Overall Banking System of Al-Arafah Islami Bank Ltd

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Overall Banking System of Al-Arafah Islami Bank Ltd

EXECUTIVE SUMMARY

This report is prepared on the basis of my two-month practical experience at Al-Arafah Islami Bank Limited (AIBL), Motijheel Branch. This internship program helps me to learn more about the practical situation of a financial institution. An Islamic bank is a financial institution whose status, rules and procedures expressly state commitment to the principle of Islamic Shariah and to the banning of the receipt and payment of interest on any of its operations. Al-Arafah Islami Bank Ltd was established in 1995 under the companies Act, 1994 as a banking Company with limited Liability by. The whole working process of Al-Arafah Islami Bank Limited Motijheel Branch is divided into 3 sections- (i) General Banking Section, (ii) Investment Section, and (iii) Foreign Exchange Section. This report has been presented based on my practical observation and experience gathered from the Branch and the focus is given on the overall banking system of Al-Arafah Islami Bank Ltd

The whole report is divided into eight chapter – The first chapter is Introduction , It contains origin of the report, background of the report, importance of the study, objective of the report, methodology of the report, scope of the report and limitations of the study. Second chapter is profile of the (AIBL) It contains, History of AIBL, Mission of AIBL, Goal of the Bank, What is Islamic Banking, Distinguishing Features and Objective of Islamic Banking, Management Bord, Organ gram, Financial Highlights of the company, Shariah Board, Feature of AIBL, Deposits, Branch locarion of AIBL, Office Automation, Liability Purchased by the AIBL. The third chapter is Branch overview it contains About Branch, Number Of Different Accounts Holders, Mobilization of Deposits, Organo gram Of motijheel Branch.

Chapter four is General Banking, It is the front side banking service department. General Banking is divided into five sectors: Account opening section, Bills and clearing Section, Remittance Section, Deposit Section, Cash Section,

The chapter Five is Invstment; one of the core functions of AIBL is to create the claim against individual borrower or real the purpose of sanctioning credit bank grants loan in the form of different securities. Investment procedure, Investment Mode, Types of Investment, Sector wise Investment etc.,

The chapter six is Foreign exchange; one of the largest businesses carried out by the AIBL is foreign trading. The trade among various countries falls for close link between the parties dealing in trade. This department handles various types of activities by three separate sections: Import section, Export section, Foreign remittance section,

The chapter seven is SWOT Analysis; The chapter eight is Findings and Recommendations. about the AIBL .

CHAPTER ONE

1.1Origin of Report:

In this particular report, the author is an intern of the previously mentioned program and the concerned organization is Al-Arafah Islami Bank limited ( AIBL), which is a prominent private and the Bank of Bangladesh that based on Islamic law.

In a way of delegation, responsibility of carrying out the study has conferred upon the concerned intern.

1.2 Background:

Bank and financial institution play an important role in financial inter mediation and thereby contribute to the overall growth in the economy. At present the financial system in Bangladesh consists of the central bank, nationalized commercial/specialized banks, private banks, foreign banks and other non-bank financial institution. This report is based on one Islami Bank that is the Al-Arafah Islami Bank Ltd.

1.3 Scope of the report:

All the tasks and information required in preparing this report have been collected from the motijheel Branch and Head office of AIBL. The scope of the organizational part covers the organizational structure, background, and objectives, functional, departmental and Business performance of AIBL as a whole including the foreign exchange department of AIBL.

1.4 Importance of the study:

To identify the problem of AIBL.

To find ways to improve the present banking system of AIBL.

To achieve practical knowledge of banking side of AIBL.

To gain practical knowledge about over all banking system & especially general banking and foreign exchange sector.

1.5 Objective of the Report:

The first objective of writing the report is fulfilling the partial requirements of the BBA program. In this report, I have attempted to give on overview of Al-Arafah Islami Bank Limited ingeneral. Some following objectives of the report are as shown.

§ To explain the general activities of AIBL.

§ To gain or achieve the practical Idea of banking System of AIBL.

§ To observe the economic condition of AIBL

§ To identify the problems of AIBL prevailing in its banking system

§ To suggest some possible recommendations to overcome the problems.

1.6 Methodology of the study:

In order to make the report more meaningful and presentable two sources of data and information have been used widely;

1.6.1The primary sources :

The sources are as follows Face-to-face conversation with the Executives and officers of Bank.Informal conversation with the client.

