General Banking And Investment and Foreign Exchange Operation of Islami Bank Bangladesh Limited

D.   Findings
of the study: The
collected data were scrutinized very well and were pointed out and shown as
findings. Few recommendations are also made for improvement of the current
situation.

E. Final report preparation: On the basis of the suggestions of
our honorable faculty advisor some corrections were made to present the paper
in this form

\ .4 Scope of
the Study

This present study covers general banking, investment and
foreign exchange operations of Islami Bank Bangladesh Limited (IBBL). This
study is confined to only this bank other than conventional bank.

1.5 Limitation of the study

• Islami banking
system is different than the traditional banking system

• It is very
difficult to analyze this issue without proper knowledge about Islamic

banking and economy.

• As it is not
conventional so it bears some complexity to understand.

• Some words are in
Arabic terms that make it difficult.

• It is time
consuming to differentiate & understand interest & profit.

Islam! Banking and Islami Bank Bangladesh Limited

2.1 Definition and concept of Islamic Bank

2.2 History and growth of Islamic bank around the world

23 Historical Background of IBBL

2.4 Basic objectives of Islamic Banks

2.5 Mission
and vision of IBBL

2.6 Difference between interest and profit

2.7 Brief Profile
& Performance of IBBL

2.8 Functional
departments of IBBL

14

2.1 what do we
understand by Islamic bank?

This is for those who
want to lead their financial life based on Islamic shariah. Islamic Bank
developed under Islamic framework, performs most standard banking service and
investment activities on the basis of profit-loss sharing system conforming the
principles of Islamic Shariah. It operates with the objectives to implement and
materialize the economic and financial principles of Islam in the banking arena

According to Organization of Islamic Conference (QIC), “Islamic bank is 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.”

According to Dr. Ziauddin Ahmed “Islamic
Bank is essentially a normative concept and could be defined as conduct of
banking in consonance with the ethos of the value system of Islam.”

Although Islamic Bank
is a financial institution, its operations and activities shows that Islamic
Bank as a Business firm with Halal transaction within the boundary of Islami
Shariah .The main objective is not only to earn profit but also to make welfare
oriented interest free and exploitation free economy of a country. This is the
motto of islami
bank

2.2 History and progress of Islamic Bank all over the world:

In this millennium,
Islamic Bank with its special features acquainted with a new member in the
money market especially in financial and banking world. Islami banking
gradually evolved during the last thirty years in some parts of the Muslim
world. During 1960’s it was observed that Muslims Malaysia used to save money
primarily for performing Hazz. Such savings mostly kept idle in pillows, under
mattresses and floor for avoiding interest, which was unproductive and damaging
for the growth and development of economy. For utilizing such saving the
Government of Malaysia in 1962 established an interest free financial
institution known as “Pilgrims Saving Corporation”. In 1963 Dr.
Ahmed-Al-Nazzar established a savings bank at Mit Ghamar in Egypt by his
personal endeavor with a view to
bring some development in socio-economic field in the process of Islam. This
Mitt Ghamar is considered as Modern Islami Banking and A.A. Nazzar is
considered as the Father of Islamic Banking System.

A survey report by the
National Institute for Management Development, Cairo, Egypt,
shows that the Mitt Ghamr Bank was tremendously succeeded in achieving its
objectives and the tremendous success of the Bank was the cause of its closure
by the vested interest in 1967.

Islamic Development
Bank was established in 1975 and during the following three years Seven Islami
Banks & financial institutions was established. Name of this banks are
given follows:

i) Dubai Islami Bank

ii) Kuwait Finance
House

iii) Faisal Islami
Bank, Sudan

iv) Jordan Islami Bank
for Finance and Investment

v) Islamic Bank System
International Holding S. A. Luxembourg

vi) Faisal Islami Bank
of Egypt

vii) Islamic
Investment Co. Ltd.

In 1978 Islamic
foreign minister conference is Dakar,
capital of Senegal,
the ministers decided that the member of OIC would take systematic efforts to
establish Islamic Banking gradually and within the next three months their plan
came into existence. In 1978 the Faisal Islamic Bank of Sudan was
established. In Bangladesh Islamic Bank named Islami Bank Bangladesh Limited
(IBBL) was first found on March
13, 1983 and opened its operation formally on March 30,1983. Malaysia Islamic bank
was established in July 1983 that was the second Islami bank in South and South
East-Asia.

Now more than 300
Islamic Banks and Islamic Institutions have been operating their business all
over the world. Besides Muslim countries, Islamic Banks are operating their
banking business in non-Muslim countries as well.

23 Historical Background of IBBL:

In August 1974, Bangladesh
signed the Charter of Islamic Development Bank and committed itself to
reorganize its economic and financial system as per Islamic Shariah.

In January 1981, the
President of People’s Republic
of Bangladesh While
addressing the third Islamic conference held at Mecca and Taif suggested “The Islamic
countries should develop a separate banking system of their own in order to
facilitate their trade and commerce”

This statement of the
president indicated favorable attitude of the government of the People’s
Republic of Bangladesh
towards establishing Islamic banks and financial institution in the country.

In early November
1980, Bangladesh bank, the country’s Central Bank, sent a representative to
study the working of several Islamic Banks abroad.

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

They came forward to
provide training of Islamic banking to top bankers and economists to fill up
the vacuum of leadership for the future islami bank in Bangladesh.
They also had seminars, symposiums and workshops on islami economic and banking
throughout the country to mobilize public opinion in favor of islami banking.

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

At last, the long
drawn struggle to establish an islami bank in Bangladesh become a reality and
islami bank Bangladesh limited was established in march 1983 in which

Bangladeshi national,
4 Bangladeshi institutions and 11 banks, financial institutions and government
bodies of the middle East and Europe including
IDB and two eminent personalities of the kingdom of Saudi Arabia
joined hands to made the dream a reality.

Later, other Islami
Banks, Islami Insurance Companies and Financial Institution were established in
the country. Some traditional banks opened Islamic banking branches in some
major cities.

2.4  Core Objectives of IBBL:

The basic objectives of Island bank Bangladesh Limited can be pointed out
as follows:

18

2.5 Mission and Vision of IBBL:

Mission of IBBL:

To establish Islami
Banking through the introduction of a welfare oriented banking system and also
ensure equality and justice in the field of all economic activities, achieve
balanced growth and equitable development through diversified investment
operations particularly in the priority sectors and less development areas of
the country. To encourage socio-economic enlistment and financial services to
the low-income community particularly in the rural areas.

Vision of IBBL:

Vision of IBBL is to
always strive to achieve superior financial performance, be considered a leading
Islami Bank by reputation and performance.

* Goal of IBBL is to
establish and maintain the modern banking techniques, to ensure the soundness
and development if the financial system based on islami principles and to
become the strong and efficient organization with highly motivated
professionals, working for the benefit of people, based upon accountability,
transparency and integrity in order to ensure the stability of financial
system.

*• IBBL will try to
encourage saving in the form of direct investment.

>  IBBL will also try to encourage investment
particularly in projects, which are more likely to higher employment.

2.6 Difference
between Riba (interest) and Profit

There is debate on the
similarity of riba and profit. In effect they are fundamentally different from
each other. These difference are given below –

2.7 Functional
Department of IBBL

The Islami Bank
Bangladesh Limited (IBBL), provides several services to its customers by
several departments. These departments are dedicated to its millions of
customers. These are given follows: 1. General banking

• Account Opening Section

• M.S.B, M.S.S, Haji Section

• P.O, T.D.R, D.D, T.T Section

• Cash Section

= Clearing House Section

• Transaction Entry Section

2.8 Brief Profile
And Performance Of IBBL

ISLAMI BANK BANGLADESH LIMITED

A Brief Profile (at a glance)

‘ Date of Incorporation

‘ Inauguration of First Branch

‘ Formal Inauguration

‘ Paid up capital

‘ Share of Capital

a) Local Shareholders

b) Foreign Shareholders Equity

Number of Zones Number
of Branches Total Deposits Total Investments

a. Industrial
(Project) Investment

• Total Project
Investment

• Garments Industries

• Textile Industries

• Agro-based Industries

Total Number of
Projects • Employment Generation

b. Rural Development
Investment

: 13th March 1983 : 30th March 1983 : 12th August 1983 : Tk. 500.00 Core :Tk.
380.16 Core

42.63% 57.37%

Tk. 1213.5 l.Corc 08
186

Tk. 16,664 Core
(31.12.2007) : Tk. 17,406 Core (31.12.2007)

:Tk. 4,944 Core
(31.12.2007) (45% of Total Investments)

:Tk. 399 Core (8% of
Project Investment)

:Tk. 1,991 Core

(40% of Project
Investments)

:Tk. 208 Core

(4% of Project
Investments)

:921

: 30 lac (Both directly
& indirectly approx)

(For Poverty
Alleviation)

• No. of Villages Covered

: 5,622

: Around 3 lac

: Tk. 682 Core

: Plantation, Sanitation, Pure Drinking water.

Total Foreign Exchange
Business

• Import Operating
Profit Manpower

Number of Shareholders
Face Value per Shore Market Value per Share Earning per Share (EPS) Dividend
Capital Adequacy

: Tk. 28792 Core
(2007)

:Tk. 8414 Core (2007)

:Tk. 6669 Core (2007)

: Tk. 13708 Core
(2007)

: Tk. 555 Core(2007)

:8438

:23711

: Tk. 1000.00

: Tk. 5706

: Tk. 487.57(2007)

: 25% Bonus
Share(2006)

: 9.44%(2005)

(amount in million Taka) .

