporated in Bangladesh on 29 August 1999 as a banking company under Companies Act 1994 to carry on banking business. It obtained permission from Bangladesh Bank on 22 September 1999 to commence its business. It was commenced its operation as a conventional banks but from 1st January’ 2009 it was converted from interest based bank to an Interest free bank. At present The Bank carries banking activities through its 86 branches in the country. Like other private commercial banks First Security Islami Bank Limited (FSIBL) encompass a wide range of services including accepting deposits, making loans, discounting bills, conducting money transfer and foreign exchange transactions, and performing other related services such as safe keeping, collections and issuing guarantees, acceptances and letter of credit.
This report basically deals with “General Banking Activities”.
After observing and doing the internship I have found the some problems comparing to other private commercial bank (Mutual Trust Bank Ltd, Exim Bank Ltd.) that take places in the banking system.
At the age of modern technology computer and online leads the every sphere of lives including banking system but more than half of officers of First Security Islami Bank Ltd are not experts in computer and online system. Its IT department is not so developed and experts like other banks’ IT.
They face some problem due to using differences types of software like Bankultimus, PCbank etc.
Few officers are skilled and experienced in banking sector that’s why sometimes they take more times handling tasks owing to handling more tasks.
First Security Islami Bank Ltd has brought SMS, Mobile and Internet banking systems as a modern service but it does take any measures to popularize and make strong.
Apart from, due to not having own ATM booth, clients are to pay more charge for using others bank’s ATM booth.
Normally Accounts Opening section takes more responsibilities without its duties. It is a problem for Accounts Opening section.
It does not provide service to bring attention of target customers.
Problems aside, First Security Islami Bank Ltd. is collecting more deposit and trying to provide new services to clients to meet their satisfaction which is well for First Security Islami Bank Ltd.
Chapter One
Introduction
This Chapter includes following points:
Introduction
Origin of the Report
Objective of the Report
Scope of the Report
Methodology Used
Limitations
1.0 Introduction:
Banking sector is considered as a pillar of the economy of any nation on which economy of that country is standing. At the time of bearing the economy banks exercise different types of banking activities and take responsibilities. As an intern choose an Islamic Bank called First Security Islami Bank Ltd which is leading and reputed private commercial Islami bank in Bangladesh is playing important role in country economy. First Security Islami Bank Limited (FSIBL) was incorporated in Bangladesh on 29 August 1999 as a banking company under Companies Act 1994 to carry on banking business. It obtained permission from Bangladesh Bank (BB) on 22 September 1999 to commence its business. From on 1st January 2009, First Security Bank Ltd is continuing as an Islami Bank called First Security Islami Bank Limited. Banks provides the opportunity to its clients to deposit and lending money also at the same time attractive services are ensured as per the client’s needs wants & demand with the changing environment and competition. Activities of a bank permits to open & close accounts, issuing cheque books, remit funds, pay order, demand draft, receive cheque for clearing, FDR (Fixed Deposit Receipts)DBS(Double benefit Scheme) opening with attractive interest rate etc. It also includes the process of communicating, summarizing and explaining the economic events of a bank within a specific period of time.
1.1 Origin Of The Report
“General Banking Activities in Private Commercial Bank of First Security Islami Bank Ltd”is a topic of internship report. To make this report had performed internship at this organization for three (3) months. Internship program is the partial requirement of B.B.A program. After completing of my forty courses, it was my legal obligation to get the practical knowledge of the corporate world. That’s why had to join in the First Security Islami Bank Ltd. Mirpur Branch and my internship report is based on the practical workings that I have performed.
I have tried my best to accomplish the report is an essential part of BBA program. The assigned to First Security Islami Bank Ltd. Mirpur Branch and conducted a study on “General Banking Activities of First Security Islami Bank Ltd” under the supervision of Mr. Nurul Mohammad Zayed, Lecturer, Department of Finance, BUBT.
1.2 Significance of the Report:
Education will be most effective when theory and practice blends. Theoretical knowledge gets its perfection with practical application. And the internship is designed to bridge the gap between the theoretical knowledge and real application. We all know that there is no alternative of practical knowledge which is more beneficial than theoretical aspects. The prime reason of this study is to become
Familiar with the practical business would and to attain practical knowledge about the overall Banking and Corporate world.
1.3 Scope of the Report:
In order to maintain the speed of development now banks must compete in the market place both with local institution as well as foreign ones. The presentation of the organizational structure and policy of First Security Islami Bank Limited and investing the strategy applies by it provide the scope of this report.
An infrastructure of the organization has been detailed and looks into the future. The scope of this report is limited to the overall description of the company, its services, its position in the industry, practical progress of its operation. The scope of the study is limited to organizational set up, function and performances:
Recent performance of FSIBL in terms of deposit, investment and foreign exchange.
- -To analyze the banks current financial flows performed by FSIBL.
- -To obtain practical experience about general about general banking activities by involving such type of program.
- -To build professional carrier in the banking sectors as well as any credit providing institution.
