Modes of Investment a study on Exim Bank Ltd.
1.1 Introduction:
Economic history shows that development has started everywhere with the banking system and its contribution towards financial development of a country is highest in the initial stage. Modern banks play an important part in promoting economic development of a country. Bank provides necessary funds for executing various programs underway in the process of economic development. They collect savings of large masses of people scattered throughout the country, which in the absence of the banks would have remained ideal and unproductive. These scattered amounts are collected, pooled together and made available to commerce in industry for meeting the requirements.
The word ‘Bank’ comes from the Italian word ‘Bancus’. Generally by the word “Bank” we can easily understand that the financial institution dealing with money. But there are different types of banks like Central Banks, Commercial Banks, Savings Banks, Investment Banks, Industrial Banks, and Co-operative Banks etc.
When we use the term “Bank” without any prefix, or restriction, it refers to the Commercial banks. Commercial banks are the primary contributors to the economy of a country. So we can say Commercial banks are a profit-making institution that collects the deposits from the surplus unit of the society and then lend the deposits collected to the deficit unit of the society. So the people of the society and the government are very much dependent on the commercial banks as the financial intermediary. As banks are profit-earning concern they collect deposit at the lowest possible cost and provide loans and advances at higher. The differences between two are the profit for them.
Banks are become more important to the economy as a whole and to local communities. Certainly banks can be identified by the functions (service or role) they perform in the economy. Bank is a financial intermediary accepting deposits and granting loans; offers the widest menu of services of any financial institution. Banks are the most important financial institution in the economy.
Modern banking system plays a vital role for a nation’s economic development. Over the last few years the banking world has been undergoing a lot of changes due to deregulation, technological innovations, globalization etc. These changes in the banking system also brought revolutionary changes in a country’s economy. Present world is changing rapidly to face the challenge of competitive free market economy. It is well recognized that there is an urgent need for better, qualified management and better-trained staff in the dynamic global financial market. Bangladesh is no exceptions of this trend. Banking Sector in Bangladesh is facing challenges from different angles though its prospect is bright in the future.
1.2 Background of the study:
The internship program which is necessary to complete the BBA program exercise a significant importance as it enables a student to familiar with the practical business activities. The student work closing with the people of an organization and learn about the function of that organization. This program enables a student to develop his analytical skill and scholastic attitude.
1.4 Objectives of The Study:
General Objective:
The General Objective is to prepare & submit a report on the topic Modes of Investment a study on Exim Bank Ltd.
Specific Objective:
? To have an understanding of the Investment functioning of a bank.
? To acquire knowledge of practical operations and the ways of functioning of the bank.
? To achieve knowledge about banking operations performed and services offered by Bank.
? To know the investment products offered by the Exim Bank Limited.
? To familiarize the banks sources of the funds and how it is collected.
? To examine the potentials of future growth of the bank.
? To find out the contribution of private commercial banks for the economic development of the country.
? To familiarize different rules and regulations of investment formalities.
? To come up with a SWOT analysis of Exim Bank Ltd.
? To analyze the service procedure of Exim Bank Ltd.
? To be familiar with the banking management system.
1.6 Methodology of The Report:
Methodology includes direct observation, face-to-face discussion with employees of Investment department and practical work. In preparing this report both primary and secondary sources of information have been used.
The primary sources are
For collecting primary data, I had to ask with the respective officer(s), others like:
? Exposure on different desk of the bank.
? File study.
? Practical desk work
? Face to face conversation with the officer
? Direct observations
? Face to face conversation with the client
The secondary sources are
? Annual Report of Exim Bank Ltd.
? Gather knowledge about the bank from their banking website.
? Some internship report which has been prepared on banking sector.
? Annual reports of Exim Bank Ltd.
? Files & Folders
? Memos & Circulars
? Daily diary (containing my activities of practical orientation) maintained by me,
? Various publications on Bank,
? Websites,
? Different circulars sent by Head Office and Bangladesh Bank.
I tried to point out that how valuable this internship period was to me. It was great opportunity that helps me to gain some practical knowledge and experience regarding banking system.
1.7 Limitations of The Study:
This is an individual research work where only one individual researcher need to undertake the whole process done alone but the time frame work did not permit me.
Although have obtained wholehearted cooperation from employee of Exim Bank Ltd, Mirpur branch but they were extremely busy. So they were not able to give me much time, as they and would like. Besides, total duration of internship is not sufficient to give me more than a superficial idea of the functioning of the various departments. Have faced the following problems, which may be termed as the limitation/short coming of the study. These are as follows:
- It was very difficult to collect the information from various personnel for the job constrain.
- Bank policy was not disclosing some data and information for obvious reasons.
- Due to time limitation many of the aspects could not be discussed in the present report.
- Since the bank personnel where very busy, they could provide me little time.
- Because of the limitation of information some assumption was made. So there may be some personal mistakes in the report.
- The time is not sufficient to know all activities of the branch are prepared the report.
- The insufficiency of information was not adequately available. Moreover, the sources were hazardous and in-discipline. Therefore the providence of insufficient information came out as a constraint.
- Almost all the personnel were apparently too busy to assist us with their valuable support.
- There was no remuneration for our internship that demoralizes our motivation to keep consistency in our extensive study.