23

t

0

•M

r

24

(Note : One Million = Ten L*c)

Deposit as on
31.12.2007 : 166640.00

Target fixed for the
year-2007 : 166000.00

Deposit On 2006 :
132830.00

Growth : 25.47%

Percentage of
Achievement : 100.39 %

Deposit Trend (2003
-.2007): (Figure In Millions)

180000

160000

140000

120000

100000

80000

60000

40000

20000

0

2003 2004 2005 2006 2007

ure: trend of IBBL in
deposit collection

Investment as on 31.12.2006

Target fixed for the
year-2007

Achievement In 2007

Growth

Percentage of
Achievement

Investment Trend
(2003-2006):

(Fig. in million)

: 123920.00 :
155000.00 : 174060.00 : 40.42% : 112.30
%

27

180000

160000

140000

120000

100000

80000

60000

40000

20000

0

2003

2004

2005

2006

2007

gure: trend of IBBL in
investment sector

Import:

Fi

Import as on2006

Target fixed for the
year-2007

Achievement on.2007

Growth

Percentage of Achievement

96870.00 140500.00
137080.00 41.51% 97.57 %

Year wise performance of Import (Fig. in millions)

28

2003

2004

2006

2006

Figure: Trend of IBBL
in import sector

Export;

Export as on
31.12.2006 : 51130.00

Target fixed for the
year-2007 : 74000.00

Achievement on 2007 :
66690.00

Growth : 30.43

Percentage of
Achievement : 90.12 %

Year wise performance of Export (2003-2007):

(Fig. in millions)

4000

D3500

[33000

D2600

BM600

D1000

D900

E3600

D300

29

2003

2004

2005

2006

Figure: Trend of IBBL
in export sector

I

a 1200

B1000

a 800

0600 D400 B200 D100

a so

D30

mo

Foreign Remittance:

31.12.2006

Target fixed for the
year-2007 : 80500.00

Achievements 1.03.2007
: 84140.00

Growth : 56.34

Percentage of
Achievement : 104.52 %

Year wise performance of foreign remittance (2003-2007):

(Fig. in millions)

30

• 200 D180

D140

• 120 D100 D80

• 30 010

2003

2004

2005

2006

Figure: Trend of IBBL
performance in foreign remittance sector

Operating profit

Operating profit on
31.12.2006 : 3530.00

Target fixed for the
year-2007 : 5200.00

Achievement as on
31.03.2007 : 5550.00

Percentage of
Achievement : 107%

Year wise performance
of Profit (2003-2007V.

(Fig. In millions)

31

GENERAL BANKING OF IBBL

3.1 Introduction

3.2 Activities of
general banking department

3.3 Types and
characteristics of deposit account

3.4 Local remittance

3.5 problems regarding
general banking

3.1 Introduction:

General banking is the
heart of any bank. In this division bank does lots of work. These are includes Al Wadia: – It
means to keep something is safe o safety. Current account is conducted under Al
Wadia system. Mudaraba
mode: – It is a business contract between two or more parties. In here one
party give 100% capital but not take any part in business activities and
another party give his labor in business activities. The principle of
profit/loss distributing in mudaraba is called loss bearing and profit
shearing. In this mode client is called Saheb Al Mall and bank called Mudarib.
Under this agreement profit distribution under agreed ratio and loss (if any)
will be borne by Saheb Al Mall. The bank distributes minimum 65% of its
investment -income earned through deployment of Mudaraba Deposits among the
mudaraba depositors. Under Mudaraba mode there are many accounts as under:

3.2 Activities of general banking section

Cash section: a) Cash
receipt

b) Cash payment

c) Issuance of cheque
book

d) Passing, cancellation
and payment of cheque. Remittance
section: issuance, payment and collection of DD, TT, P.O., OBC and IBC.

Clearing and Collection department: 
Clearing and Collection of
instruments of different banks through central bank or its representative by clearing
house.

Account section: Book keeping,
maintenance of vouchers, preparation of general ledger and clean cash book.
Maintenance of sundry, suspense etc A/Cs for internal purpose.

This bank provides
locker service, vault & maintenance of strong room.

3.3 Principles of Distribution of Profit to Mudaraba Depositors:

The principles of
calculation and distribution of profit to Mudaraba Depositors generally
followed by Islami Bank Bangladesh Limited are as under:

‘ 2.   Mudaraba Depositors do not share any income derived
from miscellaneous

— banking services
where the use of fund is not involved, such as communication,

_ exchange, service
charge and other fees realized by the Bank in connection with

— sale and purchase of
Demand Drafts, Telegraphic Transfers and Mail Transfers

Profit and loss
resulting from the use of funds are separately maintained in the

—« accounts from other
income and expenditure relating to other activities and

— services offered by
the bank.

a) Minimum 65% is distributed to Mudaraba
Depositors applying the rates of weightage shone below. Mudaraba Depositors
share of 65% of gross investment income might further be raised by the Bank’s
management at its discretion to rationalize the rates of profit to Mudaraba Depositors
but it would not be reduced during any accounting year without giving prior
declaration.

b) The rest of gross investment income is
retained by the bank as management fee for managing the investment & for
making reserve for bad & doubtful
investment.

3.4 types and Characteristics of Deposit Accounts:

3.4.1. Al- Wadeeah Current Account (AWCA)

AWCA accounts are
unproductive in nature as far as banks loanable investment fund is concerned
sufficient fund has to be kept in liquid form, as current deposits are demand
liabilities. Thus huge portion of his fund becomes no performing. For this
reason banks do not pay any of AWCA account holder. Businessmen and companies
are the main customer of this product.

3.4.2. Mudaraba Savings Account (MSA)

As per Bangladesh Bank
instruction 90% of SB deposits are treated as time liability and 10% of it as
demand liability. In IBBL there is a restriction about drawing money from SB
account but any time accounts holder may draw money of any amount with prior
notice. Generally householders and individuals are the clients of this account.

 3.4.3. Mudaraba Term Deposit
Account

^ Fixed deposit are
two kind – midterm deposit (MTD) and term deposit (TD) instrument

*, whose maturity period is
within one year are known as MTD and those one year are

* considered as term
deposit TD. Calculation of profit TDR and provisioning regarding this

is quite complicated
issue. Profit is calculation at each maturity date and provision is t

made on that. Also at
the month and provision of profit is mode.

3.4.4. Special Savings Schemes

i) Mudaraba Hajj Savings Scheme (MHSS)

IBBL has introduced a
scheme in the name and style of ‘Mudaraba Hajj Savings Scheme’ to facilited the
intending Muslims to perform Hajj properly at appropriate age. This is purely a
savings scheme for performing hajj. Any Muslim intending to perform Hajj by
build up deposit required for meeting Hajj expenses will select one of the 25
alternative choices based on duration of period from 1 year to 25 years for
building up savings by monthly installments under this scheme.

ii) Mudaraba Savings Bond Scheme (KSBS)

Person (s) age 18
years and above shall be eligible to purchase Mudaraba Savings Bond (s) in
single name or in joint names. Educational institutions, Clubs, Associations,
and other non-trading and non-profit socio-economic institutions shall also be
eligible to

purchase bond (s) in
the name of the institutions. Guardians shall be allowed to purchase bond (s)
jointly with a minor mentioning the age of minor. Mudaraba Savings Bond shall
be available in Tk. 1,000.00, Tk.5,000.00, Tk. 10,000.00, Tk.25, 000.00, Tk.50,
000.00, Tk.l, 00,000.00, and Tk..5,00,000.00 denominations. Term: 5 years and 8
years.

iii) Mudaraba Special Savings (pension) Scheme:

Considering increasing
demand from the people of all walks of the country for special and attractive
savings schemes on the basis of the Islamic Shari’ah so as to enable and
encourage them to save as per their capacity in Islamic way for their old age
when they will normally retair from their active economic life, Islami Bank
Bangladesh Limited has introduced ‘Mudaraba Special Savings (pension) Scheme’
in which a person gets the opportunity to build up savings by contribution
small monthly installments for getting an attractive amount at the end of a
specified term or a monthly amount for a specific period after the expire of
the term.

iv) Mudaraba Monthly Profit Deposit Scheme:

Any individual may
open account under this Scheme by depositing a minimum amount of Taka 1,
00,000.00 and multiples thereof at a time for 5 years. Monthly provisional
profit shall be given to the account just after completion of 30 days from the
date of opening of the account. The profit amount will be adjusted on
completion of each accounting year after decleration of final rate of profit.

v) Mudaraba Muhor Savings Scheme:

IBBL has introduced
‘Mudaraba Mohor Savings Scheme’ which has been designed for all classes of
people particularly the professionals and service holders aiming to creat an
opportunity for them to save in monthly installments according to their
capability for building up sufficient fund in order to meet the obligation of
Muhor to their wives and to protect the rights of women ensured by the
religious faith. The scheme is of 2 different terms, 5 years and 10 years. Any
married bonafide citizen of the country with sound mind may open account in his
wife’s name.