First Security Islami Bank Limitedhas 84 branches all over the country. The placed to the Mirpur Branch, Dhaka by the Human Resource Department of the Bank. During my internship period, The learned and gathered experience of general banking activities from Account Opening Section, Cash Section, Clearing Section and Accounts Section. The scope or span of this report is to highlight the general banking activities practiced in private commercial banks specially focusing on general banking activities of First Security Islami Bank Ltd, Mirpur Branch.
1.4 Objectives of the Report
Objective is an important thing for different purpose. Objective helps to go in a good way which is related with the report. I segment the objective in two ways as follows:
1.4.1 Broad Objective
The board objective is to analyze the general banking activities of FSIBL.
1.4.2 Specific Objectives
- To learn General Banking Activities of First Security Islami Bank Ltd practiced in branch.
- To identify the problems & make some recommendations against this problem in General Banking Division in First Security Islami Bank Ltd.
- To show the comperative analysis among IBBL & Al-Arafa Islami bank.
1.5 Methodology of the Study
The study is performed based on the information extracted from different sources collected by using a specific methodology. This report is analytical in nature.
1.5.1 Data Collection:
Sources of data of this report can be divided into two categories:
1.5.2 Secondary Sources:
- Annual reports (2010) of First Security Islami Bank Ltd.
- Printings & Brochures of First Security Islami Bank Ltd.
- Prospectus of First Security Bank Ltd
- Website
1.5.3 Data Analysis & Presentation
Data analysis has been done by using different types of computer application programs such as MS Excel, MS word.
1.6 Limitations of the Report
· To complete all of these mentioned above, I face some limitations like:
- The major Problem was time constraints. The duration of my internship Program was only three months. But this allocated time is not enough for a complete and fruitful study.
- Due to some legal obligation and business secrecy Bank is not disclosing some expected data and information for obvious reason, which could be very much useful.
- The data and various information of FSIBL Bank are not in organized way that’s why Bank failed to provide all information.
Chapter Two
Banking System
This Chapter discusses following topics:
History of Banking System
Banking Scenario in Bangladesh
Islamic Banking System
History of Islami Banking
Chronology of Development
Objectives
Principles
Characteristics
Benefits
Islamic Bank in Bangladesh
Relevant Laws/ Acts/ Order for Bankers/ Financial Institutions
Major Differences between Booth Banking Systems
2.0 Banking System
2.1 History of Banking System
When money became an accepted medium of exchange, the need arose to keep the money safe. In addition, some people needed to borrow money. These needs led to the development of banks. The earliest banking records, dated around 2000 B.C., indicate that Babylon had a highly developed banking system. Babylonian banks were not unlike the banks of today, except that you might say they had a monopoly. Many years later, in the sixth century B.C., the first private bank emerged.
Like today’s bank, it accepted for deposit money on which it paid interest. It also lent money to persons who needed the money for worthwhile purposes and who repaid the borrowed funds with interest. By the fourth century B.C., Greece was the dominant nation in the world. Private and city-state-owned banks existed in the outlying lands of the Greek Empire, but only privately owned banks were allowed in Greece. Government to a great extent regulated those banks; however, Rome then became the dominant empire. Under early Roman law, banks could only be privately owned, but law regulated them.
With the fall of the Roman Empire, banking became essentially illegal until the third century A.D. By the fourteenth century, when trade routes were being developed, privately owned banks were once again allowed. And by the fifteenth century, banks were needed to advance the huge sums of money required to send out ships to bring back valuable commodities such as spices, silk and gold. At this time in history, banking was big business.
2.2 Banking Scenario in Bangladesh
The banking in Bangladesh has passed four decades through different policy environments and comprises central bank at the apex, nationalized commercial banks (NCBs), private commercial banks (PCBs), foreign commercial banks (FCBs) and specialized financial institutions. In the decade of seventies, in an atmosphere of fully regulated banking, the nationalized commercial banks played the active role in intermediation and allocation of credit along with the specialized financial institutions.
The decade of the eighties witnessed the active operation of both the NCBs and PCBs (local and foreign) in the banking sector. Before liberation of Bangladesh in 1971, the total banking system was private owned, urban-based and profit oriented. But after the liberation, the Government of Bangladesh nationalized all the banks operating in Bangladesh in 1972, except a few foreign banks branches. It was due to the economic policy of Pakistan Government that we were having a privatized banking structure, till the independence of Bangladesh in 1971.
Therefore, under such a situation, Bangladesh Government had no other alternative but to take up the control and nationalize the enterprises including the banks. Following nationalization, the government also recognized the existing commercial banks into six (6) distinct new banks in the following manner in terms of the Bangladesh Banks (Nationalization) Order, 1972:
| Existed Bank | Reorganized Bank |
| The National Bank of Pakistan | Sonali Bank |
| The Habib Bank Ltd. | Agrani Bank |
| The United Bank Ltd. | Janata Bank |
| The Standard Bank Ltd. | Rupali Bank |
| The Estern Mercantile Bank Ltd. | Pubali Bank |
| The Estern Banking Corporation Ltd. | Uttara Bank |
Source: Khan, Mohammad Khalid, “Banking System in Bangladesh: 1972-1982”
The Bangladesh Times, March 20, 1982
Reorganization of Commercial Banks of Bangladesh In 1972
First Generation Banks (Established 1982-1988)
- National Bank Limited,
- The City Bank Limited,
- United Commercial bank Limited,
- AB Bank Limited,
- IFIC Bank Limited,
- Islami Bank Bangladesh Limited,
- Oriental (Al-Baraka) Bank Bangladesh Limited. At present it is ICB Islamic Bank Limited.