- Sometimes we had to face unexpected conduct on the part of some of the personnel that was supposed to be a little bit more cordial.
- The study was limited only to the Exim Bank Limited.
- Getting financial information is very hard job.
- The Bank was a busy one having heavy rush of people, whom officers need to deal with. So allocation of time for an internee is very much tough for the officers of the bank.
Chapter
2
Organizational Part
2.1 Introduction:
In this chapter discusses overview of the banking sector which gives us a better understanding regarding the ancient banking and modern banking. After that this deals organizational overview which includes history, vision, and mission. The list is operating and financial performance which contains financial position at a glance. In this chapter also discussed financial overview & activities of the bank, their product & services, & functional & social contribution, mission & vision and others of Exim Bank Ltd.
2.2 Economy of Bangladesh:
According to the IMF list of 2007, Bangladesh ranked as the 48th largest economy in the world. Although one of the world’s poorest and most densely populated countries, Bangladesh has made major strides to meet the food needs of its increasing population, through increased domestic production augmented by imports. The land is devoted mainly to rice and jute cultivation, although wheat production has increased in recent years; the country is largely self-sufficient in rice production. Though improving, infrastructure to support transportations, communications, and power supply is poorly developed. Bangladesh is limited in its reserves of coal and oil, and its industrial base is weak. The country’s main endowments include its vast human resource base, rich agricultural land, relatively abundant water, and substantial reserves of natural gas.
Since independence in 1971, Bangladesh has received more than $30 billion in grant aid and loan commitments from foreign donors, about $15 billion of which has been disbursed. Major donors include the World Bank, the Asian Development Bank, the UN Development Program, the United States, Japan, Saudi Arabia, and West European countries. Bangladesh historically has run a large trade deficit, financed largely through aid receipts and remittances from workers overseas. Foreign reserves dropped markedly in 2001 but stabilized in the $3 to $4 billion range (or about 3 months’ import cover). In January 2007, reserves stood at $3.74 billion, and they increased to $5.39 billion by January 2008, according to the Bangladesh Bank.
(Source: <href=”#cite_note-bn-0″>http://en.wikipedia.org/wiki/Economy_of_Bangladesh#cite_note-bn-0)
2.3 Banking System in Bangladesh:
The banking system at independence consisted of two branch offices of the former State Bank of Pakistan and seventeen large commercial banks, two of which were controlled by Bangladeshi interests and three by foreigners other than West Pakistanis. There were fourteen smaller commercial banks. Virtually all banking services were concentrated in urban areas. The newly independent government immediately designated the Dhaka branch of the State Bank of Pakistan as the central bank and renamed it the Bangladesh Bank. The bank was responsible for regulating currency, controlling credit and monetary policy, and administering exchange control and the official foreign exchange reserves. The Bangladesh government initially nationalized the entire domestic banking system and proceeded to reorganize and rename the various banks. Foreign-owned banks were permitted to continue doing business in Bangladesh. The insurance business was also nationalized and became a source of potential investment funds. The new banking system succeeded in establishing reasonably efficient procedures for managing credit and foreign exchange. The primary function of the credit system throughout the 1970s was to finance trade and the public sector, which together absorbed 75 percent of total advances.
The government’s encouragement during the late 1970s and early 1980s of agricultural development and private industry brought changes in lending strategies. Managed by the Bangladesh Krishi Bank, a specialized agricultural banking institution, lending to farmers and fishermen dramatically expanded. The number of rural bank branches doubled between 1977 and 1985, to more than 3,330. Scheduled bank advances to private agriculture, as a percentage of sectoral GDP, rose from 2 percent in FY 1979 to 11 percent in FY 1987, while advances to private manufacturing rose from 13 percent to 53 percent.
Foreign exchange reserves at the end of Fiscal Year 1986 were US$476 million, equivalent to slightly more than 2 months worth of imports. This represented a 20-percent increase of reserves over the previous year, largely the result of higher remittances by Bangladeshi workers abroad. The country also reduced imports by about 10 percent to US$2.4 billion. Because of Bangladesh’s status as a least developed country receiving concessional loans, private creditors accounted for only about 6 percent of outstanding public debt. The external public debt was US$6.4 billion, and annual debt service payments were US$467 million at the end of Fiscal Year 1997.
(Source: <href=”#top”>http://www.asiatradehub.com/bangladesh/banks1.asp#top)
2.4 Historical Background of Exim Bank Ltd:
Export Import Bank of Bangladesh Limited is a public listed scheduled bank categorized in private sector and established under the ambit of Banking Companies Act, 1991 and incorporated as a public limited company under the Companies Act, 1994 on June 02. The Bank started commercial banking operations effective from August 03, 1999. The Bank converted its Banking Operations into Islamic Banking based on Islamic Shariah from traditional banking operation in July 01, 2004 after obtaining approval from Bangladesh Bank.