2. Practical work exposures from the different desks of the various departments of the Branch covered.

3. Relevant file study as provided by the officer’s concerned.

1.6.2The Secondary Sources:

The secondary sources data and information are:

1. Annual Report of Al-Arafah Islami Bank Ltd.
2. Periodicals published by Bangladesh Bank.
3. Various books, articles, compilations etc. Regarding general banking functions.

1.6.3 Data Collection Method:

1.6.3.1 Secondary:

For the organization, part information has been collected through different published articles, journal.

1.6.3.2 Primary:

Formal questionnaire for data collection is not used. Information is collected through informal discussions with Relationship managers & respective Unit heads.

1.7 Limitation:

Objective of the practical orientation program is to have practical exposure for the students. tenure was for twelve weeks only, which was somehow not sufficient. After working whole day

in the office it very much difficult, it not impossible to study again the theoretical aspects of banking. On the other hand to prepare my internship report have faced some limitations as follows:

· To collect data and information, it is a common tendency of any departments to keep

· back their departmental data and information.

· Unavailability to required published documents.

· Lack of my experience and efficiency to prepare the standard report.

· Observed that unskilled persons are available in AIBL; they are not able to teach us various aspects.

CHAPTER TWO

PROFILE OF AIBL

2. History of AIBL Bank Limited

2.1 Status of the Bank:

Islam provides us a complete lifestyle. Main objective of Islamic lifestyle is to be successful both in our mortal and immortal life. Therefore in every aspect of our life we should follow the doctrine of Al-Qur’an and lifestyle of Hazrat Muhammad (Sm.) for our supreme success. Al-Arafah Islami Bank started its journey in 1995 with the said principles in mind and to introduce a modern banking system based on Al-Qur’an and Sunnah. Bangladesh is one of the largest Muslim countries in the world, its people are deeply devoted to Islamic way of life as enshrined in the Holy Quran and the sunnah. Al-Arafah Islami Bank Ltd was established in 1995 under the companies Act, 1994 as a banking Company with limited Liability by shares. It is an interest free Shariah bank of Bangladesh rendering all types of commercial banking service under the regulation of Bank Companies Act, 1991. The Bank conducts its business on the principles of Musaraka, Bai-Murabaha, Bai-muazzal and Hire Purchase transactions approved by Bangladesh Bank. Naturally its modes and operations are substantially different from those of other conventional commercial banks. There is a Shariah Council in the bank who maintains constant vigilance to ensure that the activities of the bank are being conducted on the precepts of Islam. The Shariah Council consists of prominent Ulema, reputed Bankers, renowned Lawyers and eminent Economist.

2.2 Vision of AIBL:

To become a leading banking institution and to play a pivotal role in the development of the country.

2.3 Mission of AIBL:

1. To conduct interest free banking.

2. To establish participatory banking instead of banking on debtor creditor relationship.

3. To invest through different modes permitted under Islamic Shariah.

4. To accept deposits on profit-loss sharing basis.

5. To establish a welfare-oriented banking system.

2.4 Goal of the Bank:

The motto of the Al-Arafah Islami Bank Ltd is to explore a new horizon of innovative modern banking creating an automated and computerized environment providing one stop service and prepare itself to face the new challenges of globalization and 12^th century.

2.5 WHAT IS ISLAMIC BANKING:

Definition:

Islamic banking has been defined in a number of ways. The definition of Islamic bank approved by the General Secretarial of the OIC is staled in the following manner. “An Islamic bank is a financial institution whose status, rules and procedures expressly state commitment to the principle of Islamic Shariah and to the banning of the receipt and payment of interest on any of its operations.” Dr Shawki Ismail Shehta viewing the concept from perspective of an Islamic economy and the prospective role to be played by an Islamic bank therein opines that “It is therefore, natural and, indeed, imperative for an Islamic bank incorporate in its functions and practices commercial investment and social activities, an institution design to promote the civilized mission of an Islamic economy.” Dr. Ziaul Ahmed says, “Islamic banking is essentially a normative concept and could be define conduct of banking in consonance will the ethos of the value system of Islam.”

It appears from the above definitions that Islamic banking is a system of financial intermediation that avoids receipt and payment of interest in its transactions and conducting operations in a way that it helps achieving the objectives of an Islamic economy. Alternatively, this is a banking system whose operation is based on Islamic principle transactions of which profit and loss

sharing (PLS) is a major feature ensuring justice equity in an economy. That is why Islamic banks are often known as PLS-banks.