Second Generation Banks (Established 1992-1996)
- Eastern Bank Limited,
- National Credit & Commerce Bank Limited,
- Prime Bank Limited,
- Southeast Bank Limited,
- Dhaka Bank Limited,
- Al Arafa Islami Bank Limited,
- Social Investment Bank Limited,
- Dutch-Bangla Bank Limited.
Third Generation Banks (Established 1996-2000)
- Mercantile Bank Limited,
- Standard Bank Limited,
- One Bank Limited,
- EXIM Bank Limited,
- Premier Bank Limited,
- Mutual Trust Bank Limited,
- First Security Bank Limited,[now a days it’s incorporated FSIBL]
- Bangladesh Commerce Bank Limited,
- Bank Asia Limited,
- The Trust Bank Limited
Fourth Generation Banks (Established 2000-2011)
- Shahjalal Bank Limited,
- Jamuna Bank Limited,
- BRAC Bank Limited.
Fifth Generation Banks (Established 2012-Till Now)
· Union Bank Limited,
· Modhumoti Bank Limited,
· The Farmers Bank Limited,
· Meghna Bank Limited,
· Midland Bank Limited
· South Bangla Agriculture and Commerce Bank Limited.
2.3 Definition of Islami Banking System
An Islamic Banking is a financial institution that operates with the objective to implement and materialize the economic and financial principles of Islam in the banking arena.
According to The Organization of Islamic conference (OIC) defined an Islamic Bank as “a financial institution whose statutes, rules and procedures expressly state its commitment to the principles of Islamic Shariah and to the banning of the receipt and payment of interest on any of its operations.”
2.4 History of Islamic Banking
Modern banking system was introduced in Muslim countries at a time when they were politically and economically slave to the western world. Western Banks established their branches in the Muslim countries and territories to fulfill requirements of foreign business. The Muslim community generally avoided the foreign banks for religious reasons but with the passage of time, it became more and more difficult to engage in trade and other activities without making use of commercial banks. Even then, a large number of Muslims confined their involvement to transaction activities such as current account or hundred percent cash margin letter of credits. Borrowings from commercial banks or placement the access funds and saving accounts were
strictly avoided by practicing Islam in order to keep away from interest which is prohibited by Islam.
With the passage of time, however, due to increase in cross-border transactions and other socio-economic forces are demanding more involvement in national economic and financial activities, avoiding the interaction with the banks became impossible. Local banks were established in Muslim countries (including the names like Muslim Commercial Bank) on the same lines as the interest-based foreign banks and they began to expand within the country bringing the banking system to more and more people. Governments, businesses and individuals began to transact business with the banks, with or without liking it. This state of affairs drew the attention and concern of Muslim intellectuals which gave emergence to the contemporary Islamic banking. By the midst of the last century, many Muslim countries started their efforts to adopt the Islamic economic and banking systems. Many scholars, economist and experienced bankers came with different solutions to initiate the Islamic banking. Those experiences paved the route for modern Islamic banking.
Nowadays Islamic financial institutions (IFIs) are spread all over the world including European countries and the United States. In particular these have their significant presence in Pakistan, Saudi Arabia, Bahrain, United Arab Emirates, and other GCC countries, Malaysia, Sudan and Iran.
2.5 Chronology of Islamic Banking Development:
- 1940: Deliberations by Islamic Scholar on modalities of Islamic system of financing and banking.
- Mid-1940s: Experiment with Islamic Bank in Malaysia, It did not materialize.
- Mid-1950s: Experiment with Islamic Bank In Pakistan, It too proved unsuccessful
- 1962: Pilgrims bank established in Malaysia.
- 1963:Ghamr Bank established in Egypt
- 1970:Deliberations on Islamic Bank in Islamic Conference in Karachi, Makka and London
- 1975: Islamic Development Bank established in Jeddah
- 1975: The Dubai Islamic Bank established by a group of businessman from several countries.
- 1977:Faisal Islamic Bank established in Egypt and Sudan
- 1978: Pakistan converted into interest free banking system
- 1983: Fist Islamic Bank—Islamic Bank Bangladesh Ltd established in Bangladesh
2.6 Objectives of Islamic Banking System
We should first try to understand the objectives of Islamic banking, which are as follows:
- The objective of Islamic Banking is not only to earn profit, but to do well and bring welfare to the people, Islam upholds the concept that money, income and property belong to Allah and this wealth is to be used for the good of the society.