During the span of time the Bank has been widely acclaimed by the business community, from small entrepreneurs to large traders and industrial conglomerates, including the top rated corporate borrowers for forward- looking business outlook and innovative financing solutions. With a few of the Company’s activities and program on the basis of Islamic Shariah, within this period of time it has been able to create an image of responsibility for itself and has earned significant reputation in the country’s banking sector. Within an operative period as eight years, the bank has arrived at a strong financial and business position by expanding its market share compared to its contemporaries and to some extent to the 2nd even 1st generation banks of private sector. In edition, the Bank has also made a significant contribution to the national economy under the prudent leadership and untiring support of the member of the Board of Directors, who are leading business personalities and reputed industrialists of the country. As a matter of policy, the Bank conducts its business on the principles of Mudaraba, Murabaha, Bai-Muazzal and hire purchase transaction approved by Bangladesh Bank. The Bank is one of the interest-free Shariah-based Banks in the country and its modus-operandi is substantially different from those of other commercial banks.
The gradual improvement in the overall policy environment has enabled Bangladesh to improve its economic performance in recent years. Successive governments in Bangladesh have been confronted with the problem of stimulating the economic growth rate in a country where a substantial segment of the population lives below the subsistence level. Economic policies are still guided by five year plans. The prospect of economic growth in Bangladesh in the near future will depend on the pace of economic reforms and the quality of macroeconomic management. Accelerating the rate of economic growth will require higher levels of investment. This will primarily come from private flows of foreign direct investment. This can be established by reforming of the financial system and continuing the process of financial deepening.
The banking industry in Bangladesh is one characterized by the strict regulating and monitoring from the central governing body, The Bangladesh Bank. As the government is often the owner and regulator as well as the supervisor and customer of a bank, there has been ample opportunity for mismanagement over the years. The banking sector is plagued with a lack of credit discipline, archaic loan recovery law, corruption, inefficiency, overstaffing, etc. Several reform measures of the financial sector have been taken to improve the situation. Relative stability achieved by the support extended by both the central bank and the Government of Bangladesh in the past has restored public confidence in the country’s banking sector. Moreover, Nationalized Commercial Banks (NCBs) and old generation Private Commercial Banks (PCBs) would have to lower the rate of NPAs in their portfolios. Failure to do so would mean re-capitalization, at least for the NCBs. This may in turn lead to a further drain on the limited resources of the Government of Bangladesh at this time or in the immediate future this recapitalization would not be feasible. With these conditions in place, the World Bank anticipates the likelihood of a situation where the ever-increasing burden of non-performing loans and growing rate of debt servicing would place the economy under enormous strain and result in a crisis in the banking sector in the long term. The main concern is that currently there are far too many banks for the bank to sustain.
As a result the market will accommodate only those banks that can transpire as the most competitive and profitable ones in the future.
Export Import Bank of Bangladesh Limited that was named before as Bengal Export Import Bank Ltd. being newly formed commercial bank of the country with a distinctive identity was opened in 3rd August 1999,with the permission if Bangladesh Bank under Banking Companies Act-1991. The bank received the certificate of incorporation #C-37884(2164)/99 under the company act of 1994.
Exim Bank Limited was established in 1999 under the leadership of Late Mr.Shahjahan Kabir, founder chairman who had a long dream of floating a commercial bank which would contribute to the socio-economic development of our country. Mr.. Nazrul Islam Mazumder became the honorable chairman after the demise of the honorable founder chairman respectively.
The bank has migrated all of its conventional banking operation into Shariah based Islamic banking since July/2004.
Currently the major financial institutions under the banking system include
- Bangladesh Bank
- Commercial Banks
- Islamic Banks
- Leasing Companies
- Finance Companies
Figure 1: Percentage different banking Sectors in Bangladesh
The number of banks in all now stands at 52 in Bangladesh. Out of the 52 banks, four are Nationalized Commercial Banks (NCBs), 30 local private commercial banks, 12 foreign banks and the rest are Development Financial Institutions (DFIs).
However, the Bangladeshi Banking industry is characterized by the tight Banking rules and regulations set by the Bangladesh Bank. All banks and financial institutions are highly governed and controlled under the Banking Companies Act 1991. The range of banking products and services is also limited in scope. With the liberalization of markets competitions among the banking products seems to be growing more instances each day. In addition, the banking products offered in Bangladesh are fairly homogeneous in nature due to the tight regulations imposed by the central bank. Competing through differentiation is increasingly difficult and other banks quickly duplicate any innovative banking service.
These private banks are popularly known to public as First Generation Banks (9 banks opened during 1982-88), Second Generation banks (13 banks opened during 1992-96) and Third Generation banks (13 banks opened during 1999-2001).
2.5 Key Function of Exim Bank:
Like other commercial banks like Exim bank performs all traditional banking business including introduction of a wide range of saving and credit products, retail banking and ancillary service with the support of modern technology and professional management, but the Exim Bank Bangladesh Limited emphasizes its function in export and import trade handing and financing of export oriented industries will enhance wealth, quotes more employment opportunities helps formation of capital and reduces in balance in the balance of payment in the country.
2.6 Social Commitment of Exim Bank:
The purpose of the banking business is, obviously, to earn profit, but the promoters and the equity holders of EXIM bank are aware of their commitment to the society to which they belong. A chunk of the profit is kept aside and/or spent for socio-economic development through trustee and in patronization of art; culture and sports of the country and the bank want to make a substantive contribution to the society where we operate, to the extent of our separable resources.