· Theoretical Basis of the Concept of Islamic Banking:

Conventional banking is essentially based on debtor-creditor relationship between depositors and the bank in the one hand and between the borrowers and the bank on the interest is considered as the price of credit, reflecting the opportunity cost of money. Islam, on the other hand, considers loan to be given or taken, free of charge, to meet contingency and that the creditor should not lake any advantage of the borrower. The money is lent out on the basis of interest, more often it happens that it leads to some kind of injustice. The first Islamic principle underlying such kinds of transactions is that “deal not unjustly and ye shall not be dealt with unjustly”. Hence, commercial banking in an Islamic framework is not based on debtor-creditor relationship.

The second principle regarding financial transactions in Islam is that there should not be any reward without risk-taking. This principle is applicable both to labor and capital. As no payment is allowed to labor unless it is applied to work, no reward for capital should be allowed unless it is exposed to business risks.

Thus, financial intermediation in an Islamic framework has been visualized on the basis of the above principles. Consequently financial relationships in Islam have been participatory in nature. Several theorists suggest that commercial banking in an interest-free system should be organized on the principle of profit and loss sharing. The institution of interest is thus replaced by a principle of participation in profit and loss. That means, a fixed rate of interest is replaced by a variable rate of return based on real economic activities. The distinct characteristics which provide Islamic banking with its main points of departure from the traditional interest-based commercial banking system are: (a) the Islamic banking system is essentially a profit and loss sharing system and not merely an interest-free (Riba) banking system; and (b) investment (loans and advances in conventional sense) under this system of banking must serve simultaneously both the interest of the investor and those of the local community. The financial relationship as pointed above is referred to in Islamic jurisprudence as Mudarabah.

2.6 DISTINGUSHING FEATURES OF ISLAMI BANKING:

An Islamic bank has several distinctive features as compared to its conventional counterpart. Six essential differences as below:

· Abolition of Interest (Riba): Since Riba is prohibited in the Holy Quran and interest in all its form being akin to Riba as, confirmed by Fukaha and Muslim economists with rare exceptions, the first distinguishing feature of an Islamic bank must be that it is interest-free, while the abolition of Riba would be the first and essential difference between the conventional interest-based commercial banks and Islamic banks, if would not the constitute the only difference between them. The nature, outlook and operations of an Islamic bank would have to undergo a complete transaction.

· Adherence to Public Interest: Activity of commercial banks being primarily based on the use of public funds, public interest rather than individual or group interest will be served by Islamic commercial banks. The Islamic banks should use all deposits, which come from the public for serving public interest and realizing the relevant socio-economic goals of Islam. They should play a goal-oriented rather than merely a profit-maximizing role and should adjust themselves to the different needs of the Islamic economy.

· Multi-Purpose Bank: Another substantial distinguishing feature is that Islamic banks will be universal or multi-purpose banks and not purely commercial banks. These banks are conceived to be a crossbreed of commercial and investment banks, investment trusts and investment management institutions and would offer a variety of services to their customers. A substantial part of their financing would be for specific projects or ventures. Their equity-oriented investments could not permit them to borrow short and lend long. This should tend to make them less crisis-prone compared to their capitalist counterparts. Since the overnight, call loan or very short-term inter-bank market may be available to them only to a limited extent, they may have to make a greater effort to match the maturity of their liabilities with the maturity of their assets.

· More Careful Evaluation of Investment Demand: Another very important feature of an Islamic bank is its very careful attitude towards evaluation of applications forequity oriented financing. It is customary that conventional banks evaluate applications, considers collateral and avoids risks as far as possible. Their main concern does not go beyond ensuring the security of their principle and interest receipts. Since the Islamic bank has in built mechanism of risk-sharing, it would need to be careful more careful. It adds a healthy dimension in the whole lending business and eliminates a whole range of undesirable lending practices.

· Work as Catalyst of Development: Profit-Loss-Sharing being a distinctive characteristic of an Islamic bank, if fosters closer relations between banks and entrepreneurs. It helps develop financial expertise in non-financial firms also enables the banks to assume the role technical consultants and financial advisors and act as catalysts in the process of industrialization and development. The bank would take care of all the responsible and agreed financial needs of their clients thus relieving them of the need to run around for funds to overcome their normal liquidity shortages.