- It provides Shariah compliant and prudent banking opportunities; that is, banking transactions –in a Halal way: In other words, this is just an effort to avoid Riba and other prohibited elements from commercial and banking transactions, in order to ensure that we do “Nothing-Haram”;
2.7 Principles of Islamic Banking System:
Islamic banking has the same Principles Like conventional banking, that are operates in accordance with the rules of Shariah, known as Fiqh al-Muamalat (Islamic rules on transactions).
- The basic principle of Islamic banking is the sharing of profit and loss and the prohibition of riba (usury).
- Common terms used in Islamic banking include profit sharing (Mudharabah), safekeeping (Wadiah), joint venture (Musharakah), cost plus (Murabahah), and leasing (Ijarah).
- an Islamic mortgage transaction, instead of loan, banks buy the item itself from the seller, and re-sell it to the buyer at a profit, while allowing the buyer to pay the bank in installments.
- There are no additional penalties for late payment. But In order to protect itself against default, the bank asks for strict collateral.
- The goods or land is registered to the name of the buyer from the start of the transaction. This arrangement is called Murabaha.
- Another approach is EIjara wa EIqtina, which is similar to real estate leasing.
- Islamic banks handle loans for vehicles in a similar way (selling the vehicle at a higher-than-market price to the debtor and then retaining ownership of the vehicle until the loan is paid).
- If default occurs, both the bank and the borrower receive a proportion of the proceeds from the sale of the property based on each party’s current equity. This method allows for floating rates according to the current market rate such as the BLR (base lending rate).
- Mudaraba is venture capital funding of an entrepreneur who provides labor while financing is provided by the bank so that both profit and risk are shared. Such participatory arrangements between capital and labor reflect the Islamic view that the borrower must not bear all the risk/cost of a failure, resulting in a balanced distribution of income and not allowing lender to monopolize the economy.
2.8 Characteristics of Islamic Banking System:
- It follows balanced and dynamic economic system
- It is most efficient banking system
- It runs on as per Islamic Shariah
- It always avoids interest or Rhiba
- Islamic system is non-inflationary; this is a very important and fundamental aspect of Islamic banking.
- In case of Islamic banking system, depositors also bear the risk.
- Islamic banking cannot invest excess liquid amount in approved securities or other bank crisis due to existence of interest in transaction process.
- It faces some problems due to interest free banking system.
- Modes of financing are totally different compared to conventional banking.
- It uses Islamic term
- Inter Bank transaction is profit-loss sharing basis.
- It invests to stimulate income of poor
- To ensure social justice and welfare.
- Friendly and cooperative relationship.
- Duel target: implementing objectives of Shariah and earning profit.
- Business policy is socio-economic basis.
- Integration of ethical and moral values with its banking operation.
2.9 Benefits of Islamic Banking
- Islamic banking and the finance industry is growing at an annual rate of 20%.
- International giant banks such as HSBC (HSBC Amanah), Citi Bank (Citi Islamic) and Standard Chartered have already established their Islamic units and functioning in the Middle East region.
- Islamic banks are restricted to useful goods and services and refrain from financing alcoholic beverages and tobacco or morally unacceptable services such as casinos and pornography.
- Islamic banks do not consider only the credit worthiness and interest rate as standards.
- It reduces the social and economic cost of such harmful products and activities.
- Islamic banks eliminate the barrier between those who save and those who invest, and bring them closer to the real market.
2.10 Islamic Bank in Bangladesh
Bangladesh joints the caravan of the Islamic bank in 1983 when a shariah based bank —Islamic Bank Bangladesh Ltd was established as a joint venture bank. Since then 6 banks established. One commercial banking —Exim Bank Ltd previously chartered as conventional interest based bank has switched to Islamic bank. Some bank has also opened separate “Islamic windows” to seek patronage of the people of Bangladesh who by and large attach a stigma to conventional interest based banks. By now the Islamic banks have carved out a nice niche in the banking arena in terms of collecting deposits and providing finances to a large number of entrepreneurs and investors.
2.11 Some Islamic Banking in Bangladesh
- Islamic Bank Bangladesh Ltd.
- First Security Islami Bank Ltd.
- Al-Arafah Islamic Bank Ltd.
- Shahjalal Islamic Bank Ltd.
- Social Investment Bank Ltd.
- Exim bank Ltd.