2.7 Strategies of Exim Bank:
Exim Bank has formulated some strategies to achieve their desired Objective. These are:
2.7.1 Promotional activities: Exim Bank is trying to achieve their objective of increasing their market share by engaging in promotional activities. Example: They are offering free shopping worth Tk 2,000 from Agora to customers who will be able to refer at least 5 new customers to Exim Bank Ltd.
2.7.2 Assigning targets to sales people: The sales people of Exim Bank are assigned targets based on their desired increase in market share. Sales people are paid based on the number of sales they can make. If they are unable to achieve their target, they are not paid. This acts as a negative motivational factor, which is a driving force for the sales people.
2.7.3 Offering a very wide range of innovative products: Exim Bank wants to establish themselves as a strong brand name in the minds of customers. In order to achieve this objective they are continuously coming up with innovative products such as night banking, 24 hours ATM banking, 24 hours Phone banking, Internet banking, SMS banking, platinum credit cards having a maximum credit limit of BDT 1,000,000 and many more.
2.7.4 Introducing more convenient and comfortable means of banking: The innovative products offered by Exim have already made banking more convenient for customers. They have introduced token systems for customers who want to engage in cash and cheque transactions or want to make remittances. Customers no longer have to wait for long hours in the queue; they can sit making themselves comfortable and wait for their token number to appear on the screen before they go to the counter.
2.7.5 Communications Strategy of Exim Bank:
Exim Bank is a third generation bank. It has converted into Islamic Banking in July 01, 2004 with the approval of Bangladesh Bank. Exim Bank mainly emphasis on public relation out of four communications strategy. Exim Bank does following activities for their market promotion and advertising.
- When they open new branch, send letter to the elite persons, offices and industries in that area for opening account in their bank.
- Every year they arrange get together for their loyal customer in Dhaka and Chittagong. For that reason Exim Bank build good relationship with their clients. Exim Bank also solves the clients problems and they show the procedure the overcoming the problem.
- They arrange the ceremony of award to the honorable person in every year.
- They send gift item at the beginning of the year to the senior citizen of the society. These items include pen, dairy, calendar, pen stand, wall clock etc.
- They also give special gift to the elite person in different occasions.
- In every month the higher authority of Exim Bank give information about the market condition and suggestion to the branch manager.
- The managers of every branch tell present condition of his branch to the head office in every month.
- Head Office updates deposit and investment guideline to the branch manager.
- Exim Bank sponsors different types of National games.
Exim Bank will soon setup a Research and Development Division and separate marketing divisions, which are, help them to implement better marketing strategy.
2.7.6 Place Strategy of Exim Bank:
One of the simplest methods of segmenting markets is by their geographic location. People who are living in one region of the country have consuming and purchasing habits that differ from those who live other regions. For example, the usages of woolen sweaters and jackets is higher in north India, due to the extreme cold during the winter months, compared to consumers in south India. Even in local markets, geographic segmentation is important. A bank branch in the western part of the city may attract account holders from that part of town to the bank. However, the bank branch manager may find it difficult to attract customers from the eastern part of the city due to the location inconvenience. When marketers analyze geographic data, they study sales by region, by state, city size, specific locations and the kind of retail outlets where sales are made.
Its may be seen and unseen it is not necessary that bank perform its activities by branch network. Bank may be deal contacts with a client or corporation in different location out of Bank branch. Exim Bank has 54 branches in urban and rural area. But most of them are in urban commercial.
2.8 Vision of Exim Bank:
The gist of their vision is “Together towards Tomorrow”. Export Import Bank of Bangladesh Ltd. as the name implies, is not a type of Bank in some countries on the globe, but is the first of its kind in Bangladesh. It believes in togetherness with its customers, in its march on the road to growth and progress with services.
- Provides the greatest return to the stakeholders by the stakeholders by achieving sound profitable growth.
- Be perceived by the customers and employees as the best whenever it operates.
Customer Services and Automation:
“To err human and forgiveness divines” a proverb, the bank believes but the customers will not accept. Because for a service they pay for they want it 100% defect free. So improvement of the customer service should always be their motto altered expectations of the customer have shifted the focus from resource base productivity.
To operate in the globalize environment, the banks future plan is to equip all the units of the bank with the modern technology, such as online computer network telex, fax, e-mail etc. for the service of the customer round the clock, it has a plan to install ATMs suitable places in Dhaka and other cities of the country.
2.9 Mission of Exim Bank:
The bank has chalked out the following corporate objectives in order to ensure smooth achievement of its goals-
- To be the most caring and customer friendly and service oriented bank.
- To create a technology based most efficient banking environment for our customer.
- To ensure ethics and transparency in all levels.
- To ensure sustainable growth and establish full value of the honorable shareholders.
- To add effective contribution to the national economy.
- Provide high quality financial services in export and import trade.
- Providing efficient customer service.
- Maintaining corporate & business ethics.
- Become trusted repository of customer’s money and their financial advisor.
- Making its products superior & rewarding to the customers.
- Display team spirit and professionalism.
- Create sound capital base.
- Enhance shareholders wealth.
- Fulfilling its social commitments by expanding its charitable & humanitarian activities.
2.10 Exim Bank’s Objectives:
Based on their mission and vision, Exim Bank has come up with few objectives, which they believe will help them reach their desired destination. They are:
2.10.1 Gaining a larger market share: Exim Bank currently has a quite low market share of less than 6%. They want to increase their market share in the coming years.