Objectives of Islamic Banking:

The primary objective of establishing Islamic bank all over the world is to promote, foster and develop the application of Islamic principles, law and tradition to the transaction of financial, banking and related business affairs and to promote investment companies, enterprises and concerns which shall themselves be engaged in business as are acceptable and consistent with Islamic principles, law and traditions. But the objective of Islamic bank when viewed from the context of its role in an economy, its specific objectives may be enlisted as following:

To offer contemporary financial services in conformity with Islamic Shariah;

To contribute towards economic development and prosperity within the principles of Islamic justice;

To facilitate efficient allocation of resources;

To help achieving stability in the economy

· Offer Financial Services:

Interest-based banking considered to be practicing riba in financial transaction has

Islamic banking is clearly meant for creation of provision for Shariah approved financial transactions.

· Islamic Banking for Development:

Islamic banking is claimed to be more development oriented than its conventional counterpart. The mechanism of Profit-Sharing is build-in development promoter since it establishes a direct relationship between the benefit of the bank and the entrepreneurs.

· Optimum Allocation of Recourses:

Another important objective of Islamic banking is the optimum allocation resources. The basic mechanism of Islamic banking system is such that financial resources are allocated to projects which are considered to be more profitable.

The means, in the case of Islamic banking profitability of projects works as deciding factor as to where the financial resources will go and to what extent.

· Islamic Banking for Equitable Distribution of Resources:

Another important objective of Islamic banking is to ensure equitable distribution of income and resources among the participating factors: the bank, the depositors and the entrepreneurs. This is done through its built-in mechanical arrangement as well as other welfare activities pursued through Zakah fund.

2.7 Management Body of AIBL:

The management of the bank is vested in a 24-member board of directors, who oversee the affairs of the bank through a managing director, the chief executive officer of the bank. In December 2000, the bank had a total of 622 employees, including its executives and it had 35 branches (30 urban and 5 rural). The registered head office of the bank is at Motijheel, Dhaka.

Board of Directors

List of Chairman of the Executive Committee (E.C)

Source – Annual Report of AIBL.

2.8 Organo gram orManpower Position of AIBL:

Source – Service Rule of AIBL

2.9 Financial Highlights of the company:

Source- Web-site Of AIBL.

2.10 Shariah Board:

Shariah Board

Source – Memorandum and Articles of AIBL

2.11 Feature of AIBL:

• All activities of the bank are conducted according to Islamic shariah where profit is the legal alternative to interest.
• The banks investment policy follows different modes approved by Islamic shareah based on Quaran & Sunnah.
• The bank is committed towards establishing welfare oriented banking system, economic upliftment of the law- income group of people, create employment opportunities.
• According to the needs and demands of the society and the country as a whole the bank invests money to different halal business. The bank participates in different activities aiming at creating jobs, implementing development projects taken by the government and developing infrastructure.
• To render improved services to the clients imbued with Islamic spirit of brotherhood, peace and fraternity and by developing an institutional cohesion.
• The bank is contributing to economic and philanthropic activities side by side. Al-Arafah English Medium Madrasah and AIBL Library are among mention worthy.

2.12 Deposits:

The total deposit of the bank was TK. 26,685,444,177 at 30^th June 2008, of which general deposit was 3,676,315,890 taka. At the same time in the last year 2005, the amount of total deposits was 23,009,128,287 taka.

2.13 Liability Purchase by the AIBL:

Investment:

At the end of the year 2008, the amount of investment of the bank was Tk.17423.19 million in comparison to tk.11474.41 million of the last year 2005. The amount of investment has increased 5948.78 million taka within this period, which is around 5184%. The bank extends investments to the clients under the following modes of investment under Islamic Shariah:

· Murabaha:

Murabaha mode of finance means purchase of commodities as per request of the client permissible by Sharia and sale thereof with profit to the client i.e. cost plus sale of a commodity to the investment client. The commodity is procured at the instance of the investment client from a third party/firm. Purchase price and profit are disclosed to the client. Goods are kept under bank’s custody as security and the client lifts the same gradually or at a time on payment of sale price of the commodity.

· Bai-Muazzal:

Bai-Muazzal means cost plus sale of the commodity on deferred payment basis against adequate collateral. The commodity is procured at the instance of the investment client from a third party as per firm agreement between the client and the bank and sale price( bank’s dues) is paid by the client within stipulated period of time. After having possession of the goods, the bank delivers the same to the client on credit which is required to be paid at a specified future date (adjust proportionately) with the progress of sale of goods within the given period.

· Bai-Salam (Advance Sale):

Under this mode, the bank buys the goods from the producer/supplier on payment in advance after entering a firm contract and the goods are delivered/ supplied to the bank at a future specified date. In the contract of Bai- Salam quantity, quality, shape, size, price and time of delivery of the goods are clearly specified.