37

vi) Mudaraba Waqf Cash Deposit Account:

‘Mudaraba Waqf Cash
Deposit Account’ is a special scheme through which savings made from earnings
for the purpose of Waqf by the well-off and the rich people of the society can
be mobilized and the income to be generated therefrom may be spent for
different benevolent purpose. Through the scheme the bank will be able to
contribute to popularize the role of Waqf in the country including casf Waqf
which will be instrumental in transferring savings of the rich to the members
of the public, in financing various religious, educational and social service
in Bangladesh.
Under this scheme one can create cash Waqf at a time or may start with a
minimum deposit of Tk. 10,0007- only and the subsequent deposit shall be made
by installment (s) in thousand Taka or in multiple of thousand Taka. Higher
profit is given against this account. Profit from this account is utilized for
social and human welfare as per instruction of the account holder.

vii) Mudaraba Foreign Currency Deposit Scheme:

Mudaraba Foreign
Currency Deposit Scheme has been introduced under Mudaraba principle and
endeavoring to invest the foreign currency funds in profitable way through its
foreign correspondent banks under shari’ah principle so as to enable the bank
to pay profit to its FC/PFC depositors, who will intend to open/ maintain
Mudaraba Foreign Currency Deposit Account in minimum 1,0007= US Dollar.

3.5 Local Remittance:

Sending money from one
place to another place for the customer is another important service of banks.
And this service is an important part of country’s payment system For this
service, people, especially businessmen can transfer funds from one place to
another

38

place very quickly.
There are five kinds of techniques for remitting money from one place to
another place. These are:

1. Demand Draft

2. Pay Order

3. Telegraphic Transfer

4. Telephone Transfer

5. Mail Transfer – Time consuming
and not frequently used

IBBL sells and
purchases P.O., DD, and T.T. to its customers only. It does not offer
remittance service frequently to those other than its customer.

3.5.1. Pay Order (PO):

This is the service
for the people. A person can do pay order transaction without having bank
account Pay Order an instrument which is used to remit money within a city
through banking channel the instruments are generally safe as most of them are
crossed.

3.5.2. Demand Draft (DD):

Demand draft is a very
much popular instrument for remitting money from one corner of a country
another. The instrument is basically used for transfer and payment. Difference
between pay order and demand draft is in terms of place only P.O. is issued for
remitting money within the city whereas DD is used for within the country. DD
too constitutes current liability on the part of a bank. At IBBL DDis not sold
to people other than its customer.

3.5.3. Telegraphic Transfer (TT):

Telegraphic Transfer
is one of the fastest means of transferring money from one branch to another
and from one to another. The TT issuing bank instructs its counterpart by
tested telex message regarding remittance of money. No instruments is given for
TT both parties should have account, as money is transferred.

39

Telegraphic and
Telephone transfer are almost the same, both are them are known as TT in short.
So the basic three types of local remittances are discussed below with
difference among them:

Problem of general banking division Problems
Regarding Bank View:

1. There is no
sufficient and high bandwidth Internet connection available in the bank So,
bank cannot ensure better service for all Customers outward city.

2. The bank cannot
launch new financial products such as Consumer Credit Scheme. Pension Scheme,
Child Education Scheme, etc. So they fail to convince new customer compare to
other bank.

3. Some few desk use
obstacle instruments and take a huge time to accomplish a particular task.

4. The decoration system of the
bank is not a planned way and the floor, furniture, other materials are not
cleaned in a right way and every time so the working condition is not
comfortable.

5. Internally shifting
process is also not a planned way. So employee can not learn every area of
total banking activities

6. Some employee cannot
provide quick customer service because of inefficiency and lack of proper
training.

7. Few banking
activities are accomplished by several desks and in some case their
understanding is not better so, total banking activity is delay.

8. In sometimes,
employees lost their working speed and be tired because of special break
without lunch. Here there is no canteen system in a bank.

9. In a beginning and
ending day of the week, the flow of customer is so high so at time handling of
the customer is so difficultlt and that show the lack of professional image.

10. In some desk, the
employee does not good communicate and not share their particular site with the
internship members.

11. The employee could
not point out the innovative nature of entrepreneur because of lack of market
information,

12. Absence of
infrastructure for Islami trade financing on international basis and inadequate
track record of Islami banking itself in particular and Islami Banks in
general.

13. Lack of honesty
and integrity of customer and it is very difficult to define trusty customer
and to understand customer nature.

14. Some customer of
the bank is not well educated and not aware about the banking activities and
that hinders the working speed.

15. At last, whole
banking activities is not dynamic and sophisticated from current point of view
compare to other bank.

Problems from
customers point of view:

Long waiting time for
customer Lack of efficient employees Scarcity of dynamic working force Bank
uses low quality installment

41

4.1 Introduction

4.2 Investment Policy of JLBBL

4.3 Investment strategy of IBBL

4.4 Mode wise investment of IBBL

4.5 Special Investment Schemes of IBBL

4.6 Problem regarding investment division

4.1 Introduction

Islamic Bank does not
invest in loans and fixed interest securities. It can invest in ordinary share
only while interest based bank can invest in loans and different kinds of
securities. Islami Bank establishes and participate projects with its client as
a partner and bears the risk along with the client on a proportionate basis.
Besides, other conventional banks sometimes finance projects but do not bear
risk. Finally, the concept of Islamic Bank is to establish on egalitarian
society based on principles of social justice and equity. Whereas traditional
banks pay a fixed interest on savings, time deposit and grant loans with
interest for any purpose. We have gathered the fact that investment management
is the theme of IBBL. The bank takes deposits and invests the same based on the
profit-loss sharing. Bank go for the investment mainly which are long term and
profitable in nature. EBBL also give high concentration on the investment that
will generate more employment. As investment is one of the most priority areas
for the IBBL, so it needs to cautious in investment decision. To ensure proper
investment IBBL always go with in-depth study before making the investment. So
in the next phases we are going to demonstrate the way IBBL follow the manage
investment.

4.2 Investment
policy of IBBL:

Investment policy of
islamic Bank and non islamic bank are fully different The investment policies of islami bank Bangladesh
limited are given follows

a Strict observance of Islamic Shariah
principles, a Investment to national
priority sectors.

a Diversified investment portfolio:
Diversification by size, sector, geographical area, economic purpose,
securities and mode of investment.

Q Preference to short-term
Investments.

a Preference to
investment of small size.

a To ensure safety
& security of investments

a To look
profitability of investments.

a To give support to
government denationalization industrial program.

a Investment to trade
and commerce sector.

a Investment to
industrial sectors.

a Investment to
Foreign Trade (import & export).

a Exploration of the possibility of investment
in the existing Money & capital Market and help organization of Islamic
Money & Capital Market

4.3 Investment Strategy of IBBL most
of the cases Investment strategy of Islamic Bank and interest-based bank are
contradictory. The investment strategies of Islami Bank Bangladesh
limited are given below:

a To check exodus of
investment clients.

a To induct new
investment clients.

a To induct good
investment clients of other Banks.

a To enhance existing
limits of good investment clients.

a Extension of
investment transport sector.

a Extension of investment to backward as well
as forward linkage industries.

a Extension of investment to real Estate
Sector.

a Strengthening supervision, control and
monitoring mechanism.

a Training and motivation of manpower to
handle increased and diverse volume of investment s.

a To give due consideration to high risk, high
return and low risk, low return investment proposals.

a Adaptation of modern technology

4.4 Investment Instrument of IBBL

IBBL invests its money
in various sectors of the economy through different modes permitted by shariah and approved by the
Bangladesh Band. The modes of investment are as follows:

A. Bai-Mechanism (Trading mode):

Bai-Murabaha: Bai- murabaha may be
defined as a contract between a buyer and a seller under which the sells
certain specific goods (permissible under Islamic shariah and the law of the
land) to the buyer at a cost plus agreed profit payable in cash or on any fixed
future data in lump sum or by installments. The marked up profit may be fixed
in lump sum or in percentage of the cost price of the goods.

Important features:

* It is permissible
for the client to offer an order to purchase by the bank particular goods
deciding its specification and committing him to buy same from the bank on
murabaha, i.e. cost plus agreed upon profit.

* It is permissible to
make the promice binding upon the client to purchase from the bank, that is, he
is to satisfy the promise or to indemnify the damages caused by breaking the
promise without excuse.

4 It is also
permissible to take cash / collateral security to guarantee the implementation
of the promise or indemnify the damages.

* Stock availability
of goods is a basic condition for signing a Bai-murabaha agreement. Therefore,
the bank must purchase the goods as per specification of the client to acquire
ownership of the same before signing the Bai-Murabaha agreement with the Client.

4 After purchase of
goods the Bank must bear the risk of goods until those are actually sold and
delivered to the Client, i.e., after purchase of the goods by the Bank and
before selling of those on Bai-Murabaha to the Client buyer, the bank bear the
consequences of any damages or defects, unless there is an agreement with the
Client releasing the bank of the defects, that means, if the goods are damaged,
bank is liable, if the goods are defective, (a defect that is not included in
the release) the Bank bears the responsibility.

* The Bank must
deliver the specified Goods to the Client on specified date and at specified
place of delivery as per Contract.

f The bank shall the
goods at a higher price (Cost + (profit) to earn profit. The cost of goods sold
and profit markup therewith shall separately and clearly be mentioned in the
Bai-Murabaha agreement. The profit Mark-up may be mentioned in lump sum or in
percentage of the purchase/cost price of the goods. But, under no circumstance,
the percentage of the profit shall have any relation with time or expressed in
relation with time, such as per month, per annum etc.

* The price once fixed
as per agreement and deferred cannot be further increased.

t It is permissible
for the bank to authorize any third party to buy and receive the goods on Bank
behalf. The authorization must be in a separated contract.

Important feature:

I.  Bank is not bound to declare cost of goods and profit
mark-up separately to the client.

II. Spot delivery of the item and payment is
deferred.

” III. The bank transfers ownership and possession
of the goods to the client before receipt of sale price.