2.10.2 Strengthening brand image: Exim wants to establish them as a bank providing excellent service in the minds of the customers. This will help them strengthen their brand image.
2.10.3 Provide technologically advanced services: Exim wants to provide technologically advanced services for the convenience of their customers. They were the first bank in the country to introduce Money link ATM cards. Now they have introduced Phone-banking, Internet banking and SMS/ online banking.
2.10.4 Making banking comfortable and convenient for customers: Exim wants to retain their customers by making customers feel comfortable while they are at the banking premises. For this reason they have arranged for adequate seating facilities. Now customers do not have to wait for long hours in queues, they can sit with their token until their token number appears on the screen and they are called to the counter.
2.10.5 Encourage and motivate customers so as to increase sales and profits: Exim wants to retain their previous customers by keeping them motivated by providing them with gifts for extensive use of ATM cards and Credit Cards and by providing higher interest rates to customers who open their accounts with a higher initial balance. This will also help them to attract new customers.
2.10.6 Ensuring customer satisfaction: Exim Bank has made use of different means of getting feedback from customers so as to understand their level of satisfaction, based on which they can take the necessary actions to ensure customer satisfaction.
2.11 Corporate Culture:
This bank is one of the most disciplined Banks with a distinctive corporate culture. Here we believe in shared meaning, shared understanding and shared sense making. Our people can see and understand events, activities, objects and situation in a distinctive way. They would their manners and character individually to suit the purpose of the Bank and the needs of the customers who are of paramount importance to us. The people in the Bank see themselves as a tight knit team/family that believes in working together for growth. The corporate culture we belong has not been imposed; it has rather been achieved through our corporate conduct.
2.11.1 Management of Exim Bank:
Management is the process of planning, organizing, leading and controlling the work of organization members and of using all available organizational resources to reach stated organizational goals. The strength of a bank depends of the strength of its management team. Exim Bank is proud to have a team of highly motivated, well-educated and experienced executives who have been contributing substantially to the continued progress of the bank.
Managerial effectiveness has been measured in Exim Bank in terms of come selected criteria such deposit mobilization, loans and advances made, loan recovery, profitability and productivity. It has been found that Exim bank is effective in respect of branch expansion, loan disbursement, loan recovery etc.
With a short spam of time, Exim Bank has become one of the leading and most successful bank not only among the third generation banks but also it superseded many other banks and financial institutions belonging to second and even first generation banks from the points of view of its excellent business performance, extraordinary corporate culture and strong team work under the dynamic leadership of its management. Management is trying to support and assist well-motivated and experienced affairs to run the day to day affairs of the bank smoothly.For maintains quality management, it is required to train-up more official at head office and branch level in respect of sanctioning, disbursement and recovery of credit, project appraisals, customer services etc.
2.11.2 Shariah Board:
The Board of directors has formed a Shariah Supervisory Board for the Bank. Their duty is to monitor the entire Bank’s transactional procedures, & assuring its Shariah compliancy. This Board consists of the following members headed by its chairmen.
The tasks of the Shariah supervisor in summary is replying to queries of the Bank’s administration, staff members, shareholders, depositors, & customers, follow up with the Shariah auditors and provide them with guidance, submitting reports & remarks to the Fatwa & Shariah Supervision Board and the administration, participating in the Bank’s training programs, participating in the supervision over the AlIqtisad AlIslami magazine, & handling the duty of being the General Secretary of the Board.
2.11.3 Members of Sharia Council:
| Professor Moulana Mohammad Salah Uddin | Mr. Md. Nazrul Islam Mazumder | |
| Moulana Mohammad Sadequl Islam | Mr. A.K.M Nurul Fazal Bulbul | |
| Professor H.M. Shahidul Islam Barakaty | Mr. Md. Abdul Mannan | |
| Mr. A.S.M. Fakhrul Ahsan | Mr. Zubayer Kabir | |
| Hafez Moulana Mufti Mohammad Khair Ullah | Mr. Abdullah Al-Zahir Sawpan | |
| Hafez Quari Moulana Mufti Mohammad Nur Uddin | Mr. Kazi Masihur Rahman |
2.11.4 Banking With Shariah Principles:
Export Import Bank of Bangladesh Limited is the 1st bank in Bangladesh who has converted all of its operations of conventional banking into Shariah-based banking since July/2004. We offer banking services for Muslims and non-Muslims alike allowing our customers choice and flexibility in their savings and investments. Our products are approved by our Shariah Board comprising of Muslim scholars of our country who are expert in all matters of Islamic finance.
The process by which Noriba’s investments are designed and executed allows the Bank to offer a combination of Shariah compliance and capital markets expertise that is unique throughout the world.
No Reba is committed to the strict adherence to the requirements of the Shariah as a result of the Bank’s sole focus on Shariah-compliant investments and the full supervision of its financial products & transactions by the no Reba Shariah Board. No Reba experts specifically design each of the Bank’s investment vehicles with the approval of the No Reba Shariah Board. Once the given product or transaction has been arranged, the No Reba Shariah Board carefully screens it for compliance before giving final approval for its implementation.