· Hire Purchase Sherkatul Melk (HPSM):

Durable items, like vehicle, machinery, equipment, etc., are purchased on equity participation by both the bank and the client and the same is handed over to the investment client on rental basis entering into an agreement with the client that principal amount shell be paid within a certain period of time by installments. Rent is to be paid on the principal outstanding till the ownership is transferred to the client on payment of the entire principal amount.

· Al-Arafah Islami Bank ltd. offers following categories of HPSM:

Entire capital is provided by the bank against firm assurances of the entrepreneur that he will manage the business properly and efficiently. The entrepreneur manages the business as Manager. Profit is shared to the bank and entrepreneur as per agreed ration while the loss, if any, is borne by the bank alone. Bank can supervise such investment if and when desired/ required but cannot participate in the management of the business.

· Industrial

· Commercial

· Transport

· DDIS

· SSBI

· HPSM Real State

· Staff House Building Investment

· HPSM Car (for executives of AIBL)

Musharaka:

Capital is provided by both bank and investment client on the basis of Shirkatul Innan principal of Islamic Shariah Partnership. Profit is shared as per agreed ratio and equity ratio. The bank supervises the utilization of investment and participates in decision making.

§ Quard:

The bank also allows Qard in very special cases on obtaining proper security. Service charge equal to cost of fund is recovered on Qard amount.

2.14 OFFICE AUTOMATION:

Banking operations of the branches have been computerized minimize cost and risks and to optimize benefits and increase overall efficiency for improved services. The Bank is capable of generating the relevant financial statement at the end of the day. The Bank has recently installed Reuters Screen for smooth operation of foreign currency dealings. The Bank has also hosted a web page of its own to take a place in the World Wide Web. The Bank is going to introduce Credit Card soon.

2.15 BRANCH LOCARION OF AIBL

AIBL 46 Branch-Location all over Bangladesh

A.N.M. Mofidul Islam

VP

85/87, Nawabpur Road, Dhaka

Ph: 02-7110708 (D), 02-7119494, 02-7167734

R: 02-9669936, 0189-212754 VIP Road Branch

Md. Emdadul Haque

SVP

86, Shantinagar, VIP Road, Dhaka- 1000

Ph: 02-9345871, 02-9345872

R: 02-7218736, 0189-212743

Corporate Branch

Md. Shamsul Alam

AVP

125, Motijheel C/A (Gr. and 1st. Fl.)

Dhaka-1000

Ph: 02-9563884, 02-9563873, 0189-212748

R: 02-7212196

Elephant Road Branch

Md. Atiqur Rahman

VP

91, New Elephant Road, Dhaka

Ph: 02-9665323-4, 0189-244902 Uttara Model Town Branch

Md. Abdullah Al-Mamun

AVP

H#13, R# 14/A, Sector# 4, Uttara Model Town, Dhaka

Ph: 02-8916454, 0189-261382

R: 02-7125678 North South Road Branch

Mohammad Golam Kibria

PO

23, Malitola Lane, North South Road

Bangshal, Dhaka

Ph: 02-7167682-3 Banani Branch

Mohammad Abu Taher

AVP

56, Kamal Ataturk Avenue, Banani

Ph: 02-8810587, 02-8810419

R: 02-7111727, 0189-255587 Mirpur Branch

Md. Ataur Rahman

SPO

5/H-G,Darus-Salam Road, Mirpur-1, Dhaka

Ph: 02-9008123 , 02-9010623

R: 02-9009920, 0189-211459 Mymensingh Branch

Ashraf hossain

PO

12, Choto Bazar, Kotowali

Mymensingh

Ph: 091-53614 Mouchak Branch

Md. Nizamul Haque Chowdhury

SPO

90/A,90/1 Siddeswari

Circular Road Mouchak, Dhaka

Ph: 02-9339006, 02-8322373

R: 02-7511545, 0171-341736 Dhanmondi Branch

Md. Manjur Hasan

AVP

Ahmed Tower

House#54/1, Road#4A (Satmasjid Road)