IV. Client may offer an order to purchase by the
bank any specified goods and committing himself to buy the same from the Bank
on Bai-Muajjal mode.

V. It is permissible to make the promise
binding upon the client to purchase from the bank. That is, he is either to
satisfy the promise or to indemnify damage caused by breaking the promised.

VI. Cash /Collateral Security should be obtained
to guarantee the implementation of the promise or to indemnify the damages.

signing the agreement.

VIII. Stock and
availability of goods is a pre- condition for Bai- Muajjal agreement. V The
responsibility of the bank is to purchase the desired goods at the disposal of J the client to acquire ownership of
the same before singing the Bai-Muajjal

. agreement with the
client.

*

IX. The Bank after purchase of good must bear
the risk of goods until those are

^ actually delivered
to the client.

^ X. The Bank must deliver the specified goods to
client on the specified date and at

specified place of
delivery as per contract.

XI. The Bank may sell
the goods at one agreed price, which will include both the cost price and the
profit.

XII. The price once fixed as per
agreement and deferred cannot be further in increased.

Bai-Salam: Bai-Salam
may be defined as a contract between a buyer and a seller under which the
seller in advance in the certain commodity/products permissible under Islamic
Shariah and the law of the land to the Buyer at an agreed price payable on
execution of the said contract and the commodity products to the buyer at a
future time in exchange of an advance price fully paid on the spot.

Importance Features:

Bai-salam is , mode of
investment allowed by Islamic Shariah in which commodity/product can be sold
without having the said commodity (ies)/product(s) either in existence or
physical/constructive possession of the seller. If the commodity /product are
ready for sale, Bai-Salam is not allowed in Shariah. Then sale may be done
either in Bai-Muajjal mode of investment.

Generally, Industrial
and agricultural products are purchased /sold in advance under Bai-Salam mode
of investment to infuse finance so that product is not hindered due to shortage
of fund/cash.

I. It is permissible to obtain collateral
security from the seller client to secure the investment from any hazards vis
non-supply of supply of commodity (ies)/product, supply of low quality
commodity (ies)/ product(s) etc.

III. Bai-salam on a particular commodity
(ies)/product(s) or on a product of a particular field or farm cannot be
affected.

IV. The seller (manufacture) client may be made
agent of the bank to sell the goods delivered to the bank by him provided a
separated agency agreement is excuted between the bank and the client (agent).

B. Share mechanism

49

Mudaraba

It is a from
partnership where one party provides the funds while the other provides the
expertise, labor and necessary business activities.

The first party is
called the Sahib-al Mail and the letter referred to at the Mudarib. Any profits
accrued are shared between the two parties on a pre- agreed basis, while
capital loss in exclusively born by the partner providing the capital.

Important features:

i. Bank supplies capital as Sahib-Al-Mall
and the client invest if in the business with his experience.

ii. Administration and
management is maintained by the client,

iii. Profit is divided
as per agreement,

iv. Bank bears the
actual loss alone,

50

Musharakah

The term
“Shirkat” and Musharaka” have been derived from Arabic words
“Shairkah” and “Sharika” The word shirkah means a
partnership between more than one partner. Thus the word “Musharaka”
and “Shirkat” means a partnership established between two or more
partners for purpose of a commercial venture participated both in the capital
and management where the profit may be shared between the partners as per
agreed upon ratio and the loss. If any incurred, is to be borne by the partners
at per capital/equity ratio.

In this case of
Investment, “Musharaka” meaning a partnership between the Bank and
the Client for a particular business in which both the Bank and the Client
provide capital at an agreed upon ratio and manage the business jointly. Share
the rent as per agreed upon ratio and bear the loss, if any in proportion to
their respective equity.

Bank may move itself
with the selected Client for conducting any Shariah permissible business under
Musharaka mode.

Important features:

• The Bank shall take part in the policy
and decision making as well as overseeing (supervision and monitoring) the
operations of the business of the Client. The Bank may appoint suitable
personal(s) to run the manage the business and to maintain books of accounts of
the business property.

C. Hire Purchase
under Shirkatul Melk:

Hire Purchase under
Shirkatul Melk is a Special type of contract that has been developed through
practice. Actually, it is a synthesis of three contacts:

Sale
These may be defined as follows:

i) Shirkatul Melk: Shirkat means
partnership. Shirkatul Melk means share in ownership. When two or more persons
supply equity, purchase an asset, own the same jointly, and share the benefit
as per agreement and bear the loss in proportion to their respective equity,
the contract is calledShirkatul Melk contract.

ii) Ijarah: The term Ijarah has
been derived from the Arabic words (Air) and (Ujrat) which means consideration,
return, wages or rent. This is really the exchange value or consideration,
return, wages, rent of service f 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 the Hiree
to a Hirer against fixed rent or rentals hires out a certain asset for a
specified period.

iii) 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.

Thus, in Hire purchase
under Shirkatul Melk mode both the Bank and the Client supply equity in equal
or unequal proportion for purchase of an asset like land, building, and
machinery, transport etc. Purchase the asset with that quit money, own the same
jointly, share the benefit as per agreement and bear the loss in proportion
their respective equity. The share, part of portion of the asset owned by the
bank is hired out to

52

the client partner for
a fixed rent per unit of time for a fixed period. Lastly the bank sells and
transfers the ownership of its share/part/portion to the client against payment
of price fixed for the either gradually part by part or in lump sum within the
hire period or after expire of the hire agreement.

4.5 Mode wise investment

Mode wise distribution
of investment as on 31st
December 2005 vis-a-vis corresponding period of last year is given
below:

(Million in Taka)

Mode

Figure: Trend of mode wise investment of IBBL

4.5 Special Investment Schemes Of IBBL

4.5.1 Household Durable
Investment Scheme

In a developing
country like Bangladesh
people of middle and lower class especially service holders with limited income
find it difficult to purchase articles like refrigerator, television, cot,
almirah, wadrobe, sofa-set, pressure cooker, sewing machine etc. which are part
of modem and decent living. They cannot enhance the standard and quality of
life to the desired level due to the constrain of their limited income. Islam!
Bank Bangladesh Limited has, therefore, introduced Household Durables
Investment Scheme that has already created great enthusiasm among the people
and received tremendous response from them.

Objectives:

• To assist service holders with limited
income in purchasing household durables

• To assist the fixed income group in raising
the standard of living.

• To create opportunity for the service
holders to enjoy the benefit of modern and sophisticated living and at the same
time lead a decent and honest life.

Eligibility

• Government Organizations.

• Semi-Government Organizations and
Autonomous Bodies.

• Banks and Financial Institutions.

• Armed Forces, BDR, Police and Ansars.

• Teachers of Universities, Government Colleges,
School and Senior Madrashas.

• Officers of the multinational companies.

• Officers of the local established and
renowned public limited companies.

• House Owners.

• Doctors,
Engineers, Architects, Chartered
Accountants/  FCMA and
other important professionals.

• Investment clients of IBBL.

• Deposit client of IBBL.

• Shopkeepers and Businessman. Amount

• For doctors, Engineers, Architects,
Chartered Accountants, FCMA the Ceiling of the investment of the bank will be:-

I. Dhaka city:
Maximum Tk. 3,00,000.00

55

III. Other municipal areas: 1,00,000.00

* For depositors: Tk. 2,00,000.00

* For others: Tk. 1,00,000.00

* Bangladesh armed forces, Teachers
of Primary schools, Private School and Colleges

* For students: Maximum Tk. 40,000.00 Period of investment: Maximum two years.

Mode of investment: Bai-Muajjal. Procedure of Application

Interested client
shall apply in prescribed from to the concerned branch. The application shall
have to be duly recommended by the Divisional Chief of the organization where
the applicant serves. From and booklet outlining the rules and procedures of
the Scheme may be obtained from the selected Branches of the Bank on payment of
Tk. 25.00 only.

(Taka in millions)

2003 2004 2005
2006 2007

Figure: Trend of IBBL
in household durable scheme

4.5.2 Housing Investment Scheme

One of the basic human
needs is to have a house to live in. A house is an abode of peace

and happiness. Housing
has now become an acute problem in the country, especially in the towns, cities
and metropolis. With their limited income, it has become almost impossible on
the part of the lower middle class, middle class and sometimes, even for upper
middle class to solve their housing problem. To meet this basic human need, Islamic
Bank Bangladesh Limited is committed to contribute to this end to provide a
peaceful and happy living. The Bank has introduced “Housing Investment
Scheme” with the objective to ease and minimize the housing problem and
assist service holders and professionals with limited income in materializing
their dream of becoming owner of housing.

Objectives

• To extend the benefits of the investment of
the Bank under the Scheme to different sections of the people.

• To assist in solving the existing housing
problem of the country.

• To assist the service holders and
professionals with fixed income to arrange for house of their own.

• To extend the investment facilities of the
bank to every nook and corner of the country, by size of investment, by sector
of investment and on the basis of geographical area.

• To make investment facilities easily
available under Islamic Shariah to those people who do not want to avail
investment facilities from interest-based financial institutions.

Eligibility

• Initially the following categories of
people shall be eligible to apply for availing investment facilities under this
Scheme:

1. Officials of the Defense Forces.

2. Permanent Officials of Government,
Semi-Government and Autonomous Organizations.

3. Teachers of the established Universities,
University Colleges & Medical Colleges.

4. Graduate, Engineers, Doctors and established
professionals.

Mode of investment

Period of investment

S  The maximum period of investment shall be generally 15 years. However,
the period of investment shall be determined on the basis of the proposal of
the client, the amount of investment (for which the client has applied) and the
ability of the project or client to repay the dues.