2.12 Relevant Laws/Acts/Order for Bankers/Financial Institutions
The following Law, Acts and Order are guiding Banks and Financial Institutions-operating in Bangladesh:
· The Artha Rin Adalat Act-1990
· The Bangladesh Bank Order-1972
· The Banker’s Books Evidence Act-1891
· The Banking Companies Act-1991
· The Bankruptcy Act-1997
· The Bangladesh Bank (Nationalism) Order-1972
· The Bill of Exchange Act-1882
· The Companies Act-1994
· The Contract Act-1872
· The Co-operative Societies Act-1940
· The Insurance Act-1938
· The Pre-Shipment Inspection order-1999
· The Partnership Act-1932
· The Securities & Exchange commission Act-1993
· The Foreign Exchange Regulation Act-1947
· The Bangladesh Export Processing Zones Authority Act-1980
· The Export Policy- 1997-2002
· The Guidelines for Foreign Exchange Transaction-1996 (Bangladesh Bank)
· The Import Policy Order- 1997-2002
2.13 Major Differences:
| Islamic Banking and | Conventional Banking |
| It is an advance step to achievement of beauty of Islamic Economic | Part of capitalist based financial system |
| Try to ensure social justice and welfare | Not concern |
| Flow of financial resources are in favor of poor and disadvantaged section of society | Not concern |
| Investment funds for asset less, poor but physically fit | All plan for rich |
| It invests to stimulate income of poor | No such program. |
| Interest is avoided at all level of transaction | All transaction is interest basis |
| Islamic Banking and | Conventional Banking |
| Depositors bear risk, no need of deposit insurance | Depositor does not bear any risk |
| Friendly and cooperative relationship | Debtor-Creditor relationship |
| Socially needed investment are considered | Project below fixed rate are not considered |
| Eliminations of exploitation of interest. | It helps to increase capital of capitalists |
| It bears the loss of business partner | It does not bear any loss |
| Commitment to implement welfare | No commitment |
| Inter-banking transaction is PLS basis | Inter-banking transaction is interest basis |
| It works under Shariah surveillance | No surveillance |
| Low morale problem due to brotherhood relationship | High moral problem due to relation monetary transaction basis |
| Business policy is socio-economic basis | Business policy is to earn profit |
| Paid Zakat on income and inspire client | No Zakat system |
2.14Comparative Analysis of Islamic Banking and Conventional Banking System
Islamic Banking system always avoids interest due to restriction of Islam. On the other side; Conventional Banking system considers interest as a profit. So Islamic is more efficient than conventional banking.
Commitment: Islamic Banking system is committed to ensure social justice and welfare. On the other side, conventional banking system does not commit to ensure social justice and welfare.
Objective: To ensure social welfare and justice by financing under shariah. On the other side, To earn profit by financing, not social justice and wellbeing.
Relationship: Between depositors and bank relationship is friendly and cooperative, that’s why, and moral problem is low. On the other side, moral problem is high owing to depositor-creditors relationship.
Policy: maximizing wealth by ensuring socio-economic welfare. On the other side, Earning profit of shareholders by implementing policy.
Religious Perception: Perception about Islamic banking is positive because of avoiding interest. On the other side, Muslim country has negative perception due to business based on interest.
Profit: It is not specific or certain percentages, it totally depends on profit and loss. On contrary, interest is fixed, so, no bearing risk.
Chapter Three
Organizational Overview
This Chapter includes:
First Security Islami Bank Ltd.
Board of Directors
Management
Branch Network
Different Sorts of Product & Services
Banking Activities
Functions of First Security Islami Bank Ltd
General Banking Activities
Cash Section
Clearing Section
Accounts Section
Remittance: Section
And Some Differences In General Banking Activities
3.0 Organizational Overview
| Name of the Company | First Security Islami Bank Ltd. |
| Chairman | Mohammad Saiful Alam |
| Vice Chairman | Alhaj Mohammad Abdul Maleque |
| Managing Director | A.A.M. Zakaria |
| Company Secretary | Abdul Hannan Khan |
| Legal Status | Public Limited Company |
| Date of Incorporation | August 29, 1999 |
| Date of Commencement of Business | August 29, 1999 |
| Date of Permission from Bangladesh Bank | September 22, 1999 |
| Date of Opening of First Branch | October 25, 1999 |
| Registered Office | House- SW(I) 1/A, Road-8, Gulshan-1,Dhaka-1212, Bangladesh |
| Line of Business | Banking |
| Authorized Capital | Tk.4,600 Million |
| Paid up Capital | Tk.2,300 Million |
| Date of consent of IPO | 04 June 2008 |
| Phone | 88-02-9888446 (Hunting), 9565594/9554208 (ITDivision) |
| Fax | 880-02-9891915 |
| bcs@fsiblbd.com , info@fsiblbd.com | |
| Website | www.fsiblbd.com |
| SWIFT | FSEBBDDH |
| Auditors | Syful Shamsul Alam & Co.Chartered Accountants. Phone:9555915,9560332 ,Email: syful@intechworld.net |
| Legal Advisor | The LawCounsel ,Barrister&Advocates,Phone:9349647-8 Fax:9349866,9567029 ,Email: l.counsel@bdonline.com |
| Tax Consultant | K.M. Hasan FCA ,K.M. Hasan & Co. Chartered Accountants
Phone: 9351457,9351564 Fax: 9345792-112 |
3.1Corporate Information
3.1.1 Background
First Security Islami Bank Limited (FSIBL) was incorporated in Bangladesh on 29 August 1999 as a banking company under Companies Act 1994 to carry on banking business. It obtained permission from Bangladesh Bank on 22 September 1999 to commence its business. The Bank carries banking activities through its 86 branches in the country. The commercial banking activities of the bank encompass a wide range of services including accepting deposits, making loans, discounting bills, conducting money transfer and foreign exchange transactions, and performing other related services such as safe keeping, collections and issuing guarantees, acceptances and letter of credit.