Dhanmondi, Dhaka

Ph: 02-8610913, 0189-255906 Madhabdi Branch

Mizanur Rahman

SPO

691-694 Madhabdi Bazar, Madhabdi, Narshingdi

Ph: 02-9351805

R: 02-06257932, 0171-613484 Pagla Branch

Mohd. Yahya

AVP

Plot No. 573 Pagla, Fatullah, Narayangonj

Ph: 02-7604356

R: 02-8619284, 0189-253591 Joydebpur Branch

Md. Mujibur Rahman

SPO

Nasir Super Market (1 st Floor) Chandna

Chourasta, Joydebpur, Gazipur

Ph: 02-9256196, 0189-261297 Mohammadpur Branch

S.M. Jamal Uddin

AVP

32/8(Ka), Tajmahal Road, Block-C (West),

Mohammadpur, Dhaka

Ph: 02-9142732

R: 02-9664547 Narayangonj Branch

Touhid Siddique

PO

71, B.B. Road, Narayangonj

Ph: 02-7615821, 02-7615822

R: 02-7215277

Islampur Branch

Md. Abdul Mannan

PO

Rowshan Plaza, 29/31, Islampur Road, Dhaka-1100

Ph: 02-7393800, 02-7392588

R: 02-7510732, 018-203033

Dilkusha Branch, Dhaka(AD)

Nazmus Saadat

AVP

36, Dilkusha C/A, Dhaka-1000

Ph: 9554663, 9559063, 01819-260304

R: 8959263

Progati Sharani Branch, Badda

Janab Harun-ur-Rashid

AVP

Ga-133/3, Progati Sharani, Badda, Dhaka

Ph: 01714-073000

R: 02-8315208

Kapashia Branch, Gazipur

Md. Sultan Mahmud

SPO

956, Kapashia Bazar, Kapashia, Gazipur

Ph: 06824-52055, 017122-011838Chittagong Division (10) Agrabad Branch

Yakub Muhammad Faruque

SVP

34, Agrabad, C/A Chittagong

Ph: 031- 713372, 031-713373, 018-310770

R: 0189-40374 Khatungonj Branch

Akter Kamal

SPO

146, Chan Miah,

Lane (1st Fl) Kotwali, Chittagong.

Ph: 031-622229, 031-622230, 0189-315481

Telex-633087 AIBKB BJ Jubilee Road Branch

A.K.M. Amzad Hossain

AVP

Kader Plaza, 221 Jubilee Road, Chittagong.

Ph: 031-637680-1, 018-319480

R: 8313572 O R Nizam Road Branch

Mohammed Hossain

SPO

943, O.R. Nizam Road, Chittagong

Ph: 031-656567-8, 0189-310770 (M)

R: 031-684155 Comilla Branch

Mohd. Monzur-E-Mowla

PO

257,240 Hazi Mansion

Monoharpur, Kotowai, Comilla

Ph: 081-64546, 081-64647

R: 7203265, 0171-431174 Companigonj Branch

Mustaque Ahamed Mollah

SO

Companigonj Bazar,

Muradnagor, Comilla

Ph: 0172235569

Cox’s Bazar Branch

Md. Sowkat Islam

SPO

438, Cox’s Bazar Uts Corporation

Cox’s Bazar

Ph: 01712-191878

Chowmuhani Branch

Md. Manir Ahmed

VP

857,858 Hazipur, Feni Road,

Chowmuhani, Noakha1i.

Ph: 0321-51000, 032151105

R: 0321-51150, 0171-437742

Gollai Branch

Md. Kabir Ahamed

PO

Abada Nur Foundation Complex

Gollai Chandina, Comilla

Ph: 011-811263Feni Branch

Hasan Mahmud

AVP

33, S.S.K Road, Feni

Ph: 01713-453213Sylhet Division (05) Laldighirpar Branch

Fazlur Rahman

SPO

1438-1439 Laldigirpar, Sylhet

Ph: 0821-710809, 0821-710265

R: 0171-345673

Zindabazar Branch

Hadi Ferdous Ahmed

AVP

Jalalabad House, Zindabazar Mian Road,

Sylhet

Ph: 0821-722078-9

R: 9141977, 0171-431175

Moulvi Bazar Branch

Md. Asaduzzaman Khan

SPO

99-100 Central Road, Moulvibazar (Sylhet).

Ph: 0861-54106-7

Rupashpur Branch

Mohammed Salim Ullah

PO

Plot No# 1021, Rupashpur, Srimangal

Ph: 08626-88130

Beani Bazar Branch,(Sylhet)

Janab ASM Gouch Uddin Siddique

PO

Holding N0 -825, South Beani Bazar,Sylhet.