S Reasonable gestation period for
construction be allowed considering the size of construction and Bank’s
investment.

Procedure for Application

Interested persons
shall have to apply in prescribed from of the Bank through the Branch of the
concerned area. The Bank shall sanction investment if the proposal is found
acceptable after examination of its viability and profitability. The Bank
reserves the right to sanction or reject any investment proposal.

58

(Taka in millions)

2003 2004 2005
2006 2007

Figure: Trend of IBBL
in housing investment scheme

4.5.3 Real Estate investment Program

Professionals,
Service-holders, Businessmen, Real Estate developer and other categories of
people who are not entitled for availing investment facilities under Housing
Investment Scheme, shall be eligible under this program. Investment is to be
extended to build new houses and for extension / completion of the house
already constructed, commercial building, shopping complex, flat/apartment etc

59

(Taka in millions)

2003 2004 2005
2006 2007

Figure: Trend of IBBL
in real estate investment scheme

4.5.4 Transport investment Program

The role modern
communication is most vital for the socio-economic growth and uplift of a
developing country like Bangladesh.
A sound and efficient communication network is the pre-requisite for sustained
development through the expansion of trade, commerce and industry. In this
backdrop the demand for road and water transport has increased manifold
throughout the country. Moreover, the use of modern transports has increased
keeping pace with the rise of standard of living of professionals. Considering
all these facts, Islami Bank Bangladesh Limited has introduced ‘Transport
Investment Scheme’ Under this scheme investment on easy terms is being extended
to the existing successful businessmen in road and water transports and potential
entrepreneurs in this sector for different types of road and water transport.
Besides, Multinational companies, established business house and well to do
officials and professionals can become owner of various kinds of transports
through Hire Purchase under scheme.

60

Aims and Objectives

• To assist in the development of
communication system of the country.

• To help overcome the existing
transportation problem.

• To assist solvent service-holders and
professionals having fixed income for acquisition of private cars and thus to
help them to improve their professional efficiency and the standard of living.

Mode of Transports

• Road Transports

S Private car, microbus, jeep,
pick-up van.

S Bus, truck, minibus.

S Auto-rickshaw, tempo.

S Ambulance.

” Water Transport

S Cargo vessel of maximum 500-ton
capacity.

S Ocean going vessel of maximum
800-ton capacity.

Target Group

Bus/Truck/Minibus

  Successful individual/businessman/ firm engaged in transport business
and potential individual/businessman/firm who intends to take-up transport as
business.

Private car/Microbus/ Jeep

Permanent Officials of Government, Semi-government, Autonomous Bodies,

Corporation, Banks and
financial institutions. S Established Businessman and Business
establishments. S Officials of Defense Forces.

Professional, University Teachers, Doctors, Engineers.

Experience Person/Firm
engaged or interested in transport business (Rent-a- car). Preference will be
given to those person and firms who are already engaged in transport business.

Auto Rickshaw/ Tempo/ Pick-up van Persons/
Businessmen/Firms who have already proved themselves successful in the
transport business and those efficient and potential persons /businessmen
/firms who are interested to take small transport as business, nay apply for
investment to purchase auto-Rickshaw, tempo and pick-up van.

Ambulance

S Established Clinics and
Hospital?. ” Water transport

S  Experience and successful Persons and Businessmen engaged in water
transport business.

Mode of Investment

Period of Investment:

Procedure of application

Interested person/firm
must apply through any branch of the Bank for availing investment facilities
under this scheme in prescribed from along with required papers and documents.
The Bank will consider the proposal as per prescribed rules and sanction and
disburse the investment.

4.5.4Car Investment Scheme

Islami Bank, being and
welfare oriented banking institution, has now designed and implemented a good
number of investment schemes keeping in view the needs of different sectors and
various sections of the people for their socio-economic enlistment and to
improve their quality of life. The investment schemes including the
“Transport Investment scheme” and the “Household Durables
Investment scheme” so far introduced have gained popularity and received
wide response from the people.

63

Car is considered as
on essential mode of transport in the modern society, particularly by a section
of the officials, business houses and business executives and established
professionals for movement in discharging their duties and responsibilities
punctually and efficiently. Many of these categories of people cannot purchase a
car on payment of entire purchase value at a time out of their own sources. To
meet this need Islami Bank has introduced the ‘Car Investment Scheme’ for the
mid and high ranking officials of government and semi-government organizations,
corporations, executive and directors of big business houses and companies and
also for persons of different professional group on easy payment terms and
conditions.

Objectives

To assist the above categories of
persons to procure a car easy payment terms and conditions and thus become its
proud owner.

To extend the range of Bank’s investment
facilities to various sections of people in the line with the deals of the
Bank.

To diversity the investment portfolio of
the Bank by size, sector and volume.

Eligibility

Permanent senior
officers/executives of the following organizations: Category-A

• Government Organizations.

• Semi-Government Organizations/Autonomous
Bodies/Corporations.

• Banks

• Commissioned Officer of Armed forces, BDR,
Police and Ansars.

• Teachers of the Universities, Government
Colleges. Category -B

• Executives/ Directors of big companies and
business houses of repute.

• Members of all other professional groups
having good income.

The clients, in both
the categories, must be within age group of 27-50 years with minimum 6(six)
years unexpired service in case of service holders. In all cases the

Clients must have
sufficient capacity to pay the installments in due time to the satisfaction of
the Bank. The Bank reserves the right to regret the sanction of any proposal
not found suitable.

Nature of Car & Procurement Procedure

New/reconditioned cars of reputed brands
imported within the provision of import policy in force shall be allowed to be
procured under the Scheme.

Ceiling of Bank’s Investment

Bank’s is maximum Tk.
3.50 lac per client against purchase cost of the vehicle. Registration and
comprehensive insurance cover shall be in the name of the Bank. The

65

clients shall have to
bear all subsequent expense relating to blue book, registration, first party
insurance, tax token, fitness certificate etc.

Client’s Equity

Minimum 30% of the
purchase cost of the vehicle. The amount of equity shall have to be deposited
with the Bank before disbursement of Bank’s investment.

Period of Investment

Period of investment
is maximum, 4 (four) years from the date of disbursement or delivery of the
vehicle to the client, whichever is earlier.

Mode of Investment

a) Hire purchase

b) Hire purchases
Shirkatul Meelk.

Procedure for Application & Sanction of Investment

Interested persons
falling within the eligibility criteria are required to apply in prescribed
from to the concerned Branch. The applications of service holders should be
duly recommended by their respective Department/Divisional Heads. The Bank
shall sanction investment, if the proposal is found suitable and viable after
feasibility study. The Bank reserves the right to sanction any investment or
reject it.

Mode of Disbursement

Bank’s sanctioned
amount shall be disbursed directly to the supplier of the vehicle as mentioned
in the quotation/indent submitted and accepted for the purpose on completion of
the following requirements:

Deposit of the equity amount by the client with the concerned Branch.

S Completion of all formalities
including documentation for the investment.

S Obtaining of
securities/collateral as per sanction requirements.

(Taka in millions)

4.5.6 Investment Scheme for doctors

A good number or newly graduated
doctors from Medical Colleges are unemployed. Many of the medical graduates are
waiting for job because the opportunity for Government service is limited. If
these young doctors could be self-employed by extending investment facilities,
they could make modern medical facilities available at the doorsteps of rural
people.

Besides, experienced
and specialist physicians who are providing Medicare facilities to the people
in different towns with their limited and outdated Medical equipment will be
able to improve the standard of their techniques of treatment and also make the
modern treatment facilities available to more people, if investment facilities
are extend to them for procurement of modern and improved medical equipment.
The constitution of Bangladesh
has made it obligatory to ensure good health for all and the government is also
committed to ensure good health for all.

In view of the above
facts, Islami Bank Bangladesh Limited has taken the initiative an introduced
the “Doctors Investment Scheme” to ensure modern treatment and
medical facilities available to the people through extension of Bank’s
investment facilities for self-employment of newly graduated doctors and the
same time extending investment facilities to the established medical
practitioners to procure modern and sophisticated medical equipment.

Objectives

• To assist newly passed unemployed medical
graduates to establish clinics by way of formation of groups by 5 years.

• To assist experienced and established
physicians to procure improved and modern medical equipment and thus to improve
the standard and techniques of treatment.

• To assist specialists and consultant
physicians to procure specialized medical equipment for extending improved
treatment to the people.

Eligibility Criteria

• Newly passed medical graduates who are
willing to establish chambers, pharmacies and small clinics in district and Thana level towns.

• Experienced and established doctors who are
settled in district and other towns but cannot procure modern medical equipment
to improve their techniques of treatment.

• Specialized and consulted physicians who
are willing to procure latest and specialized type of medical equipment.

• Newly passed medical graduates who are
willing to from groups in order to establish clinic.

• Priority is given to specialist and
consultant physicians like dentists, child specialists, and ophthalmologists
etc.

68

Purpose of Investment

1. Establishment cost of Chambers, pharmacies
& Clinics. Procurement of medical equipment and purchase of motor Cycle for
visiting patients in rural areas in case of newly passed medical graduates
willing to settle in district and Thana
towns under self-employment.

Mode of Investment

S Hire purchases Shirkatul Melk: for
purchase/ procurement of medical equipment

and appliances,
motorcycle and other items. ^
Bai-Muajjal: For establishment of Chambers, Clinics and purchase of
medicines

etc.