2.11.5 Shariah Based Islamic Banking:
By the grace of Almighty Allah, the Bank has started its operation as full-fledged Islamic Bank based on Shariah through conversion from conventional interest based banking system with effect from 1st July 2004 with the approval of Bangladesh Bank. It is our great pleasure that every body gladly accepted the conversion with appreciation. It is a breakthrough in the history of Islamic Banking, because all other Islamic Banks of Bangladesh are found Shariah based since inception i.e. at the time of their incorporation. We have also experienced some traditional Banks having a few branches based on Shariah. But total conversion of a conventional Bank into a full fledged Islamic Bank is, perhaps, first time introduced by us in the World.
It is noted here that a learned Shariah Council, consisting of 12 members who are prominent ulema, reputed bankers and eminent economists of the country, has been formed to guide, monitor and supervise the banking activities complying Shariah principle since inception of its Islamic banking branches and thereafter transformation of its operation from traditional to fully Shariah based Islamic banking system. Professor Moulana Mohammad Salah Uddin is the Chairman of the council. Total 08(Eight) meetings of the council were held during the period.
2.11.6 Prime Operational Area:
As a commercial Bank, Exim Bank provide all traditional banking services including a wide range of savings and investment scheme products, foreign exchange and ancillary services with the support of modern technology and professional management. But our main stress is, as the name implies, put on export and import trade handling and financing & the bank has become the pioneer in promoting Readymade Garment industries and one of the largest financials in this sector. Since the inception, the Bank foresighted the bright prospects of this sector and extended finance to the deserving and promising entrepreneurs. It provides this sector with financial support including market information and advice and today the garment sector constitutes about 76% of the total export of the company.
2.11.7 Human Resource Management of Exim Bank:
Hunan resource is the fundamental asset of the organization. Human resource approach is concerned with the growth and development of people toward higher level of competency, creativity and fulfillment. Therefore, human resources development has been given its due importance in an environment that values performance, teamwork, fairness and integrity, it has both qualitative and quantitative dimension. Exim Bank recognizes that intellectual capital is the most important asset for a financial institution.
Without proper and efficient human resources, no organization can run its operations. The bank believes that the professional competence bank personnel and its commitment for accomplishing assigned responsibilities are a first line of defense to prevent irregularities.
The objectives of Human Resource management of Exim Bank are as follows:
? Conducting job analysis
? Planning employee needs and recruiting job candidates
? Selecting of candidates
? Orienting and training new employees
? Managing wages and salaries (Compensating Employees) and benefits
? Appraising performance
? Communicating (interview, counseling, disciplining)
? Training and developing managers
2.11.8 Corporate profile of Exim Bank:
Name of the Company : Export Import Bank of Bangladesh Limited.
Chairman : Md. Nazrul Islam Mazumder
Managing Director : Kazi Mashiur Rahman
Company Secretary : Md. Golam Mahbub
Advisor : Alamgir Kabir, FCA
Legal Status : Public Limited Company
Date of Incorporation : June 02, 1999.
Registered Office : “SYMPHONY”Plot#SE (F)-9, Road#142, Gulshan Avenue, Dhaka-1212, and Bangladesh
Line of Business : Shariah based Islamic banking.
Authorized Capital : 350.00 Core
Paid Up Capital : 267.75 Core
Shariah based Islamic banking: Since July/2004.
Stock Exchange Listing : August 03, 1999.
Phone No : 9566764, 9566418, and 9553872
Telex : 642527 EXMHO BJ
Fax : 880-2-988 9358
SWIFT : EXBKBDDH
E-mail : eximho@bdonline.com
Website : www.eximbankbd.com
Auditor : hoda Vasi Chowdhury & Co. Chartered
Accountants. BTMC Bhaban (8th Level),
7-9, Kawran Bazar, Dhaka-1215.
Authorized Capital : Tk. 1000.00 (initial)
Paid up capital : Tk.225 million (initial)
Deposit accumulation : Tk 5758.70 core.
General Investment : Tk 5363.77 core.
Foreign Exchange Business : Tk 1564.46 core
Operating Profit : Tk 251084 core
Net Profit : Tk 1, 0960,627,046
Number of Branches : 5
Total Manpower : 1350 (approximate)
2.11.9 Organizational Structure of Exim Bank:
The development of on organization depends on the management style of their organizations the same the development if the bank is being occurred only for the good management team. Management of the Exim Bank controlling of all the resources of the organization.
The board of directors wants to repose in the management all executive powers to run this service industry administration and credit portfolio independently without any undue influence from outside. The board formulates policy and gives policy directives to the management. Transparency and accountability are strictly ensured at all leaves of the bank. Bank operate with integrity, competence and farsightedness abiding by all the principals and provisions laid down in the bank company act 1991, 1994 and the guidelines of Bangladesh Bank. The bank is committed to pursue a straight forward, upright legitimate banking business, never be tempted by the abnormal prospect of large returns to do any thing. It will only do what may be done under the national policy.
2.11.10 Hierarchy Position Structure of Exim Bank:
2.11.13 Achievement:
It is a great pleasure that by the grace of Almighty Allah, we have migrated at a time all the branches from its conventional banking operation into Shariah based Islamic banking operation without any trouble. Lot of uncertainties and adversities were there into this migration process. The officers and executives of our bank motivated the valued customers by counseling and persuasion in light with the spirit of Islam especially for the non-Muslim customers. Our IT division has done the excellent job of converting and fitting the conventional business processes into the processes based on Shariah. It has been made possible by following a systematic procedure of migration under the leadership of honorable Managing Director.