It was commenced its operation as a conventional banks but from 1st January’ 2009 it was converted from interest based bank to an Interest free bank. The company philosophy “Symbol of Security”; the bank has been operating with talented and brilliant personnel, equipment with modern technology so as to make it most efficient to meet the challenges of 21st century. During this short span of time the Bank successful in positioning itself as progressive and dynamic financial institution in the country. The sponsor and director of the bank are a successful and prominent business group in our business community.
3.1.2 Vision
To be the unique modern Islami Bank in Bangladesh and to make significant contribution to the national economy and enhance customer’s trust and wealth, quality investment, employee’s value and rapid growth in shareholder’s equity.
3.1.3 Mission
- To be the most caring and customer friendly and service oriented bank.
- To create a technology based most efficient banking environment for it’s Customers.
- To ensure ethics and transparency in all levels.
- To ensure sustainable growth and establish full value of the honorable
- Shareholders
- Above all, to add effective contribution to the national economy.
3.1.4 Strategies
- To strive our customers best satisfaction & win their confidence.
- To manage & operate the bank in the most effective manner.
- To identify customers’ needs & monitor their perception towards meeting
- To review & updated policies, procedures & practices to enhance the ability to extend better customer services.
- To train & develop all employees & provide them adequate resources so that the customers’ needs reasonably addressed.
- To promote organizational efficiency by communicating company plans policies & procedures openly to the employees in a timely fashion.
- To ensure a congenial working environment.
3.1.5 Objective of the Bank
- To explore a new horizon of innovative modern banking creating an automated and computerized environment.
- To provide one stop services and prepares itself to face the new horizon of innovative modern banking creating an automated and computerized environment.
- To provide one stop services and prepares itself to face the new challenge of globalization and competition.
- To be a provider of high quality products and services to its potential market.
- To deal with the needs of its corporate clients.
- To provide a comprehensive range of financial services to national multinational companies.
3.1.6 Values
- Value pillars of FSIBL that are central to our core ideologies and that must always be reflected in everything we do:
- We are aggressive in business self-driven
- We empower people, create leaders and drive change
- We treat people with respect and dignity
- We are personally accountable for delivering on commitments to high built –trust relationship with customers and to ensure customers delight
- We focus on managing risks and costs in order to be doubly profitable
- We act in ways that reflect the highest standards of integrity.
3.1.7 Board of Directors
| SL.NO. | Name | Designation |
| 1 | Alhaj Md. Saiful Islam | Chairman |
| 2 | Alhaj Md. Abdul Maleque | Vice Chairman |
| 3 | Ms. Rahima Khatun | Director |
| 4 | Mrs.Atiqun Nesa | Director |
| 5 | Md. Sharif Hossain | Director |
| 6 | Mr. Md. Wahidul AlamSeth | Director |
| 7 | Mr. Shahidul Islam | Director |
| 8 | Mr. Mohammed Ohedul Alam | Director |
| 9 | Md. Kutub Uddowllah | Depositors Director |
| 10 | Md. Abdul Hamid Miah | Independent Director |
| 11 | Ahsanul Alam | Director |
| 12 | A.A.M Zakaria | Managing Director |
3.2 Management
3.2.1 Senior Management
FSIBL is functioning with a highly professional management team headed by the Managing Director Mr. A. A. M. Zakaria. Among other senior executives currently Two DMD, One Principal (Training Center), Two SEVP, six EVP, Seven SVP, Eleven VP, Nine FVP, fifteen SAVP, sixteen AVP and eighteen FAVP are discharging their services in progression of the banks business
| Managing Director |
| Deputy Managing Director |
| Principal of Training Centre |
| Senior Executive Vice President |
| Executive Vice President |
| Senior Vice President |
| Vice President |
| First Vice President |
| Senior Assistant Vice President |
| Assistant Vice President |
| First Assistant Vice President |
| Principal Officer |
| Senior Officer |
| Officer |
| Junior Officer-1 |
| Junior Officer-2 |
3.2.2 Team Management
3.2.3 Human Resources Development
FSIBL has a separate Human Resources Division (HRD) to manage the employee policies and practices. As on FYE 2011, Total 1400 executives & officers of the bank have been working for smooth banking operations. Bank follows a standardized human resources policy. HRD of the Bank follow a transparent and free & fair system to ensure the standard recruitment, training & development of human resources of the bank. The bank has defined HR policies including recruitment, training & development, promotion, leave, transfer and disciplinary action policy. Usually internal recruitment procedures are considered to fill up the mid and top management positions, while entry-level positions are filled with regularly through competitive recruitment exams. They follow transparent, well-defined and strict rules for appointment of officers and staff in the Bank’s service.