Ph: 08223-87880gjdkfBarisal Division (01) Barisal Branch

K.H.M Asaduzzaman

PO

45, Sadar Road (1st Fl.) Barisal

Ph: 0431-53148, 0431 -54276

R: 9355649 Khulna Division (04) Khulna Branch

A.S.M. Monjurul Alam

EVP

144, Sir Iqbal Road, Khulna

Ph: 041- 722499, 722399

R: 041-722599 Shatkhira Branch

JMunshi Aminul Haque

SPO

2386, Main Road, Khan Market (1st FI)

Satkhira Sadar, Satkhira

Ph: 0471-63606

R: 0171-342448 Benapole Branch

Md. Bellal Hossain

SO

Plot No. 283, 294 Benapole, Jessore

Ph: 042175686

R: 0189-212754 Jessore Branch

Md. Abdur Rashid

SPO

30,M.K. Road, Jessore

Ph: 0421-73494, 0421-73569, 0171-431060Rajshahi Division (04) Rajshahi Branch

Md. Hedaytul Islam

SPO

239, Shahib Bazar, Boalia, Rajshahi

Ph: 0721-775161, 0721-775171

R: 0171-349321 Bogra Branch

Md. Abul Basher

SPO

21/1, Thana Road(1st Fl), Kotwali, Bogra

Ph: 051-73465, 051-73561

TeIex-633714 AIBBO BJ Saidpur Branch

Md. Mogreb Ali

PO

13, Railway Engneering plot,

Zikrul Hoque Road, Saidpur

Ph: 0552-2804, 0552-688145

R: 0171-31394 Mohadevpur Branch

S.M. Jamal Uddin

AVP

Plot No. 425 Mohadevpur, Noagaon

Ph: 0742675093, 0171-425675Total = 46 Branches

CHAPTER THREE

3.2 Organogram Of Motijheel Branch:

Figure: Organgram of Motijheel Branch

3.3 Mobilization of Deposits:

This branch has deposited money from different deposit schemes. These are

• Al-Wadia Current Deposit
• Mudaraba Savings Deposit
• Mudaraba Short Notice Deposit
• Mudaraba Term Deposit
• Deposit Under Other Schemes

3.3.1 Al-Wadia Current Deposit:

Al-Arafah Islami bank Limited receives deposits in their Al-Wadiah current account. Usually business people runs Al-Wadiah current account. In Al-Wadiah current account customers can deposit and withdraw money, whenever they want. In this account, there is no restriction of withdrawing money. But in Al-Wadiah current account customer’s do not get any profit. Bank with take some money as service charge.

3.3.2 Mudaraba Savings Deposit:

Al-Arafah Islami bank Limited also receives deposits by Mudaraba Savings Deposit. General people run this accounts. In Mudaraba Savings Deposit account customers can deposit money any time whenever they want. But they cannot withdraw money whenever they want, there is some restriction. Customers can withdraw money two times in a week and ten times in a month. But if they want to withdraw any big amount they have to give notice to the manager. If bank earn any profits the depositors will get at a predetermined percentage and the bank retains the residual amount as its profit.

3.3.3 Mudaraba Short Notice Deposit:

Mudaraba Short Notice Deposit account is similar like Al-Wadiah current account. In Mudaraba Short Notice Deposit account customers can deposit and withdraw money any time whenever they want. But there is a restriction in withdrawing money. They have to inform the manager if they want to withdraw big amount. Like Mudaraba Savings Deposit account the customer’s get profit here. This profit is given every year at a predefined rate of last year.

3.3.4 Mudaraba Term Deposit:

Interest-based banks receive different kinds of Term Deposits from the depositors. The deposits are generally for 3 months, 6 months, 9 months, one year, 2 years, or 3 years, and the bank pays a stated interest rate on each of these deposits, which varies depending on the term. In general, the bank pays a higher rate of interest the longer the term of the deposit and lower rates for shorter time periods. In addition, a higher rate of interest is generally paid on term deposits than on saving deposits. Depositors are not generally allowed to withdraw money from a term deposit until the term matures. Premature withdrawal may result in penalties in excess of the interest earned, resulting in a negative return. Once a time deposit matures, the depositor may wish to reinvest for a new term.

3.3.5 Deposit Under Other Schemes:

There are also some other types of deposit schemes in AIBL for collecting deposit from customer’s. These are Mudaraba Hajj Deposit, Mudaraba Installment Term Deposit, Mudaraba Savings Investment Deposit, Mudaraba Profit Payable Term Deposit etc.