2.12 SWOT Analysis:
SWOT analysis means analyzing the strengths, weakness, opportunities and threats of the organization to know the present condition. This is very common analysis to determine the company’s capabilities of doing effective business. This help to know the possible advantages and disadvantages of the firm that it has compare to others. The SWOT analyses are briefly given in the below:
S- Strength, W- Weakness, O- Opportunity, T- Threats
Here is the SWOT analysis of Exim Bank Bangladesh Limited:
2.12.1 Strengths:
· Exim Bank has an interactive corporate culture. The working environment is very friendly, interactive and informal. And, there are no hidden barriers or boundaries while communicate between the superior and the employees. This corporate culture provides as a great motivation factor among the employees.
· Exim Bank has provided its banking service with a top leadership and management position. The top management officials have all worked in reputed banks and their years of banking experience, skill, and expertise will continue to contribute towards further expansion of the bank.
· Exim Bank Limited has already achieved a high growth rate accompanied by an impressive profit growth rate in 2001. The number of deposits and the loans and advances are also increasing rapidly.
· Exim Bank Limited has already established a favorable reputation in the banking/ service industry of the country. It is one of the leading private sector commercial banks in Bangladesh. The bank has already shown a tremendous growth in the profits and deposits sector.
· Exim Bank has the reputation of being the provider of good quality services too its, potential customers.
2.12.2 Weakness:
· Some of the job in Exim Bank has no growth or advancement path. So lack of motivation exists in persons filling those positions. This is a weakness of Exim Bank that it is having a group of unsatisfied employees.
· ATM service is not available, while most of the private banks provide the ATM service to their customers very strongly.
· They have newly established online system in Bank, which is in the preliminary stage and at present they are facing some problem with their server & also their software which they use for their daily transaction & for their working purpose.
· They have no cash deposit machine (CDM) to deposit the money. For that reason the customer sometimes need to stand on line for deposit the money to their account.
2.12.3 Opportunity:
· The country’s increased population is gradually learning to adopt consumer finance. Our population is middle class. Different types of retail lending products have great appeal to this class. So a wide variety of retail lending products has a very large and can capture market.
· A large number of private banks coming into the market in the recent time. In this competitive environment Exim Bank must expand its product line to enhance its sustainable competitive advantage.
· Exim Bank can introduce special corporate scheme for the corporate customer or officer who have an income level higher from the service holder. At the same time, they can introduce scheme or loan for various service holders. And the scheme should be separate according to the professions, such as engineers, lawyers, doctors etc.
2.12.4 Threats:
· The quality of the service at Exim Bank is higher than the some other private banks. But the bank has to compete with the Multinational Bank located here.
· All multinational banks and upcoming foreign, private banks enormous threats to Exim Bank Limited.
· The low compensation package of the employees from mid level to lower level position threats the employee motivation. As a result, good quality employees leave the organization and it effects the organization as a whole.
2.13.1 Share Information of Exim Bank:
| Export Import Bank of Bangladesh Limited | ||||||||||||||||||||||||||||||||||||||
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Table i: Share Information of EXIM Bank
2.13.2 Yearly Dividend Position of Exim Bank Ltd.
| Export Import Bank of Bangladesh Limited
Financial Administration Division Head office Dhaka. Year wise Dividend position of the Bank |
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| Year | % Cash dividend | % Stock dividend | Total |
| 2001 | -Nil- | -Nil- | -Nil- |
| 2003 | 14.00% | -Nil- | 14.00% |
| 2004 | 25.00% | 12.50% | 37.50% |
| 2005 | 8.00% | 24% | 32.00% |
| 2006 | 40.00% | -Nil- | 40.00% |
| 2007 | -Nil- | 40% | 40.00% |
| 2008 | -Nil- | 30% | 30.00% |
| 2009 | -Nil- | 25% | 25.00% |
| 2010 | 7% | 25% | 32.00% |
The Board of Directors of Exim Bank recommends stock dividend @25% per share in the form of Bonus share & 7% cash dividend for the year ended 31st December 2007 subject to approval of the regulatory authorities and the ensuing Annual General Meeting of the Company.
Table IV: Year wise Dividend position, 2001-2010
2.13.3 Financial overview of the Bank:
The performance of the bank, during the period under review, is more significant simultaneously in development and achievements of continuous growth rate in all the areas of banking operations. The Bank has successfully been marching ahead with its prime business objective by earning a after tax profit of Tk.930,843,607 registering an annual growth of 43.14% than that of the previous year which was Tk.650,292,342. It has successfully mobilized Tk.41,565,68,592 deposits from depositors and has arranged disbursement of Tk.40,195,239,222 as investment up to 31st December 2007 through its 35 Branches. The total Income on investment (Share & Bonds) of the Bank were Tk.205,594,883. The Return on Assets (ROA) after tax was 2.00% well above the industry average. The earnings per share were Tk.43.45 as on 31st December 2007 & the net income per share was Tk.43.45 which was 14.49% more then the previous year. The achievements were possible because of the service excellence of management team with support from a very resourceful and skilled workforce rendering efficient and specialized services.
