Profile of the Organization
Bangladesh is one of the largest
Muslim countries in the world. The people of this country are deeply committed
to Islamic way of life as enshrined in the Holy Qur’an and the Sunnah.
Naturally, it remains a deep cry in their hearts to fashion and design their
economic lives in accordance with the precepts of Islam. The establishment of
Al-Arafah Islami Bank Limited on June 18, 1995, is the true reflection of this
inner urge of its people, which started functioning with effect from September
27, 1995. This Bank is a third generation fast growing bank in this country
which is trying to actualize its slogan “A rear combination of Islamic Shariah
and Modern Banking”. It is committed to conduct all banking and investment
activities on the basis of interest-free profit-loss sharing system. In doing
so, it has unveiled a new horizon and ushered in a new silver lining of hope
towards materializing a long cherished dream of the people of Bangladesh for
doing their banking transactions in line with what is prescribed by Islam. With
the active co-operation and participation of Islamic Development Bank (IDB) and
some other Islamic banks, financial institutions, government bodies and eminent
Islamic personalities of Bangladesh, Al-Arafah Islami Bank Limited has by now
earned a remarkable position of a leading private commercial bank in
2.0 Background of the organization:
Still in the year 1900 banking
activities were in the basis of capitalistic interest based banking. Somebody
felt that it became imbalanced and made a large gap between rich and poor.
Which affects thought that interest is strongly prohibited by Islam even all
religion also prohibited the same. Leader of the Muslim community named
Mohammad (sm) started interest free business which was also at the very
beginning of Islam. Business in Islam is implemented through buying and selling
/and under shirkat.
As a result Muslim scholar tried
era/years together to build a new arrangement as an alternative banking. In
1930 some Islami scholars wrote some books about Islamic banking system. In
1940 the demand for establishing Islamic banking become more stronger in the several muslim countries.
In 1962 at Malaysia a corporation was
established mamed Pilgrimmed Savings Corporation for helping pilgrims which was
recognized as a bank. But the first Islami Bank was established at Mitgamar in
Egypt. Dr. Ahmed Al Nazzar established the same named savings bank.
In 1969 the first government Islamic
bank was established at Malaysia which was operationed successfully.
In 1970 former King Faisal approached
to the Muslim countries to form the banking sector with a view to Islamic
shariah. Upon this idea in 1973, 18th December a decision was
accepted for establishing a Islamic Development Bank (IDB) involving in Muslim
countries. In 1974 resulation was signed in the conference of financial
ministers of Islamic countries and on 20th October 1975 the bank (IDB)
was established at Jeddah, KSA.
As per motivation of OIC different
Muslim countries’ Govt. approved Islamic Banking and established some Islami
Banks in several countries. Bangladesh is one of the largest Muslim countries
in the world. The people of this country are deeply committed to Islamic way of
life as enshrined in the Holy Qur’an and the Sunnah. Naturally, it remains a
deep cry in their hearts to fashion and design their economic lives in
accordance with the precepts of Islam. Under the Company Act, 1913 Islami Bank
Bangladesh Ltd. first got registration
on 13, March 1983 in Bangladesh which started functioning with effect from
March 30, 1983. Formal inauguration of the bank was on 12th August
1983. But for the huge muslims of the country it was very much insufficient
than actual demand. At last some commited muslim personalities of the country
established Al-Arafah Islami Bank
Limited in 1995. On June 18, 1995 it started its journey to meet up the demand of
the people is the true reflection of this inner urge of its people, which
started functioning with effect from September 27, 1995.
2.2 Vision of AIBL:
- To be
a pioneer in Islami Banking in Bangladesh and contribute significantly to
the growth of national economy.
2.3 Mission of AIBL:
the satisfaction of Almighty Allah both here & hereafter.
of Shariah Based Banking Practices.
financial services adopting the latest technology.
and efficient customer service.
high standard of business ethics.
& competitive return on shareholders’ equity.
banking at a competitive price.
and retain quality human resources.
competitive compensation packages to the employees.
commitment to the growth of national economy.
more in micro and SME finance.
2.4 Objectives of AIBL:
activities are conducted on interest free system according to Islamic Shariah
is made through different modes as per Islamic Shariah.
income of the Bank is shared with the Mudaraba depositors according to Islamic Shariah.
agreed upon ratio ensuring a reasonably fair rate of return on their deposits.
to introduce a well fare oriented banking system and also to establish equity.
in the field of all economic operations.
socio-economic and financial services to individuals of all economic activities
with strong commitment in rural uplift plays a vital role in human resources
development and employment-generation. Particularly among the unemployed
of investment policy have been specially tailored to achieve balanced growth
and equitable development through diversified investment operations
particularly in the priority sector
2.5 Goals of AIBL:
of Adl(Justice), to attain Hasana(good) and Falah(welfare)
in this life
and the life hereafter.
establish Ihsan (gracious conduct or kindness) in economic affairs.
of Maroof (proper and good acts, institutions) in economic life.
of Munker (Evil, wrong of injurious practices) from economic life.
maximum economic growth.
employment to ensure maximum distribution of wealth in society.
Co-operation in society.
2.6 Functions of AIBL:
functions of Al-Arafah Islami Bank
Limited are as under:
To maintain all types of deposit
To make investment.
To conduct foreign exchange business.
To extend other banking services.
To conduct social welfare activities
through Al-Arafah Islami Bank Foundation.