69

Application and
Sanction

Interested medical
graduates shall have to apply in prescribed from through the nearest branch of
the Bank. Bank will accord sanction of the investment if the proposal is found
viable and acceptable to the bank after examination of its feasibility.

(Taka in millions)

2003 2004
2005 2006 2007 Figure: Trend of IBBL in investment
scheme for doctors

4.5.7 Small Business Investment Scheme

Bangladesh, a third-world developing country, is rich in natural
and human resources. In spite of vast possibilities, the majority people of the
country live in hardship-below poverty line, as these resources are not being
property trapped, explored and exploited. Physical labor is their only means of
earning. A large segment of this population is active youth force. Many of them
are efficient, intelligent and energetic with initiative & drive and have courage to take
risk. But they cannot uplift their socio-economic condition due to poverty,
lack of financial support and other required facilities. Lack of capital
compelled many small traders to leave their profession. As a result the
unemployment problem has been increasing day by day, and the unemployment
youths, finding no avenues of employment, are getting themselves involved in
ant-social activities creating threat to the social life.

Islami Bank, as
welfare oriented financial institution, is committed to generate employment and
bring about an overall improvement in the socio-economic condition of the
people and the quality of their life. The Bank, to make effective contribution
in this respect, has taken-up a special program and introduced ‘Small Business
Investment Scheme’ to make the small traders, entrepreneurs and neglected
unemployment youth of urban and rural areas self-reliant by providing them required
financial support. The following benefits will be achieved through
implementation of this Scheme.

• Gradually it will help to alleviate poverty
and minimize unemployment.

• It will help small traders and entrepreneurs
to become self-reliant and to improve their quality of life through capital
formation.

• It will create opportunity for the
unemployed youths to engage themselves in income generating activities.

• It will help to expand the market for
locally produced goods by increasing productivity of small traders and
entrepreneurs.

Aims and objects

” To expend investment facilities for the
small traders and entrepreneurs in urban and rural areas with a view to raise
their level of income and to improve their quality of life.

• To inspire and encourage unemployed youths
to established small business enterprises and thereby to create opportunities
for self-employment for ensuring social justice and welfare of the people in
large scale.

• To extend investment facilities to those
small entrepreneurs who could not avail any credit or investment facilities
from any bank or financial institutions or otherwise deprived of from such
investment facilities.

Eligibility of the
Clients

• Investment clients must be permanent
residents of the command area of the branch through which they intend to avail
investment facilities and they must have valid trade license and shops or
selling centers.

• Small business and entrepreneurs, who are
already engaged in trade and business but can not run their operations smoothly
for shortage of fund/capital will also be eligible to avail investment
facilities under the Scheme.

• Investment shall also be extended to those
poor and asset-less unemployed youths who are honest, efficient, physically and
mentally capable with drive and initiative, especially those who have ability
to run business.

• Besides the above categories, investment
facilities under this Scheme shall also be

extended to small and
cottage industries and service sector. Sectors
of Investment

• Livestock

» Fishery

• Agro-processing

» Manufacturing

• Trading/shop keeping

• Transport

» Services

• Agriculture
Implements and Forestry

Mode of Investment

A. Hire purchases Shirkatul Meelk: For all kinds of
machineries i.e. equipments & transport sector.

B. Bai-Muajjal-TR: For trading shop
keeping, agro-processing and raw materials for manufacturing purposes.

72

Period of
Investment

Procedure of application

For availing
investment facilities, interested investment clients can contact the nearest
branch of the Bank and submit application in prescribed from of the Bank. The
application must open two accounts Al Wadeeah Current Account to deposit the
sale proceeds of the day and a Mudaraba Savings Account to Built-up compulsory
savings. The Branch shall take appropriate steps after through appraisal of the
client’s investment application.

4.5.8 Agriculture Implements Investment Scheme

Bangladesh is predominately an agricultural country with vast
majority of people living in rural areas. Most of our people, for their living,
are dependent on agriculture. Agriculture still contributes the lion share of
the gross domestic product. But we could not as yet become self-sufficient in
food production. We still import a bulk quantity of food grains from abroad to
meet the deficit. This reliance on import has made us dependent on others. We
must modernize our agriculture and establish more and more industries in order
to minimize imports.

We can bring about
revolutionary changes in the agriculture sector by adopting modern agriculture
technology replacing the age-old traditional way of cultivation and increasing
the use of fertilizer. This can be done by collective efforts of both public
and private sectors.

Islami Bank Bangladesh
Limited is a welfare oriented Bank. It can ply positive and important role in
the economic development, progress and uplift of the country by investing in
the agriculture sector. The Bank has, therefore, introduced ” Agriculture
Implements Investment Scheme” to provide power tillers, power pumps
shallow tube wells, thrasher machine etc. on easy terms to the unemployed
youths for self-employment and to the farms to help augment production in
agricultural sector.

Objectives

* To create opportunities for self-employment
of un-employcd rural youths.

* To Help Farms to agricultural production.

* To assist in the introduction and use of
modern technology in the agricultural sector.

demand. These
implements may be of any popular brand. Any locally manufactured brand, which

_

has large demand, is
also acceptable. The choice of investment clients shall be given preference in
this regard.

Investment Area

Investments are
allowed under this Scheme through all branches of the Bank expected the
branches located in the metropolitan areas. The command area of the concerned
branch is within 15 miles radius from its location.

Eligibility of Investment Clients

•«• The applicant
farmer should posse’s sound health and his age must be minimum 18 years and
maximum 50 years. Person who is willing to take agriculture as

business, his age must
be between 18 to 45 years. If the applicant is educated or half educated youth
than his age be between 18 to 35 years.

•J* The applicant must
be physically and mentally fit and willing to operate the machine himself

•J* Applicant must be
a permanent resident of the concerned area and be willing to stay and work
there.

Period of Investment: Two years

Mode of Investment: Hire Purchase
under Shirkatul Melk.

Procedure for Submission of Application

Interested investment
clients shall have to apply to the concerned branch in prescribed form of the
Bank for availing investment facility under the scheme. The bank shall consider
the proposal in the light of aforementioned terms and conditions and if found
viable then shall sanction and disburse the investment.

Particulars

Small Business
Investment Scheme

(Taka in millions)

2003 2004
2005 2006 2007

395.75

501.26

629.81

768.45

995.43

2003 2004 2005
2006 2007

Figure: Trend of IBBL
in small business investment scheme

75

4.5.9 Micro Industries Investment Scheme

Bangladesh as a developing country has been trying for its
overall economic growth. One

of the major problems
confronting its growth is lack of development of enterprises and potential
entrepreneurs who can create more job opportunities by establishing new
enterprises in the industrial sector. There are a number of educated unemployed
youths and also skilled & semi skilled unemployed persons in the country.
Besides, every year quite a good number of youths are coming out of the
general/technical educational institutions to add to this already crisis ridden
employment market. Development programs and efforts will bring no meaningful
result unless and until income-generating employment opportunities can be
created for the growing number of unemployed people including the educated
unemployed youths. Establishment and expansion of micro industries can play a
vital role in creating more employment opportunities as well as in the overall
socio-economic development of the country.

Islami Bank Bangladesh
Ltd. has been appreciably participating in this direction by financing
industrial sector. With a view to creating wider base for industries, the Bank
has decided to launch “Micro Industries Investment Scheme” through
its Branches. This scheme has been devised to cater to the investment needs of
those persons who intend to set-up new micro industrial ventures or to
restructure their old units by way of BMRE involving a total cost of Tk. 5.00
lac.

This is intended
mainly to create new jobs for the educated, skilled & semi skilled
unemployed and also to encourage those who remain outside the purview of
investment due to shortage of funds and insufficient collaterals. The scheme
has been prepared with easy terms and conditions to encourage the small
entrepreneurs, educated unemployed youths and skilled/semi skilled persons to
come forward for establishment of micro industries commensurate with the local
demand.

Objectives

Eligibility

The eligibility
criteria for the selection of the entrepreneurs under the scheme will be as
under:

from any
Technical/Vocational Training Institutes and willing to set up micro

proposed industry.
>  Skilled and semiskilled persons
having practical knowledge and experience in

industrial operations.
^  Persons already engaged in
micro-industries as owners and willing for BMRE of

their enterprises.
>  Wage earners
who want to
establish micro industries
having work

experience/training in
the particular field of industry. > 
The proposed enterprise must be exclusively owned by Bangladeshi
Nationals that

use indigenous raw
materials or imported raw materials not exceeding 25% of the

total requirement of
raw materials. >• Defaulters and persons/enterprises having outstanding
liabilities with other Banks

and Financial
Institutions will not be eligible for availing investment under the

scheme.

Sectors of
Investment

Different sectors
including food and agriculture based industries, plastic & rubber
industries, forestry and furniture industries, engineering industries, lather
industries, chemical industries, textile industries, recycling industries,
service industries, electrical accessories industries, computer technology
industries, paper products industries, handicraft industries, fishery &
livestock farming, hollow bricks, roof tiles and any other viable
micro-industries have been identified for financing under the Scheme.

Purpose of Investment

To procure capital
Machinery.

To purchase raw materials.

To meet a portion of
working capital requirement.

While selecting
enterprise(s)/project(s) for financing, Branch must ascertain the market demand
of the product of such enterprise(s)/project(s). Also care should be taken so
that local machineries & raw materials are used to keep cost of the project
at a minimum level and to develop supporting job opportunities.

Period of Investment

Capital Machinery: 5(five) years
including reasonable gestation period. Raw
materials: One year from the date of 1st disbursement.