The Bank started its voyage with an authorized Capital of Tk.1, 000 million while it’s initial Paid up Capital was Tk.225.00 million subscribed by the sponsors in the year 1999. The Capital and Reserve of the Bank as on 31st December 2007 including paid up capital of Tk.4,569,562,645. The Bank also made provision on classified investment which is amounted to Tk.635, 106,791.
2.13.4 Deposit:
Deposit is one of the principal sources of fund for investment of commercial banks and investment of deposit is the main stream of revenue in banking business. The total deposit of the Bank stood at Tk.4154.66 crore as on December 2007 against Tk.3503.20 crore of the previous year which is an increase of 18.60%. This growth rate may be termed as a remarkable achievement for the Bank. The present strategy is to increase the deposit base through maintaining competitive rates of Profit and having low cost of funds.
2.13.5 Import Business:
During the year, the Bank import volume stood at Tk.6139.94 crore with a growth of 24.05% in comparison with previous year.
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Figure iii: Import Business, 2006-2010
2.13.6 Export Business:
The growth of the export business has significantly been increased by 39.55%. It stood at Tk.31, 285.37 million as of December 31, 2005 against Tk.22, 418.40 million of the previous year. And next Year it rise to Tk. 46, 234.60 million which stand for a huge 47.78% increase in this area.
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Figure iiii: Export Business, 2007-2010
2.13.7 Foreign Remittance:
Foreign Remittance of the Bank stood at Tk.34.30 crore as of December 31, 2006 as against Tk.22.3 crore in 2005. And in 2007 it stood at Tk. 71.30 crore.
Figure ivx: Foreign Remittance, 2007-2010
2.13.8 Asset and Liability Management:
A Banks Assets are mainly developed with and backed by its liabilities. Thus successful banking requires efficient and effective management of its assets and liabilities. Export Import Bank of Bangladesh Limited has a well organized Asset Liability Management Desk under direct supervision of a well formed and well groomed Asset Liability Committee (ALCO). The ALCO of the Bank monitors Balance Sheet risk and liquidity risks of the Bank. The term Balance Sheet risk refers to potential change in earnings due to change in rate of profit, foreign exchange rates which are not of trading nature. On the other hand, liquidity risk can be defined as the risk or chance of failure to meet up any withdrawal/disbursement request by a counter party/customer. The ALCO of Exim Bank reviews liquidity requirement of the Bank, the maturity of assets and liabilities, deposit and lending pricing strategy and the liquidity contingency plan. The primary objective of the ALCO is to monitor and avert significant volatility in Net Profit Income (NPI), investment value and exchange earnings. Besides this, the ALCO of Exim Bank deals with various issues that may put an impact on the profitability or management procedure of the Bank. To manage the contingent points of time and operation, the ALCO of the Bank calls for special meetings, analyzes the situation and decides what should be done to serve the Banks interest most.
2.13.9 Internal Control & Compliance:
Internal Control and Compliance is the key of a good management and a strong core of an organization. It ensures safe and smooth operations within the organization. All the rules and regulation practiced in the banking industry are meant to safety and efficiency in banking operations of all kind. Internal Control and Compliance ensures that all the working units of the Bank abide by those rules and regulations without any fail.
Sometimes Operational loss arises from errors and fraud due to lack of Internal Control and Compliance. Internal Control and Compliance Division undertakes periodical and special audit of the branches and departments at Head Office for review of the operation and compliance of the statutory requirement. The Audit Committee of the Board of Directors plays an effective role in providing a bridge between the Board and Management. The Committee reviews the Financial Reporting process, the System of Internal Control, the Audit process and the Bank’s process for compliance with laws, regulations and code of conduct.
Export Import Bank of Bangladesh Limited has a very strong and well organized Internal Control and Compliance Division to look after the control and compliance level of rules and regulations within the Bank. Bangladesh Bank guidelines are strictly followed in case of Internal Control and Compliance of the Bank. There is a well-organized guideline prepared by the Internal Control and Compliance Division (ICCD) of the Bank in line with the guidelines of Bangladesh Bank. The audit and inspection department under ICCD is conducting audit and inspection on regular basis and submits reports to the Management and the Board Audit Committee with the follow-up of review on compliance and monitoring thereof satisfactorily. Besides, a number of circulars regarding Internal Control and Compliance are issued each year so that the employees of the Bank may learn about the rules and regulation of the Bank as well as the Regulatory Authorities and the amendments and changes therein.
2.13.10 Money Laundering:
Money laundering means Illegal transactions made in order to project the proceeds of crime as legally obtained. Persons, who earn illegal money, try to hide their source of earning by conducting a number of transactions. Such transactions separate the source of earning from its proceeds. It becomes difficult for the law enforcing agencies to trace the source of earning.
Not only Exim Bank, all of the company which has banking business must follow the rule. After the act the bank imposed some rule of their banking sector. Such as:
· For money transfer form one bank to another bank a customer must need to be a bank account on the particular bank.
· In case of foreign currency, the customer must need a bank account to receive the currency.
· In case of sent money to outside of the country, without an account the customer cannot be able to sent money.
All of the banks strictly followed the money laundering act. If any