2.7 Organizational Culture of AIBL:
It is operated within chart/
organogram. Relation to each other is excellent. Business like investment in
trade, project and small & medium entrepreneurship is handled here. It has
relations with mass population as the bank open A/c with minimum balance and
Established Al-Arafah Islami Bank Foundation for helping poor and meritorious
students. It also provides sewing machine to distressed women, rickshaw to poor
labour, and distribute cow, goat to the poor people. It has educational program
like as Al-Arafah English Medium Madrasah and helps in health sector
establishing charitable dispensary. It also provides Tube-well and sanitary
latrine to the unhealthy area of poor inhabitants. From the operation and
culture of the bank, client/ society and bank itself benefitted.
2.8 Structure of the Organization of AIBL:
Source: AIBL Recruitment manual
2.9 Departmentalization of AIBL:
The organization has a “Pyramid
Structure”. The Managing Director is the top. Under him there are one
Additional Managing Director and two Deputy Managing Director who are
individually head of three wings. Under each wing there are several
divisions/departments. Hierarchy is well defined and follow specific chain of
command. The wings head and divisional head reporting directly to the Managing
: Headed by Additional Managing
Director, this wing is responsible for all General Banking operations and
control to the Branches.
Headed by a , this wing processes Investment proposals received from
different branches, analyze them and get approval from the competent authority.
This wing also responsible for monitoring the Bank’s Investment portfolio.
Headed by a Deputy Managing
Director, this wing processes foreign transaction, foreign exchange, foreign
There are many
departments under different divisions headed by Executive Vice Presidents
This division is responsible for
overall Audit & Inspection of the Bank.
This division is responsible for
recruitment, training, posting, promotion of employees and also for pays and
This division is responsible for
keeping books and accounts of the Bank.
Establishment and Common Services
Establishment and engineering works, common services and development works are
done by this division.
It is a group job on the basis of
product or customers flow. In my organization group job practice are being done
in every department for example in general banking there are different group
T.T section , D.D section
, P.O section, O.B.C section, Cash section, Accounts section and IT section.
A group of officers has
been working in every section, they have been working like a team and every
member works towards its goal.
2.10 Hierarchy of AIBL:
AIBL there is a system of hierarchy like top management to lower level officers
i.e officers or positions are organized in hierarchy each lower one is being
controlled and supervised by the higher one. In every division and department
every official has an office order in order to perform his duties and which is
duly supervised by his superior. The hierarchy may be mentioned as, board of
directors, Managing Director, Divisional Heads, Departmental Heads etc.
2.11 Job Analysis of AIBL:
It means the number of subordinates a
manager can manage efficienly and effectively in our organization. Every
department has yearly man power plan which plan are overviewed by the
management and if justified yearly man power plan approved by the management,
work-load, daily s, proposal received and disposal trend assesses its man power
2.12 Job Specification of AIBL:
Job specification involves employee’s
skill abilities and others credentials need to do the job. In our organization
every employees have job specification. Bbefore preparation of office order
manager of respective division /department go through employees abilities,
performance, experience etc. and decided job specification of employees who are
working in his division /department.
2.13 Span of Control of AIBL:
bank various rank/designation is maintained. Including name of the Honorable
director of the board is mentioned as under:
2.14 Designations of Employees of AIBL:
Executives of the Bank:
Managing Director (AMD)
Managing Director (DMD)
Vice President (EVP)
Vice President (SVP)
Vice President (AVP)
Officials of the Bank:
Sub Staffs of the Bank:
Cum Guard (MCG)
3.1. Literature Review:
Our socio-economic as well as
business world is dynamic, uncertain and affected by multiplicity of causes.
There is hardly a field of human endeavor in which variables are not
To analyze widely the performance of
the bank we need to incorporate various statistical tools viz. Time Series
Analysis, Growth Rate, Acceleration Rate, Correlation and Regression Analysis
of the different variables used in the Bank.
These techniques undoubtedly provide
a real picture of the bank and it help the general investors and stakeholders
to review the quantitative and qualitative aspects of AIBL. To have a good grip
of the aforesaid statistical tools we need to outline widely it’s importance
Employees’ performances mean the
quality of the job that the employees have done and how it has contributed to
their organization’s goal achievement.
On the other hand financial
performances mean what quality of the finance related products are produced by
the organization and how they are satisfying their customer needs through the
Growth Rate indicates
the changes in the level of the variables over the period of time in relative
term. With the help of the growth rate, we can forecast the value of a variable
for a specific time in future.
indicates the changes in the level of the variable in absolute term i.e. in
original units of measurements. Moreover, trend indicates whether the variables
are changing over a period of time.
Acceleration Rate is the average growth rate of the growth rates. It indicates the future
trend of the growth rate.
Correlation Analysis is the study of the relationship between variables. It measures the
strength of the association between two variables.
Regression Analysis is the statistical tool with the help of which we are in a position to
estimate the unknown values of one variable from known value of another
variable. It measures the relationship in absolute term.
To evaluate the performance of the
AIBL properly, we need to focus on the following variables, which are lined
Earning Per Share (EPS)
Number of Branches
4.1.1 Employees/Human Resources Performances Evaluation:
In today’s business
environment where technology plays a dominant role the importance of skilled
human resources are ever increasing. The bank is fully committed to ensure a
perfect fit between the right person for the right job and assist them to
develop their core competencies and technical skills. A good working
environment and people related policies generate team spirit and promotes a
high level of loyalty, commitment and devotion on the part of its employees.
AL-ARAFAH ISLAMI BANK
LTD. particularly stressed the need of training and sent a number of executives
for various trainings and seminars abroad in 2004 to 2008. The Bank’s training
institute conduc bank related various aspects of training and work-shops every
The formal performance
evaluation system is designed to:
To serve as a systematic guide for
supervisors in planning each employee’s further training.