3.2.4 Corporate Governance
Corporate governance is about how corporation is running its operations to achieve its corporate objectives. Bangladesh Bank (BB) gives emphasis on implementing corporate governance among the financial institutions and to do that, BB emphasizes implementation of the guidelines issued by them for improving corporate governance in banking. Good Corporate Governance practices enhance an entity’s corporate image and market credibility, which attract capital and increase its borrowing power. These can be reflected in the quality of financial reporting and disclosures; strength of internal control system and internal audit function induction of professionally competent, independent non-executive Directors on corporate Board; formation of Audit Committee; delegation of authority to executives and staff; protection of corporate governance for strengthening organizational strength. With a view to ensure effective participation and deep interest in the affairs of the company and as per Articles of Association of the Company and as per Bangladesh Bank Circular No. 16 dated March 24, 2003 the bank has set up the following 2 committees:
- Executive committee
- Audit Committee
3.2.5 Executive Committee
FSIBL has constituted 09 members executive committee of the board as per Bangladesh Bank guidelines to ensure corporate governance in the business of which managing director of the Bank is Ex-officio Member. The executive committee of the board is responsible for developing policy and strategy for smooth operations of business and business development of the bank to ensure maximization of shareholders wealth’s protecting other stakeholder’s interest in the company Mr. Alhaj Md. Saiful Alam, Chairman of the board of Directors is the Chairman of the present Executive Committee of the bank. He is very dynamic person and leading the executive committee of the bank in a very manner.
2.5 Audit Committee
FSIBL has formulated an audit committee can play an effective role in formulating an efficient and secured banking system. The Audit Committee
Has been formed comprising three members of the Board of Directors. As per corporate governance guidelines the Chairman of the Audit Committee should have sound knowledge and expertise in finance & accounting or auditing.
3.3 Branch Network
At present, First Security Islami Bank Ltd. has 84 Branches in overall Bangladesh. All the 84 Branches are computerized. Among them 62 Branches are under distributed server environment, other are ruining with our Core Banking Software (CBS). All the Branches will be migrated from distributed server to CBS, First Security Islami Bank Ltd (FSIBL) has already started their on-line, SMS and ATM banking facilities for their clients. , First Security Islami Bank Ltd (FSIBL) will add mobile banking and e-banking facilities within short period of time.
Branches of First Security Islami Bank Ltd
| Division | Number of Branches |
| Dhaka | 35 Branches |
| Chittagong | 28 Branches |
| Khulna | 7 Branches |
| Sylhet | 7 Branches |
| Rajshahi | 3 Branches |
| Khulna | 2 Branches |
| Rangpur | 2 Branches |
3.4 Information Technology Division
FSIBL has an Information Technology Division at the head office to provide IT support to all its branches. The Bank has well documented guideline on information and communication technology (ICT). From the very beginning FSIBL was using computerized banking software “PcBank/Bank Ultimus’’ for all the branches to provide online banking facilities to its clients. FSIBL is now providing online banking facilities with distributed system. The Bank also has SMS banking service. , First Security Islami Bank Ltd (FSBL) has a plan to introduce centralized system for online banking.
3.5 Products
3.5.1 Deposits Scheme
- Al-Wadiah Current Deposit
- Mudarabah Savings Deposit
- Mudarabah Short Term Deposit
Mudarabah Term Deposit-
- One Month
- Three Months
- Six Months
- Twelve Months
- Twenty Four Months
- Thirty Six Months
Foreign Currency Deposit
- Mudarabah Savings Scheme
- Monthly Savings Scheme
- Monthly Profit Scheme
- More than double the deposit in 6 years
- Consumer Finance Scheme
First Security Islami Bank Ltd. In 2011 Introduced New Deposit Scheme
- Alo Mudarabah Education Deposit Scheme
- Bondhon Mudarabah Wedding Deposit Scheme
- Niramoy Mudarabah Treatment Deposit Scheme
- Obosor Mudarabah Pension Deposit Scheme
- Onkur Mudarabah Student Savings Deposit
- Prapti Mudarabah Salary Savings Deposit
- Somman Al-Wadiah Premium Account
- Provin Mudarabah Senior Citizen Savings Deposit
- Morjada Al- Wadiah Current plus Account
- Zakat Fund
- Mudarabah Hajj Savings Deposit
- Mudarabah Monthly Deposit Scheme
- Mudarabah Double Deposit Scheme
- Mudarabah Monthly Profit Scheme
We are also emphasizing on non-fund business and fee based income. Bid bond/ bid security can be issued at our customer’s request.
Our Bank is posed to extend L/C facilities to its importers / exporters through establishment of correspondent relations and Nostro Accounts with leading banks all over the world.