3.4 Number Of Different Accounts Holders

CHAPTER FOUR

GENERAL BANKING

4.1 Concept Of General Banking:

Bank is nothing but an intermediary between lender (surplus unit) and borrower (deficit unit). Savings and deposits are the main strength of the banks to provide loan. And the interest earned from the difference borrowing and lending is the major portion of banks income. Banks also earns from variety of operation. Branch banking includes four operational divisions in Al-Arafah Islami Bank Limited.

General banking is the front side banking service department. It provides those customers who come frequently and those customers who come one time in banking for enjoying ancillary services. In some general banking activities, these are no relation between banker and customers with who bank are doing its business frequently. Al-Arafah Islami Bank Ltd General Banking is divided into five sectors.

1. Account opening section
2. Bills and clearing Section
3. Remittance Section
4. Deposit Section
5. Cash Section

Initially all the accounts are opened through deposit money by the customer and these accounts are called deposit account. Normally a person needs to open an account to take services from the bank. Without opening an account, one cannot enjoy variety of services from the bank. Thus, the banking usually begins through the opening of the account with the bank.

4.2 TRANSECTION:

Transaction is a financial event, which changes the financial position of a company. There are three types of transaction that is performed by the Al-Arafah Islami Bank Limited.

• Cash Transaction
• Transferring Transaction
• Clearing Transaction

4.2.1 Cash Transaction:

Cash department is a sensitive and important place of Bank. Cash receiving and cash payment is the first and important duty. A Bank should member that the image of a Bank is dependent on cash officer of Bank. If the Cash officer is not smart, outstanding and handsome person, then it is meant this does not care for its customers.

4.2.1.1 Cash Receipt:

Receiving cash officer should draw his attention to avoid from these types of notes when he /she taken money from the customers”

· Mutilated note

· Mismatched note

· Discolor note

· Forged note

· Incorrect note

· Burn note

4.2.1.2 Cash payment:

The officer should enough care when he/she makes payment of a cheque. Some of the important checkpoints are given below:

· Amount of the cheque

· Who is the draw of the cheque

· Verifying the signature

· Posted and cash paid sale on the cheque

· Name of the branch

· Is it a fraud cheque?

After payment, the cheque the officer should maintain/noted account number, name of the draw, and withdrawal amount in a register book.

4.2.2 Clearing Transaction:

Clearing transaction is of two types one is inward clearing another is outward clearing.

4.2.2.1 Inward Clearing:

When any client of any Bank gives cheque to the creditors, the creditor generally gives deposit to their respective Bank account for collection. Then the banks will send those cheques to Bangladesh Bank. The Bangladesh Bank then sends this type of cheques to their respective Bank main branch this type of transaction is called inward clearing. This is presented in below:

Fig: Inward out clearing

4.2.2.2 Outward Clearing:

When the bank gets different types of cheques of different banks from their client for collection, they then send cheques to their main branch. The main branch then sends those cheques to Bangladesh Bank. The Bangladesh Bank sends those to the respective banks. The process is as follows:

Fig: Outward clearing

4.2.3 Transferring Transaction:

Transferring transaction is the type of transaction in which money is not physically moved. But it is moved from one account to another through debit and credit voucher.

4.3 OPOENING ACCOUNT:

The money deposited with the banker is not held by him in trust but as his debts to the depositors and the relationship that exists between the banker and the depositor is strictly that of debtor and creditor. The banker becomes the owner of the money and is free to utilize the same in any way he chooses an is bound at the place where the deposits are maintained to make repayment thereof by an equal amount on demand, at notice or at the end of the specified period with or without interest depending on the nature of the deposits.

The deposits are accepted by the banker through current and saving accounts, which is withdraw able by cheques. The deposits are repayable on demander otherwise and withdraw able by cheques, draft, and order or otherwise.

Al-Arafah Islami Bank keeps the deposits on the form of different account. Like

1. Al-Wadiah Current Deposit
2. Mudaraba Saving Deposit
3. Short Notice Deposit
4. Mudaraba Terms Deposit Receipt
5. Mudaraba Investment Terms Deposit
6. Mudaraba Fixed Deposit Receipt
7. Mudaraba Profit Payable Terms Deposit
8. Mudaraba Monthly Hajj Deposit
9. Mudaraba Terms Hajj Deposit

4.3.1 Who can open an account?:

These above accounts may be open by-

• Individual
• Partnership
• Club, societies, trusts etc.
• Joint
• Proprietorship
• Private Limited Co.
• Public Ltd. Co.

4.3.2 Necessary documents to open an account:

When a customer/organization/company/firm/society/club etc. want to open bank acc