To assure considered opinion of an
employee’s performance and focus maximum attention on achievement of assigned
To assist in determining and
recording special talents, skills, and capabilities that might otherwise not be
noticed or recognized.
To assist in planning personnel moves
and placements that will best utilize each employee’s capabilities.
To provide an opportunity for each
employee to discuss job problems and interests with his/her supervisor.
To assemble substantiating data for
use as a guide, although not necessarily the sole governing factor, for such
purposes as wage adjustments, promotions, disciplinary action, and termination.
The Director of Human Resources has the overall responsibility for the administration of the
Performance Evaluation Program and will ensure the fairness and efficiency of
1. The distribution of proper forms in a
Ensuring completed forms are returned
for file by a specified date.
Reviewing forms for completeness.
Ensuring proper safeguard and filing
of completed forms.
(Evaluator) is the employees’ “evaluator” and has
the responsibility for:
Developing Evaluation Support
Form in concert with each employee.
Continuously observing and evaluating
an employee’s job performance.
Holding periodic counseling sessions
with each employee to discuss job performance.
Completing Performance Evaluation
Forms as required.
Reviewing Official: The Reviewing Official is the “Evaluator’s” supervisor and
Reviewing the evaluation for accuracy and objectivity.
Investigating and resolving any disagreement(s) between the
Directors: Within their respective
the proper and timely distribution of forms.
Ensure that any conflicts identified
have been resolved in a fair and equitable manner in accordance with existing
Evaluation Support Form: An Evaluation Support
Form will be completed for each employee. This is a joint effort between
the employee and his/her immediate supervisor. Evaluation Support Forms will be
completed for all new employees within five working days from date of
employment. A copy will be given to the employee. The original will be retained
by the immediate supervisor. This form should be reviewed annually and revised
as necessary to indicate any significant changes in duties and/or
responsibilities. The support form is designed to increase planning and relate
performance to assigned responsibilities through joint understanding between
the immediate supervisor (evaluator) and the employee as to the job description
and major performance objectives.
Counseling Sessions between immediate supervisors and employees will be scheduled
periodically. During these sessions, an open dialogue should occur which allows
the exchange of performance oriented information. The employee should be
informed of how well or how badly he/she has performed to date. In the case of
derogatory comments, the employee should be informed of the steps necessary to
improve performance to the desired level. Counseling sessions should include,
but not be limited to, the following: job responsibilities, performance of
duties and attendance. A memorandum for record will be prepared following each
counseling session and maintained by the supervisor.
Upon receipt of the evaluation form,
the following actions will be accomplished:
A.The Immediate Supervisor
the evaluation form as promptly as possible. Note that any area evaluated as
Inadequate, Minimally Meets Requirements, or Exceptional must be discussed in
Comments section of the evaluation form. Describe why performance is not
satisfactory and specify how performance can be improved, or explain why
performance is outstanding.
evaluation with the employee emphasizing strong and weak points in job
performance. Commend the employee for a job well done if applicable and discuss
specific corrective action if warranted. Set mutual goals for the employee to
reach before the next performance evaluation. Recommendations should specifically
state methods to correct weaknesses and/or prepare the employee for future
the employee to make any written comments he/she desires. Have employee sign
the evaluation form and initial after supervisor’s comments.
the original copy of the evaluation form in a sealed envelope marked
Personal-Evaluation Form to the appropriate reviewing official. Retain a copy
of the completed form for the department and the employee.
to the completion of this evaluation by the supervisor, and review by the
employee, revisions must be discussed by both parties. In addition, if changes
in the form are made after the employee has signed the form, the level of
authority making the changes must notify the immediate supervisor and give the
employee and supervisor copies of the revised evaluation.
the evaluation form for objectivity and accuracy. If the employee has stated
that he/she disagrees with the evaluation, the Reviewing Official will attempt
to resolve these disagreements prior to forwarding the evaluation form.
Comments as to conflict resolutions are required.
the original evaluation form to the appropriate Director/Dean in a sealed
envelope marked, Personal-Evaluation Form.
The Director will:
Review each form to ensure proper
actions have been taken to resolve any identified conflicts.
Account for all evaluation forms in
his/her area of responsibility.
Forward all original forms together
as a group to the Office of Human Resources in a sealed envelope marked Personal
Human Resources’ receipt of the
completed evaluation form, it will be reviewed for completeness and accuracy.
Any unresolved problems will be brought to the attention of the next line of
authority. The completed form will be placed in the employee’s permanent
New Employees will be evaluated
during the fifth month of employment. On the first working day of the fifth
month of employment, the Human Resources Office will send the new employee’s
supervisor a Probationary Evaluation Form (ETSU Form 12).
The evaluation form will be processed as outlined above. If job
performance is judged to be unsatisfactory, a memorandum recommending
termination will be forwarded with the completed Probationary Evaluation Form.
4.1.5 Traits to be evaluated
The following is a guideline which
can be used in evaluating an employee’s overall performance:
Knowledge of work – How well does the employee know his or her job? In order to
successfully complete the duties and responsibilities of this position, what
level of technical knowledge does the employee demonstrate?
Quantity of Work – Is employee’s rate of production adequate? How does employee’s
production compare with that of others? Does employee display efficient use of
Quality of Work
– Does the employee make frequent mistakes? Does employee’s performance require
constant supervision in order to ensure accuracy? Does employee take pride in
his/her work and strive for excellence?
Does employee volunteer for new assignments and responsibilities? Does the
employee require a great deal of supervisory guidance regarding initiative?