3.5.2 Investment Scheme
Investment / Deployment of Funds:
- Bai-Murabaha (Deferred Lump Sum/ Installment Sale)
- Bai-Muajjal (Deferred Installment / Lump Sum Sale)
- Ijara (Leasing)
- Musharaka (Joint-Venture Profit-Sharing)
- Mudaraba (Trustee Profit-Sharing)
- Bai-Salam (Advance Sale and Purchase)
- Hire-Purchase
- Direct Investments
- Post Import Investment
- Purchase and Negotiation of Export Bills
- Inland Bills Purchased
- Murabaha Import Bills
- Bai-Muajjal Import Bills
- Pre Shipment Investment
- Quard-ul-Hasan (Benevolent Investment)
- Letter of Guarantee
- Tender Guarantee
- Performance
- Guarantee
- Guarantee for Sub-Contracts
- Shipping guarantee
- Advance Payment guarantee
- Guarantee in lieu of Security Deposits
- Guarantee for exemption of Customs Duties
Others:
Letter of Credit (L/C) / Back to Back Letter of Credit (L/C)
Specialized Schemes
- Consumer Investment Scheme
- SME Investment Scheme
- Lease Investment Scheme
- Hire Purchase
- Earnest Money Investment Scheme,
Mortgage Investment
- Employees House Building Scheme
- ATM
- VISA Investment Card
- EEF etc.
3.6 Services
3.6.1 Online Any Branch Banking
First Security Islami Bank Ltd (FSIBL) have set up Wide Area Network through Radio, Fiber-Optics & other available communication media systems to provide any branch banking to our customers.
Customer of one branch is now able to deposit and withdraw money at any of our branches. All Branches are included in our Wide Area Network.
No TT/DD or cash carrying will be necessary.
First Security Islami Bank Ltd. has officially launched SMS banking service from December 17, 2007.
3.6.3 Mobile Banking
First Security Islami Bank Ltd. (FSIBL) has introduced mobile banking and payment services titled, “First pay, Sure Cash” for its customers on27 March, 12.Through this service, people staying at anywhere of the country would get various banking services, such as, opening up new account, cash deposit, cash withdrawal, money transfer, bill payment, remittance disbursement, ticketing of train, bus and cinema, payroll and utility services.
The bank teamed up with the state-owned telecom service provider Teletalk to facilitate the mobile banking services. Besides, the bank will also receive technical assistance from ‘ProgatiSystems’.
3.6.4 ATM Banking
First Security Islami Bank Ltd. has implemented successfully Automated Teller Machine (ATM) /DBDIT card transaction from June 25, 2008. Through Automated Teller Machine (ATM) /Debit card, customer can avail the facilities like withdrawal money, balance inquiry and purchase goods from Point of sale (POS) using Dutch Bangla Bank Ltd. ATM Booth and POS.
For safekeeping of customer’s valuables like important documents and goods like jewelries and gold ornaments, , First Security Islami Bank Ltd (FSIBL) Locker Service is available in most of the Branches in urban areas.
The utility bill’s received following Branches:
| Branch Name | Bill’s Type |
| Mohakhali, Dhaka | DESCO |
| Topkhana, Dhaka | Under process (Electric bill) |
| Gulshan , Dhaka | Titas Gas |
| Shafipur ,Gazipur | Dhaka Pally Biddut Shomitty |
| Keranihat,Chittagong | Pally Biddut Shomitty |
| Biswanath , Sylhet | Pally Biddut Shomitty |
Banking Activities:
In Bangladesh, all conventional private commercial banks and Islamic banks (First Security Islami Bank Ltd.) exercise daily general banking activities in banking hour. Basically all general banking activities are same but a some differences are found in concept of banking, name of activities and terms& conditions .Now will choose Mutual Trust Bank Ltd. as a Private Commercial Bank and First Security Islami Bank Ltd. where am doing internship program as for comparison in general banking activities done by both banks.
| Concept | |
| Private Commercial Bank | Interest based. |
| First Security Islami Bank | Interest free bank. |
| Name | |
| Private Commercial Bank | Current Account, Savings Account &Fixed Deposit Rate |
| First Security Islami Bank | Al-Wadiah Current Deposit, Mudarabah Savings Deposit and Mudarabah Term Deposit |
| Terms & Conditions | |
| Private Commercial Bank | Depositor doesn’t bear any loss of bank if bank fails to earn profit. |
| First Security Islami Bank | Depositor bears any loss of bank if bank fails to earn profit. |
Functions Of First Security Islami Bank Ltd
The functions of First Security Islami Bank Ltd (FSIBL) are divided into three divisions these are:
1) General Banking.
3) Investment
2) Foreign Exchange.
First Security Islami Bank Ltd (FSIBL) provides their services under t three divisions. Each of this section serves various services for satisfying their clients.
General Banking Division:
General Banking Division is considered as the direct customer service center. It is the starting point of all the Banking operation. It opens new accounts, remits funds, honor cheque, takes deposits, issues pay order etc. General Banking is also known as retail Banking. Following are the major section in general banking:
· Account opening section
· Clearing section
· Accounts section
· Cash section
Account Opening Section
Account opening is the gateway for clients to enter into business with bank. It is the foundation of banker customer relationship. This is one of the most important sections of a branch, because by opening accounts bank mobilizes funds for investment. Various rules and regulations are maintained and various documents are taken while opening an account.
Different Types Of Accounts
- Current Account
A current account is a running and active account, which may be operated upon any number of times during a working day. It is purely demand dep