Mode of Investment

Capital Machinery: Hire-Purchase
Shirkatul Melk(HPSM) Rcnv Materials: Bai-Muajjal.

78

List of Micro Industries

• Food and Agriculture
Industries.

• Engineering
industries.

• Lather Industries.

• Chemical Industries.

• Textile Industries.

• Recycling
Industries.

• Service Industries.

» Electrical
Accessories Industries.

• Computer Technology.

• Paper products
Industries.

• Handicraft
Industries.

(Taka in millions)

2003 2004 2005
2006 2007

Figure: Trend of IBBL
in micro industries investment scheme

79

4.5.10 rural development Scheme

Bangladesh with its 60% people living below poverty line and 30%
living in absolute poverty is suffering from acute rural-urban economic
disparity coupled with illiteracy, lack of proper health and sanitation
facilities. The country’s economy is basically an agrarian one with vast
majority living in rural areas. The agricultural sector is unable to provide
any further scope of employment resulting in influx of rural population towards
urban areas. Rural areas are characterized by stagnant and scanty industries.
Underemployment and unemployment is the regular feature particularly in rural
areas. The vast human resources have remained unutilized due to lack of
education and training and also concerted efforts directed towards the rural
economy. This result in uneven distribution of income which causes serious set
back in balanced geographical growth as well as growth of GDP. Islami Bank
Bangladesh Limited has been founded with the major objective of establishing
Islamic economy for balanced economic growth by ensuring reduction of
rural-urban disparity and equitable distribution of income.

In view of the above,
Branches of the Bank have been encouraged to invest their deposits in their
respective areas and in particular for the economic enlistment of the rural people.

Accordingly, a Scheme
in the name and style of ‘Rural Development Scheme’ has been introduced to
cater tot eh investment needs of the agricultural and rural sector to create
opportunity for generation of employment and raising income of the rural people
with a view to alleviate poverty.

Objectives

The main objectives of
the Scheme are:

* To extend investment facilities to
agricultural, other farming and off-farming activities in the rural areas.

* To finance self-employment and income
generating activities of the rural people, particularly the rural unemployed
youths and the rural poor.

* To alleviate rural poverty through
integrated rural development approach.

* To extend investment facilities for hand
tube-wells and rural housing, keeping in view the needs of pure drinking water
and housing facilities of the rural dwellers.

80

* To provide education and Medicare facilities
to the poor rural people.

Target Area

Initially the Scheme
was started as a Pilot Scheme in rural areas of certain districts under the
direct supervision of the nearby Branches of Islami Bank Bangladesh Limited.
The Scheme is being gradually extended to other districts/areas through
different Branches of the Bank.

Target Group

o Farmers having land of maximum 0.50 acres.

o Sharecroppers with consent from the
landowners.

o Persons engaged in off-farm activities
having no land or land up-to maximum

0.50 acres.

o Persons/farmers permanently residing in the
selected villagers, o Persons having
derelict pond will be eligible for investment for re-excavation and

fish cultivation,
o Destitute women and distressed people
will be provided investment for mills

cows/poultry
birds/ducks/goats etc. and other suitable off-farm activities for

raising their
supplementary income, o Persons having
liabilities with other banks/institutions including defaulters will

not be eligible for
the investment under the Scheme.

Application and
Processing

The Branch will start
receiving investment applications and accord approval in the following manner
as soon as the Investment Committee of the Branch will be satisfied that the
Group members conform to the principles of Group activities and it is ensured
that such Group activities will be carried out without any hindrances in
future.

The application as per
Bank’s approved format will be distributed among the eligible members of the
Group. The Bank officials will help in filling in the forms. The application
after properly filled-in will be submitted to the Branch.

Upon receipt of the
applications from the members, the Bank officials will verify the forms and
discuss in the weekly meeting with other members and ascertain that the Group
will take responsibility in the recovery of the installments and also dwell on
the applicants past behavior in the Group meetings. The Group Leaders will
recommend the application along with Bank’s field officer and designated
Officer of the Branch for sanction.

The application,
thereafter, will be presented to the Branch for sanction of the investment if
found suitable.

The applications found
suitable for sanction should be disposed off within 7 days from the date of
receipt of the applications till date of disbursement of the investment. The
applications which do not merit consideration should be disposed off within 07
days and decision be conveyed to the applicants accordingly.

82

(Taka in millions)

2003 2004 2005
2006 2007

Figure: Trend of EBBL
in rural investment scheme

Out of the
above-mentioned 13 schemes, investment under Small Transport Investment Scheme
has been abandoned due to its non-viability from technical point as well as
Govt. policy, bleak prospect & profitability. The Poultry Investment Scheme
has been suspended for the time being as financing in this sector do not seem
to be viable due to high cost of layer, chicks, medicine, feeds & un-even
competition due to smuggling from neighboring country at cheaper price. The Mirpur
Silk Investment Scheme has also been abandoned for lack of sincere and honest
investee.

The 10 other schemes
are being operated smoothly. The branches are getting good response from
different sections of the society.

83

(Tk.in million)

84

Problem Regarding
Investment Modes

Problems Regarding Bank’s point of View

Difficult to get
trusty client

Customer do not
maintain correct account

Lack of manpower to
supervise all activities of clients

Lack of honesty and
integrity of clients

Difficult to purchase
product by bank

Choice differ between
customer and bank

Bank is to maintain
many paper and document

Difficult to provide
quick service

Customer does not want
to pay advance in bai salam

Few clients do not pay
regular money HPSM

Risk in few sector ie
real estate transportation

Scarcity of innovative
entrepreneur

Problem regarding customer’s point of view

Lack of manpower
according to no. of clients

Scarcity of efficient
and dynamic man power

Long waiting time

Absent of
authoritative person

People are not aware
about all the facilities of IBBL

Foreign Exchange
Operation

5.1 Introduction

5.2 Functions of
foreign exchange department

5.3 Letter of credit
and its importance

5.4 Parties of letter
of credit and their role

5.5 Foreign remittance

5.6 Problem regarding
foreign exchange department

5.1 Introduction

Foreign Exchange Department is international
department of Bank. It deals globally. It facilitates international trade through its various modes of services.
It bridges between importers and exporters. If the branch is authorized dealer
in foreign exchange market, it can remit foreign exchange from local country to
foreign country. This department mainly deals in foreign currency. This is why
this department is called foreign exchange department.

Some national and
international laws regulate functions of this department. Among these. Foreign
Exchange Act, 1947 is for dealing in foreign exchange business, and Import and
Export Control Act, 1950 is for Documentary Credits (UCPDC – 1993 revision
& International Chamber of Commerce Publication no – 500) is also an
important law for settlement of terms and conditions between exporter and
importer in international trade. Governments’ Import &Export policy is
another important factors for import and export operation for banks.

5.2. Letter Of Credit
and its importance

Letter of credit is an
arrangement whereby bank (issuing bank) acting on the instruction

of the customer
(importer), undertakes to make payment, or to accept drafts, or authorizes

of another bank to
pay, accept or to negotiate draft drawn by the beneficiary (exporter)

against stipulated
documents, provided that the terms and condition of the credit are

compile.

To The Exporter

r  A letter of credit is generally a very safe method of obtaining payment
provided the exporter complies with the terms of credit.

An irrevocable credit
cannot be amended without his knowledge agreement.

An irrevocable credit
carries a definite undertaking on the part of the issuing bank to pay.

A confirmed irrevocable undertaking of a bank generally in the
exporter’s country.  A credit open in his
favor can often lead to a credit being opened on his behalf in favor of his
supplier (to-back credit); alternatively the credit may be transferable.

  Finance may be available b means of: – negotiating of his bills.

The exporter has indirect control of the document of title.

Better than collection
as a means of securing payment.

To The Importer

Protect own position
by stating the precise documentation required.

He should consider
making a status report on the supplier and in the case of a

large order call for a
performance bond. r Credit can be obtained from the
exporter by insisting on the use of a term bill or

exchange. r- He could also consider the use of
a revocable credit, which would be particularly

appropriate where the
goods are dispatched in part shipment as soon as the first lot

of goods arrives. The
importer can inspect them and if are made. ‘f  The advising bank will
only make payment when the exact document specified

has been received. ‘r Once the specified documents which
will usually be the documents of title are in

the hands of the
advising bank then it will only a matter of time before they sent to

the issuing bank
allowing him to collect the goods to their safe arrival.  Finance may be available
by means of:-a. Ordinary bank loan/
overdraft, b.  Loan against imported
merchandise, c. Acceptable credit.

5.3.   LETTER OF CREDIT ISSUE
PROCESS:

The issuing process of
letter of credit is one of the vital points for a bank engaged in foreign
exchange operation. In one side it has to satisfy the client on the other hand
it needs to care the order of the Bangladesh Bank rules and regulations very carefully.
After all the steps are as like

The advising bank
authenticates the L/C and advises the same to the beneficiary. The exporter
submits the necessary documents to the advising bank after execution of export,

5.4. Parties To The L/C

5.4 DIFFERENT PARTIES ROLES:

5.4.1 Role of Issuing Bank

The credit and
amendments must be complete and precise

Indicating credits
irrevocable or revocable

Definite undertaking
of the issuing bank

Such undertaking
cannot be amended or cancelled without consent of all parties.