Does employee initiate new methods or techniques?
Dependability/ Responsibility – Does employee consistently fulfill responsibilities? How
much follow-up is required? How reliable is this employee?
Quality of Interpersonal Relationships – Does employee create resentment in fellow
employees? How tactful is employee when communicating with fellow employees?
Does employee promote teamwork? Is employee cooperative with fellow employees
How often is employee absent or late? Does the employee notify his/ her
supervisor promptly when absence or tardiness occurs? How does the employee’s
attendance record compare with others?
Is the employee consistently prompt? Is there an impact on his/her job
Supervisory Ability – Does employee exert a positive influence on others? Does employee
demonstrate fair and equal treatment of subordinates? Does employee demonstrate
the ability to make sound feasible decisions? Does the employee attempt to
resolve problems at the local level?
Professional Non-faculty and Administrative
Professional Non-faculty and Administrative employees should be evaluated on
predetermined and predefined goals and objectives. The supervisor should
identify projects, tasks and special assignments important to the employee’s
performance. In addition, the employee will be rated in the following areas:
– Possesses the technical knowledge necessary to accomplish all job
requirements. Understands the facts and information related to work assignment.
Accomplishment of Objectives – Contributes to goals of department/division.responsible.
Quality of Work – Consider the thoroughness, accuracy and dependability of results of
Meets deadlines, adapts to changes, and uses resources efficiently. Uses good
judgment in establishing priorities.
Initiative and Creativity – Self-motivated, develops new methods and procedures.
Interpersonal Relationships – Motivates and develops others. Builds teamwork.
Communicates with peers, subordinates and others. Cooperates with persons
outside of department.
Supervisory Skills – Develops sound, practical solutions. Makes prompt decisions, accepts
responsibility, and resolves disputes.
– Follows through to meet schedules. Makes sound decisions. Makes positive
contributions. Consider reliability.
Professional Contribution – Contributions made on the part of the employee to the
staff, students, university, community and state or region.
4.1.6 Pitfalls in making Performance Evaluations:
The Isolated Incident
A rating should not be
based on a few isolated performance incidents. When this is done, the rating is
unfairly influenced by non-typical instances of favorable or unfavorable
The “Halo” Effect
effect occurs when one factor influences ratings on all factors. Examples: An
employee’s work is of good quality, therefore, other ratings (such as those on
promptness or work quantity) are higher than normal. Another employee is
frequently absent, with the result that the ratings on other factors are
The “Cluster” Tendency
The tendency to consider
everyone in the work group as above average, average, or below average. Some
raters are considered “tough” because they normally
“cluster” their people at a low level. Others are too lenient.
“Clustering” overall ratings usually indicates that the rater has not
sufficiently discriminated between high and low levels of performance.
Rating the Job and Not the Individual
Individuals in higher-rated
jobs are often considered superior performers to those in lower-rated jobs.
This normally means that confusion exists between the performance appraisal and
how the job has been evaluated.
Length of Service Bias
There is a tendency to
allow the period of an individual’s employment to influence the rating.
Normally, performance levels should be higher as an individual gains training
and experience, but this is not always the case.
Avoid judgments made
purely on the basis of personality traits. Effective, efficient employees do
not necessarily agree with everything a supervisor believes in or states.
Consider the entire appraisal period.
Try to enumerate high points and low points in performance, then assign a
rating that typifies the individual’s normal performance. Do not attempt to
assign a rating to a performance indicator and then create justification to
support it. Be able to explain the reason for each rating.
In a group of people in similar jobs,
performance is likely to be spread over most performance categories. Review
your own record as a rater. Check the tendency to be either “too
tough” or “too lenient” in your appraisals.
Consider how an individual is
performing in relation to what is expected. Rate the person’s performance, not
importance of the job.
Recognize that some people may never
achieve top ratings, regardless of length of service. Watch closely the
progress of newcomers and be ready to recognize superior performance if it is
Executives/Officers and concerned officials shall have to be trained
intensively and extensively regarding the rules, procedures and modalities of
Musharaka Investment so that no lapses occur at sanction and post sanction stage
Moreover the supervision and control shall also have to be ensured at all
stages to ensure end use, prevent diversion and generate income.
Apart from the above training
programmed for motivation and clear conception of Client shall have to be
arranged before disbursement and after disbursement.
performances of the various tools/ products of AIBL can be summerised as following:
A sum of money left within a bank or
financial institution for safe-keeping or to earn interest on it. It is the
prime sources of bank’s investment, which allowed the bank to generate profit
against the investment. Hence the deposit scenario of AIBL stands in the
the above chart we can arrive at a conclusion that the deposit scenario of AIBL
shows a consistent growth over the years . The deposit figure shows an
increasing trend since its inception.
The main source of income of the bank
is investment and the main source of investment is depositors money.
above chart reveals the facts that there is an inconsistent growth in the
investment scenario. In the recent year the figure look brilliant compare to
Bai-Murabaha or simply Murabaha:
The terms “Bai-Murabaha”
have derived form Arabic words Bai and Ribhum. The word “Bai” means purchase
and sale and the word ‘Ribhum’ means an agreed upon profit. So Bai-Murabaha
means sale for an agreed upon profit. It may be defined as a contract between a
Buyers and a Seller under which the seller sells certain specific goods
permissible under Islamic Shariah and the word Law of the land to the Buyer at
a cost plus and agreed upon profit payable today or on some date in the future
in lump-sum or by installments. The profit may be either a fixed sum or based
on a percentage of the price of the goods.
The word Musharaka is
derived from the Arabic word Sharikah meaning partnership. Islamic jurists
point out that the legality and permissibility of Musharakah is based on the
injunctions of the Holy Qura’n, Sunnah and Ijma (consensus) of the scholars.
Musharaka transaction may
be conducted in the following manner:
One, two or more
entrepreneurs approach an Islamic Bank to request the financing required for a
project. The bank, along with other partners, provides the necessary capital
for the project. All partners including the Bank have the right to participate
in the project. The profit is distributed according to an agreed ratio.
However, losses are shared in exactly the same proportion in which the
different partners have provided the finance for the project.
The term Mudarabah refers
to a contract between two parties in which one party supplies capital to the
other party for the purpose of engaging in a business activity with the
understanding that any profits will be shared in a mutually agreed upon.
Losses, on the other hand, are the sole responsibility of the provider of the
capital. The first party provides capital and the other party provides the
expertise with the purpose of earning lawful profit (approved by Islamic law)
which will be shared in a mutually agreed upon proportion.
The term ‘Bai’ and
‘Muajjal’ are derived from the Arabic words ‘Bai’ and ‘Ajal’ where ‘Bai’ means
purchase and sale and ‘Ajal’ means a fixed time or a fixed period. So
Bai-Muajjal is a sale for which payment is made at a future fixed date or
within a fixed period. In short, it is a sale on Credit. It is basically a
contract between a buyer and seller under which the seller sells certain
specific goods, permissible under Shariah and law of the country to the buyer
at an agreed fixed price payable at a certain fixed future date in lump-sum or
in fixed installments.
The term Bai-Salam is
used to define a sale in which the buyer makes advance payment, but delivery is
delayed until some time in the future. Usually the seller is an individual or
business and the buyer is the bank.
Bai-Istisna’a (Pre-shipment Finance):
The Istisna’a sale is
contract in which the price is paid in advance at the time of the contract and
the objective of sale is manufactured and delivered later. The majority of the
jurists consider Istisna’a as one of the divisions of Bai-Salam. The definition
can be stated as “It is contract with a manufacturer to make the something” and
“ It is a contract on a commodity on liability with the provision of work”.
4.2.8 Qard-E-Hasana (Benevolent Loans):
It is a contract in which
one of the parties (the lender) places into
the ownership of the other party (the borrower) a definite parcel of his
property, in exchange nothing more than the eventual return of something in the
same value of the property loaned. Qard-E-Hasana loans are granted
compassionate basis and no service charges are imposed on the borrower.
4.2.9 Causes of Overdues and Procedures to be followed for recovery of irregular/stuck-up/overdue
investment and time barred:
Irregular/stuck-up/over-due investment in a Bank
increases at a faster rate and the same ultimately jeopardize the interest of
the Bank. In this connection we append below the causes of irregular/Stuck-up
and overdue investment for immediate attention of the concerned officials so
that the trend in this regard can be arrested.
A) General causes of
01.00 Selection of the Client:
selecting investment clients Branches do not give due weightage in this regard.
As such clients having bad track record are also inducted for allowing
investment. Selection of client should always be made strictly on the basis of
criteria given in short as under:
client should be an honest man of active habits with firm commitment. His
honesty and integrity must be undisputed.
must be a good businessman having sufficient experience in the related line of
trade. He should also have good track record of repaying bank investment.
should deal in such commodities which have social utilities and Shariah
are often allowed violating Discretionary Power of the Branch Manager which ultimately result in irregularities. Under no circumstances
Discretionary Power should be exceeded. In case any investment is allowed due
to emergencies of circumstances beyond Discretionary Power with prior
permission of Head Office over telephone that should be got confirmed in
writing and formal approval should be obtained without delay.
Client must have business establishment within Bank’s command area. Some times branches make
investment in remote/distant place beyond the command area of the branch. As a result branch can not ensure effective
supervision and control over the investment. Therefore, while making
investment, branches should ascertain that the business establishment of the
investment client is within the command area or within reasonable distance for
ensuring easy and effective supervision and control as well as constant follow-up for timely
recovery of investment.
04.00 Net-worth of the party:
net worth of the party must be ascertained properly. Nevertheless, the
investment in business, cash flow and liquidity position are also to be
ascertained. In fact Bank takes decision
for making investment among others on the net-worth of the party. If the net-worth is not ascertained properly
bank interest may be jeopardized subsequently.
report and Bank’s confidential report are not obtained. The means and standing
of the party as well as performance with the previous/ present banker is to be
obtained, checked and verified.
own investment in business both in cash and kind should be properly
ascertained. In addition cash inflow and outflow in business should also be
examined by referring to statement of account.
purchase and sale of goods must be done correctly and possession of commodity
shall be obtained. In this connection price, quantity and quality must be
properly ascertained. Purchase memo/cash memo, shall be obtained in the name of
of investment are made before completing documentation formalities and
obtaining proper securities. Proper charge documents in respect of collateral
securities relating to property offered as collateral must be obtained.
Original title deeds of mortgaged property, via deeds, C.S., S.A., R.S./B.S.
and mutation parcha up to date rent receipt, non encumbrance certificate with
charge fee receipt, Memorandum of deposit of title deeds, affidavit etc must be
opinion on the title deed shall also be obtained from bank’s panel lawers..