State how the credit
will be available and nominate the bank where it will be

available

Advice the credit and
subsequent amendments through the same bank

Reimburse nominate
bank

Determined to take
documents or not on the basis of documents alone

Reasonable time to
examine documents ‘f If refusing documents issuing banks
should without delay telex advice the

presenter stating
discrepancies and hold documents at its disposal return them

No need for
certificate of compliance

If incomplete or
unclear instructions are received to issue or amend the credit

bank may give
preliminary notification to beneficiary and seek clarification from

the applicant

5.4.2 Role of
Advising Bank:

Without engagement and
responsibility

Exercise reasonable
care in checking the apparent authenticity of the credit.

If incomplete or
unclear instruction received to advice the credit bank may give

preliminary
notification to beneficiary and seek clarification from thinning bank

Services to the
corresponding banker r Services
to existing/ potential customer

5.4.3 Role of Negotiating Bank:

Offering temporary
finance fro the exporter awaiting reimbursement from the

40Q requirements

Ensuring it as being
the nominated bank

Source of repayment

Issuing bank

Beneficiary

5.4.4 Role
of Confirming Bank:

Definite undertaking
of the confirming bank in addition to that of the issuing bank

Advise the credit
without adding confirmation and inform issuing bank if not

T willing to confirm
the credit

Such undertaking can
be amended nor cancelled without the consent of all parties.

If incomplete or
unclear instructions are received to confirm the credit bank may

— give preliminary
notification to beneficiary and seek clarification from the issuing bank

2 5.5 Foreign
remittance

Islami bank is playing
an outstanding role in foreign remittance transaction. In 2007

bank has achieved
first position in foreign remittance among all government and

private banks. There
are three ways, islami bank Bangladesh
limited can do foreign remittance transaction, and these are given follows:

1.  Bank to bank transaction

2.  Exchange house

3.  Web based

Now I am going to
discuss in detail of these three ways of foreign remittance transaction:

1. Bank to bank transaction: clients money would be credited in his or her

account. Afterwards
client will draw money by using check. Two banks are involved here. SWIFT
implements this process.

2. Exchange house transaction: there are lots of exchange house in that country from
where money would be sent. A person will pay money to that exchange house, and
exchange house will send money to IBBL. IBBL will send money to real account of
payee.

3. Web based or speed cash
transaction: money will come through E-
mail with PIN and PASS number. Payee will come at IBBL with PIN and PASS number
and draw money.

These are the way for
sending money to IBBL from abroad. An expatriate can follow any one of these.

5.6. Problem regarding foreign exchange department

I have identified some
problem and limitation in foreign exchange department of islami bank Bangladesh
limited. I have evaluated this problem from two parties. For this problem IBBL cannot
provide best service to its customers as well as customers are not getting
ultimate service from IBBL. These problems are given follows:

Problems from banks point of view

• Islami bank Bangladesh limited has to maintain
Islamic shariah, while doing foreign exchange transaction IBBL is to involve
many interest based banks and financial organization in that time maintain
shariah is very difficult.

• Manpower is not sufficient to provide best
service to the customers.

• Scarcity of technologically skilled worker
to handle difficult situation in foreign exchange transaction.

• Lack of multi killed worker to provide more
than one service by one employee.

l-tv

• Technological
support is not enough that provide by bank management.

• Scarcity of
trustworthy client.

• Lack of
knowledgeable customer about foreign exchange transaction.

• Government rules and regulation is one of
the main obstacles for doing foreign business.

• Some bad person tries to do money
laundering activities in the veil of foreign exchange business.

Problems from customer’s point of view:

• Long waiting time for getting service.

• Scarcity of skilled employee.

• Terms and condition is difficult.

• Technological support is not up to date.

93

Conclusion

The bank is committed
to run all its activities as per Islamic Shariah. IBBL through its steady
process and continued success has, by now, earned the reputation of being
leading private bank of the country. The bank has shown steady process in this
important sector. Main items of import (by the help of IBBL) are machinery,
garments, fabrics and accessories, ships for scarping, rice pharmaceuticals
etc. Whereas main items of exports are jute goods, readymade garments, leather,
frozen fish, fertilizer, etc. Still now hear about 301 Islamic banking and
financial institutions in about 49 countries of Asia, Africa, Europe, America
and countries like Pakistan, U.K., U.S.A., Germany, Argentina, Denmark,
Luxembourg, Switzerland and India have been established. The banking system of Pakistan and Iran was
totally remodeled on the basis of Islamic Shariah services.

IBBL will be more
effective in our economy by lunching new financial products to attract deposit
as Consumer Credit Scheme, Pension Scheme, Child Education Scheme, Plastic
Money ATM etc.

Recommendation

It has a large
portfolio with huge asset to meet up its liabilities and the management ol this
bank is accomplished with the expert bankers and managers in all level oi
management and with a little knowledge about banking, it is not an easy job to
find ou! the difficulties of this branch. Rather than recommending I would like
to give my opinior to improve the banking service and make the customer more
satisfied. Fe\v recommendations are given follows:

Renovation of customer service

Since a number of new
banks are coming to existence with their extended customer service pattern in a
completely competitive manner. Customer services must be made dynamic and
prompt. Now a days, people especially business people have very little time to
waste. So the bank should make its service prompt so that people need not give
more time in the banking activities.

Providing more industrial loans

It seemed to me that
the bank having a large amount of deposit is not simply encouraging the large
scale of producers that is this bank is not providing that much of long term
industrial loans to accelerate the economy as well as to help the economy to
solve unemployment problem.

Speed up Processing of loan application

If loan-processing
time is lengthy, it will not get good borrower. Most of this time is speni for
correspondence between Head Office and Branch. So the branch should speed up
it; loan processing time. For reducing loan-processing time, branch manager
should be giver more power to sanction loan. This power can eliminate the time.
Branch should have independent appraiser for appraising term loan proposal.

Bank must create foreign currency fund for itself

IBBL has no foreign
currency funds of its own to provide L/C and remittance facility. For providing
these services, it depends on Bangladesh Bank. But purchasing Foreign Currency
from Bangladesh Bank requires prior permission and hence takes long time. As a
licensed Authorized Dealer, it should have its own foreign currency funds so
that it can open L/C and remits fund independently like foreign bank operating
in Bangladesh.
If it can create its own foreign currency fund, it is for sure that it can
reduce operating time of L/C and remittance by at least two days.

Bank should be innovative and diversified in its services

This bank provides
only conventional services. Modem banking today is introducing various kinds of
deposit account with different attractive features each of which may attract
different groups of people. Even the bank does not provide any ‘Customer Loan’
facility, which has been found very much profitable for those banks who have
introduced it in their banking services.

Bank should diversify
its banking services and add new features in its services so that it can
attract customers from all groups of people. Financial Engineers of IBBL should
be innovative in developing new banking services, which will attract customers
and reduce costs. It can introduce customer loan scheme, provide bridge loan,
or can engage in lease financing. It can also underwrite shares of newly
incorporated public companies.

Bank should immediately enter into the credit card market

This bank does not have
any plan to enter into the Credit Card Market. It is well versed that
tomorrow’s payment will be consisted of only plastic money (Credit Card). A
large part of business transaction will be done by credit card in near future.
In western world, more than 50% of transactions are in credit card*. If this
bank does not prepare from now on, it cannot compete in the future market. So,
the branch should give special attention to the introduction of Credit Card.

Introduce modern technology

Without using modern
technology no bank can even think of remaining in the business in near future.
So the bank must decide right now how it can equip its branches with modern
technology. Use of modern technology in one sense can increase cost but another
sense it increases productivity highly and it attract big clients.

Information System should be developed

For information
transfer, branch uses primitive ways of telex, messenger and personal visit. It
makes correspondence with the head office by peon or orderly. For international
correspondence the branch uses telex machine, which is very costly. And in the
branch, manager has to visit specific desk for collecting information. Paper
communication is too involved between manager and employees. But branch can use
INTERNET for both local and international correspondence. E – mail can reduce
the telex cost substantially. Bank should take urgent decision to create own
WEB Page in INTERNET so that it can communicate with others very quickly.

Development of human resources

Human resource is
another sector for the branch to be developed urgently. Human resources, in the
branch, are not equipped with adequate banking knowledge. Majority of the human
resources are lack of basic knowledge regarding money, banking finance and
accounting. Without proper knowledge in these subjects, efficiency cannot be
optimized. Bank can arrange training program on these subjects.

Bank must try to be computerized absolutely

maintaining a network
among them. The networking system obviously charges a high installation cost,
but it will definitely reduce the overhead costs and an error free banking may
be in progress. Moreover by adopting this system the bank can join in modern competition
of along with e-commerce concept. The main problem is that the foreign banks
and other private commercial banks have started providing these facilities, so
introduction of these facilities will be added as modern facilities enhanced,
rather it will be a question of survival in the next decade for the bank.

Marketing division should be innovative and long sighted :

To increase the faith
of former mentioned depositors and people, IBBL should convince them in the
best manner, so that market share can be captured. A separate marketing
division should be set up for this matter.

Diversify Assets Portfolio:

Leading portfolio of
IBBL should be diversified. Not to concentrate or give weight only in working
capital financing.

IT Facilities:

IT facilities of IBBL
are not satisfactory good. Computer system which owned by branch

i are not up to date, not
sufficient and moreover some of computer system not work

properly when they are
needed. There is no sufficient and high bandwidth Internet

connection available
in the bank. So, IBBL should develop Information Technology to

ensure better service
for the customer and support communication with outside.

99

BIBLIOGRAPHY

*#* Annual branch
manager conference 2008.

*£ Investment manual
published by IBBL.

& “Modern Islamic
Banking” by Abdiu Rakib.

*#* “Marketing
Research” by Noresh Kumar Malhotra, third edition. ^
Website-www.islamicbank.bd.com.