Registered mortgage of property shall be obtained on execution of deeds drafted
by legal advisor
Causes of overdues of Musharaka Investment:
01.00 Quality and Quantity:
quality and quantity of Murabaha goods are to be properly verified and checked
at the time of purchase and storing. The
Murabaha Goods should also be verified at regular interval to ensure that the
quality is not deteriorating. While receiving the goods in the godown, the Officers
concerned should verify the quality and quantity and ensure receipt of the
goods in good conditions.
should be purchased at the whole sale market price. Overpricing should always
be avoided to avert possible shortfall. The price trend of the commodities for
the last one year should be kept in view and accordingly percentage of cash
security should be fixed-up so that
Bank’s interest is not jeopardized due to fluctuation.
03.00 Slow Moving Items:
Investment against slow moving/obsolete/hazardous/less demandable items should
always be avoided.
watch and ward arrangement of godowns are to be made. Some times Godown Staffs
are utilized for office works of the Branch which should be avoided. Godown
Staffs must be deployed in godown for proper control and supervision of
Officials must inspect the Godown at
least once in a month and certificate in this regard must be kept in Branch
record. The duties and responsibilities of Godown Staffs must be spelt out in
clear terms. Branch must also ensure that the Godown Staffs are discharging
their duties properly.
06.00 Excess Delivery:
delivery and delivery without receiving payment result in unadjusted shortfall
which is a gross irregularity and tantamount to defalcation. Therefore, it must
be ensured that excess delivery or delivery without receiving payment does not
07.00 Handling of the Keys of
times keys of the Godown are not properly handled and the same is delivered to
the party. This is not only a great lapse but also fraught with great risk.
Under no circumstances Godown Keys should be handed over to the party or any
unauthorized person other than the Bank’s Officials.
often Murabaha Goods are stored haphazardly and piled-up position . As a result
the actual position of goods can not be ascertained. Goods must be stored in
countable manner with due care so that the quality and quantity can be
determined at any time.
09.00 Bank Signboard:
signboard is not displayed in and outside the Murabaha Godown which must be
10.00 Stack Card:
Card should be displayed with up to-date information on each consignment for
easy counting and identification.
11.00 Delivery Orders:
Orders should be issued properly filed in with necessary posting in Stock and
Insurance covering value of entire stock + 10% above the cost should be
obtained from enlisted Insurance Company.
13.00 Routation of Murabaha
times the stock of goods against Murabaha/MPI remains stored for years
together. Branch Managers should not allow the stocks to continue for a longer
period to avoid damage, pilferage, licking and fall in demand/price.
C) Causes of overdues of
01.00 Party must have shop :
investment should not be allowed to any one who does not have own shop. The
shop must be visited by the responsible official to ascertain his over all
Bai-muazzal investment amounts to cash loan therefore the need of Baimuazzal
Investment shall be carefully determined, Baim. Investment should not be more
than 30% of own investment of the client.
officials must pay regular visit to the shop of the investment clients so that
the investment client feel obliged to make regular transaction in current
account as well as repay investment in time.
in Business are not verified by obtaining Stock Report at regular intervals.
Monthly stock-report should invariably be obtained from the clients.
adequate and easily saleable collateral securities are to be obtained. Value of
the collateral security is to be properly assessed and forced sale value
thereof should be ascertained correctly.
shall have to be obtained covering risk of fire RSD etc. on hypothecated stock
which many branches don’t obtain.
and frequent contact before due date and constant persuasion on or before due
date are to be made by the branches for timely adjustment and to avoid over
D) Causes of overdues of
Hirepurchase under Shirkatul Melk Investment :
as per norms and practice is not being recovered before disbursement of HP(SM)
investment. Proper and adequate equity should invariably be obtained supported
by collateral security for the rest amount.
and Vehicle of recent model and make shall have to be procured. Before
procuring machinery and vehicle, it’s technical feasibility must have to be
ascertained. From the experience it is observed that unless machinery and
vehicle, is found technically viable the investment client cannot repay the
investment as per schedule. In case of vehicle it must be get registered in Bank’s
name only and insurance cover note, road permit, tax token must be obtained in
03.00 Supervision :
vehicle/machinery must be inspected at least once in a month so that the same
cannot be shifted elsewhere/another route/place without Bank’s knowledge.
04.00 Taking of possession :
the event of party’s failure to pay 3(three) consecutive installment the
vehicle/machinery shall have to be taken into Bank’s possession, if necessary,
with the help of law enforcing authority.
05.00 Renewal of insurance :
expiry of previous insurance fresh insurance cover shall have to be obtained.
Procedures to be followed for
recovery of irregularities/stuck-up/overdue and time barred investment:
regularize/recover irregular/stuck-up/overdue investment and in order to
overcome the situation all concerned shall adhere to the following procedures
for recovery of aforesaid investments. In this regard a brief definition of
irregular/stuck-up/overdue investment is also given.
i) Irregular Investment:
ii) Stuck-up Investment:
02.00 Producers to be followed for recovery of
irregular/stuck-up/ overdue investment:
i) Contacting the investment client in writing
and meeting personally:
ii) Sending Resume of Investment to
iii) Issuance of Registered Notice:
Notice to be issued:
v) Suit to be filed:
vi) Disposal of Murabaha Stock:
vii) Inviting Tender for Disposal of Stock:
viii) Criminal Suit for Recovery of Vehicle/Machineries:
Difficulties faced while Suit is filed and after filing of Suit:
i) Service of Demand/Legal Notice:
ii) Non-availability of Property Particulars:
Apart from the above the full particulars of
assets of investment clients must be obtained while allowing investment so that
simultaneously with the filing of Money Suit, attachment of asset before
judgment can be made and subsequently decree can be executed on the available
assets of the judgment debtors.
04.00 Steps to be taken after filing of Suit:
After filing of suit the following steps shall be taken:
i) Branch shall follow-up the progress of the suit
effectively with the legal advisor by constant touch with him for speedy
disposal of cases/ suits.
ii) Quick service of Summons on the dependant
shall be ensured. In case normal service of Summons is not possible,
arrangement shall be made for substitute service i.e by way of publication of
Summons on the daily newspaper.
shall be taken for attaching the assets of investment clients before judgment
so that Bank’s interest remains secured/ safeguarded.
shall be taken for issuance of decree by the court at the earliest. As soon as
the decree is given by the court certified copy shall be obtained and true copy
shall be sent to Head Office. A copy of the decree shall also be sent to the
judgment debtor impressing to payoff as per terms of decree.
shall be ensured that payment by the judgment debtor is made as per terms of
decree. In case of default execution
case shall be filed without delay unless otherwise advised by Head Office &
decrial amount shall have to be recovered on auctioning the property of the
any prayer for amicable compromise is made by the investment client at any
stage, the same shall be sent to Head Office with comments and observation of
the Branch Manager for consideration of Head Office.
there is no chance for recovery of any irregular/stuck-up/over due investment
even by taking legal action the investment shall be treated as “Bad”
. It may be mentioned that an investment becomes bad for the following reasons:
financial condition of investment clients turns out poor and his business is
collapsed and there is no realizable asset.
is not traceable and all efforts to find him out fail.
05.00Time barred by limitation:
i) Responsibility of time barred:
further that before expiry of the above period if the investment client
acknowledge in writing signed by himself or by his duly authorized agent or any
payment made by respective borrower by deposit slip signed by him or his
authorized agent, a fresh period of limitation shall be computed from the time
and date when acknowledgement of debt is signed by him authorized agent or part
payment of debt is made by him under his signature or his authorized agent. The
deposit of profit if specifically mentioned in the pay-in-slip will, however,
not save the limitation.
iv) Signing of Blank Charge Forms including Balance Confirmation shall be
treated as acknowledgement debt:
signing of fresh demand promissory note, letter of continuity or balance
confirmation slip by the borrower or by his authorized agent before the expiry
of above prescribed period of limitation may be treated as an acknowledgement
of debt so as to compute the fresh period of limitation from the date thereof.
v) Mere receipt of Demand
Notice or Legal Notice do not constitute acknowledgement of debt:
this connection, it may be mentioned that mere receipt of the demand notice or
legal notice by the borrower or by his duly authorized agent by signing the
acknowledgement receipt thereof can not be treated to be an acknowledgement receipt
of debt because the acknowledgement receipt bears the testimony of the receipt
of the letter and not the contents of the letter i.e. do not testify the
acknowledgement of debt by the borrower. The mere reply of bank’s notice
without specific admission of debt can not also be treated to be an
acknowledgement of debt.
vi) After becoming time barred only abstention of acknowledgement of debt
in writing with promise to repay in writing shall save limitation:
if after the expiry of the above prescribed period of limitation, i.e. three
years in case of money suit and twelve years in case of mortgage suit, from the
date of initiation of investments, the borrower or his duly authorized agent
makes any such acknowledgement of debt or any part payment of his debt or
profit as mentioned above the dues shall not be saved from the limitation or
the dues shall not get a fresh lease of life unless the borrower or his duly
authorized agent along with his acknowledgement of debt in writing also
promises in writing to repay signed by him or his duly authorized agent to pay
the balance of outstanding dues.
vii) Limitation shall expire as on the last day
of the year instead of any date within the year as per calculation:
further that if the account is current, open and mutual where there has been
reciprocal demands, between the parties, computation period of limitation shall
commence from the date of last credit entry and will extend up to the calendar
year, i.e. , if the last date of credit entry is 02-10-1996 limitation shall
expire on 31-12-1997 and not on 01-10-97
4.2.10 POSITION IN THE STOCK MARKET:
Bank’s share sustained a steady
strong position throughout since its inception at Dhaka and Chittagong Stock
Exchange in 1998. In Dhaka Stock Exchange the face value of Taka 100 of the
share was traded at Taka 588.75 highest in 2008. The market trend of the bank’s
share in Dhaka Stock Exchange between January 2008 to December 2008 is stated
4.2.11 Net Profit:
Net profit is the profit of an
organization when all receipts and expenses have been taken into account. It is
an important indicator for measuring the success altitude of any organization.
Thus the net profit scenario of AIBL sets in the following fashion:
The net profit scenario follows
the similar trend in the earlier years except in the year 2007, where it
performs a lower growth in terms of net profit. The current year’s performances
would undoubtedly favors the stakeholders of AIBL. The current year’s success
of the bank would certainly prove the fact that the performance of the bank
showing a good progress.
4.2.12 Earning Per Share (EPS):
The profit in pence attributable to
each ordinary share in a company based on the
consolidated profit for the
period, after tax and after deducting minority interests and preference share
dividends. This profit figure is divided by the number of equity shares in
issue that rank for dividend in respect of the period. The EPS scenario of AIBL
stands at the following way:
the above graph, we can conclude that EPS growth shows an inconsistent trend.
Over the years, the results show unexpected growth in certain years. Moreover,
it rises and falls throughout the time period. In addition the EPS figure looks
quite brilliant in the current year.
Any object, tangible or intangible,
that is of value to its possessors. It is used for creating the value of the
organization. An asset is liquid if it can be disposed of quickly with
relatively small price changes. The practice of an asset is an important needle
for judging the dynamics of any organization. The asset position of AIBL is
From the above chart we can conclude
the asset position of AIBL always look to grow gradually over the years. In the
year 2007 and 2008, the assets figure look brilliant which itself states the
progress of the bank.
4.2.14 Return on
An accounting ratio expressing the
amount of profit for a financial year as a percentage of the assets of the
company. ROA is an important measure of a company’s profitability. ROA measures
the return of assets. The ROA of the AIBL positions in the following manner:
In the earlier years the ROA of AIBL
were poor compare to the recent years performance. It also reveals that from
the year 2007 ROA rises alarmingly and a slight fall in the year 8
4.2.15 Reserve Fund:
It is the part of the company
other than the share capital largely arising from the retained profit or from
the issue of share capital at more than its nominal value. Reserves are
surpluses not yet distributed and in some cases not distributable. The AIBL
reserve fund stand at a following trend:
The chart shows gradual increase in the
reserve fund since it’s inception. Moreover, AIBL tends to reserve a rich
portion of their profit in the reserve fund in the recent years. Whereas, in
the earlier years the reserve fund were pretty low. Hence we can conclude that
AIBL have the wider opportunity to go for investment from its internally
generated fund in the recent years.
The branch represents the
number of outlets of an organization countrywide where the services are being
provided to the customers. The branch growth of AIBL can be shown in the
From the above chart we can
conclude that the number of branches operating over the country were relatively
constant excluding the earlier few years. The bank started its operation with
20 branches but as the year passes by AIBL prefer to increase the number of
branches to fulfill the need of the customers.
During the period 2004 to 2008, the
From the period 2004 to 2008, the
During the period 2004 to 2008, the
From the period 2004 to 2008, the
During the period 2004 to 2008, the
From the period 2004 to 2008, the
During the period 2004 to 2008, the
From the period 2004 to 2008, the
4.3 Findings of the Study:
This section of the report contains
findings of the study. The findings are the outcome of the syntheses of the
analyzed data as well as analysis of the Performance Evaluation collected from
various sources like different mannuals, annual reports, circulars, practical
knowledge etc. The presented data is analyzed and interpreted to dig out the
major salient features of the Performance Evaluation of AIBL practiced at
present. Synthesis of the analyzed primary as well as secondary data covering
different qualitative variables of the study, reviewing of a number of printed documents
and oral discussion with the employees resulted in a series of findings as
Evaluation procedures of Al-Arafah
Islami Bank Limited are more
or less like other banks.
Evaluation procedures of AIBL may
be adopted with current procedures of other Banks.
Data oriented questions may be introduced in the Evaluation procedures.
related subject may be preferred for performance evaluation in AIBL.
methods are to be followed for Performance Evaluation Procedures.
4.3.1 Comments of Bangladesh Bank:
In 2008, the Inspection team of Bangladesh Bank has inspected the
branches of the bank. The inspection reports have been presented and discussed
in the meeting of the Audit Committee of the Board of Directors. Necessary
corrective measures have been taken against repetition of the lapses according
to the minutes of the meeting. The lapses/irregularities find out by Bangladesh
Bank are comparatively less than previous years.
As per Bangladesh bank’s guidelines the Credit Report Information
Services Ltd. (CRISL) in 2007 the long term and short term grading were BBB+
and ST-3 respectively.
Banking is a business encompassing
their employees and the broader communities, as well as their shareholders and
customers. They believe that shareholder value is driven by the satisfied and
loyal customers. They achieved good success last years, there were number of
challenges as they move forward. We hope that the bank will continue to
successfully deliver excellent results, meeting their financial and operations
objectives-as well the needs of their customers and their people. May the
Almighty Allah give them dedication, patience and fortitude to serve the cause
of Islam and to go ahead with their mission to run the Bank as per the
principles of Islamic Shariah.
In recommendations we would like to
cite some problems and suggestions thereagainst in achieving its goal as well as the
prospects of the bank.
our above all the analysis, we can stand at a fact that AIBL shows a good
progress since its inception. Although it started slowly in the initial years
but due to sound management and better efficiency in the operation have
resulted its performances to upfront in the coming years.
analyzing all the selected variables under study, it seems to deliver somewhat
the similar result i.e. in the recent years the performance of the bank was up
to the mark and it represents the dynamic efficiency of AIBL.
In addition, we
believe that AIBL could progress further if they better utilize their reserve
funds and go for some calculated risky projects. Moreover, the better
management and efficient operation would undoubtedly lead the bank to reach at
the highest peak of success and to stand at a better place compare to other
private commercial banks.
So, my specific suggestions in this
There are acute shortages of
qualified employees. So, more highly qualified
performance oriented eployees should be appointed.
All of the technologies of the bank
are not latest. Latest technologies should be adopted.
Performance evaluation procedures of
the bank are not up to the mark; they shoud be upgraded.
The evaluation procedures must be
result oriented and cost effective.
Financial statements of the bank
should be prepared on the basis of current data.
Report 2004, Al-Arafah Islami Bank Limited
Report 2005, Al-Arafah Islami Bank Limited
Report 2006, Al-Arafah Islami Bank Limited
Report 2007, Al-Arafah Islami Bank Limited
Report 2008, Al-Arafah Islami Bank Limited
Manual of Al-Arafah Islami Bank Limited
Banking, Investment & Foreign Exchange Manuals
of Al-Arafah Islami Bank Limited.
Managers’ Conference Reports, 2008
Diary of Al-Arafah Islami Bank Limited (2004-2008)
Gray (1999), Human Resource Management, Prentice
India Pvt. Ltd., New Delhi-110001, India
M. Abul Hasan (2001), Islamic Ethics in Human Resource
Dictionary of Finance & Banking, Brian
Butler, Oxford, New Edition.