Shahjalal Islami Bank Limited (SJIBL), Foreign Exchange Branch
CHAPTER 1:
Introduction of the Study
1.1 Background
Masters of Business Administration (MBA) program consists of integrated theoretical and practical method of teaching. In fact practical orientation with day-to-day activities of an organization is one of the most important requirements of MBA program. To fulfill this purpose I was sent to Shahjalal Islami Bank Limited (SJIBL), Foreign Exchange Branch as anintern in this regard under the supervision of two supervisors one is internal from the institute and another is from the organization for three months. The paper will deal with the “The Foreign Trade of Shahjalal Islami Bank Limited”. On the basis of working experience for this period I have prepared this report and I have tried my best to relate the theoretical knowledge with the practical work situation.
1.2 Objective of the Study
The primary objective of this report is to get acquainted with the banking business operation of Islamic Bank. The specific objectives of the report are:
· To study various desk works of the Shahjalal Islami Bank Limited.
· To know about the Foreign Exchange system.
· To know about the remittance of funds.
· To acquire an in depth understanding of the functions of each department.
· Coordinating the functions of various departments.
1.3 Scope of the study
The focus of the report will be on Foreign Exchange functional areas of Shahjalal Islami Bank Limited.
I was assigned to Shahjalal Islami Bank Limited by the authority and found the Following boundary of my study there:
· Account opening department
· Cash department
· Export and import department
· Investment department
1.4 Methodology of the Study:
To meet the objectives of the study I realized that a single method would not be effective. Formal & oral discussion, direct observation, questioning clients & printed papers of the Bank were found useful. To collect the necessary and meaningful information the following methods were applied.
Both primary and secondary sources were used in here.
1.4.1 Data Collection:
The report was fully investigative in nature. Data have been collected from two sources:
· Primary sources
· Secondary sources
1.4.1.1 Primary Sources are as follows:
· Face-to-face conversation with the respective officers and staffs of the Branch.
· Practical work experience in the different desks of the departments of the Branch covered.
· Relevant file study as provided by the officers concerned.
1.4.1.2 Secondary Sources of data and information are:
· Annual Report of Shahjalal Islami Bank Limited.
· Web site of Shahjalal Islami Bank Limited.
· Different ‘Procedure Manual’ published by Shahjalal Islami Bank Limited.
1.5Organization of the Report
This report divided into two major parts. One is organizational part and another is main assigned part.
Chapter l&2 uncovers Organizational part, that mainly focuses on the reason why this report is done and also consist limitation, scope and overview of the organization that consist a comprehensive idea about SJIBL by covering the issues like; background of the bank, mission and vision of the SJIBL, corporate profile, organizational structure, function of SJIBL, branch network, performance and growth of SJIBL.
The main part of the report contains Chapter 3, & 4, (Foreign Trade, Financial Statement & contains, Findings of SJIBL). Chapter 5Conclusion. And finally Chapter 6 Recommendation
1.6 Limitation
• Due to confidentiality of the data, adequate data were not available.
• Supply of more practical and contemporary data is another shortcoming
• The study may not be done very successfully due to inexperience.
• On our schedule time we could not find the respondent. Because they were busy with their work on that time.
CHAPTER 2: Organizational Profile
2.1 Introduction:
Shahjalal Islami bank limited is a commercial bank and its play a very important role in our economy; in fact it is difficult imaging how our economic system would function efficiently without the help of commercial bank. They are heart of our financial structure since they have the ability, co-operation with the Bangladesh Bank to add to the money supply of the nation and thus create additional purchasing power. These characteristics set commercial banks apart from other financial institution. In addition to issuing deposits payable on demand they accept time deposit. By lending and investing these resources and by transferring funds throughout the nation and even between countries, they make possible a more complete utilization of resources of the nation. Although banks create no new wealth, their lending. Investing and related activities facilitate the economic process of production, distribution and consumption. There are mainly three sections in SJIBL:
– General Banking Division
– Investment Division
— Foreign Trade Division
These Divisions have small departments or units under them.
2.2 Overview of (Bank):
At birth, Bangladesh inherited an interest based banking system, which was introduced here earlier when the country was a part of British Colony. Since its inception Bangladesh saw a new trend in banking both at home and abroad. Islamic banking was successfully tries in Egypt. After the Mit Ghamar Model, Naser Social Bank was in the process of establishment. During the seventies, Islamic Development Bank (1DB) and a number of Islamic banks at national levels were established in the Islamic world. At home, the Islamic groups were vigorously working for adoption of Islam as the complete code of life. They found Islamic banking in ready form of immediate introduction. Two professional bodies “Islamic Economics Research Bureau” (IERB) and “Bangladesh
Islamic Bankers Association” (BIBA) were taking practical steps for imparting training on Islamic Economics and banking to a group of bankers and arranging some national and international seminars/workshops to mobilize local and foreign people and attract investors to come forward to establish Islamic bank in Bangladesh. Their professional and right-thought activities were reinforces by a number of Muslim entrepreneurs working under the aegis of Muslim Businessman Society (MB S).
The body concentrated mainly in mobilizing equity capital for the emerging Islamic bank. Due to continuous and dedicated work of the above groups and individuals and active support from the Government, Islamic banking could be established in early eighties. Islamic banks have been operating in Bangladesh for about one and half decade alongside with the traditional banks. Out of over 39 banks only five banks (including one foreign Islamic bank) and two Islamic banking branches of a traditional bank, Prime Bank Limited (PBL) have been working on Islamic principles. Like any other traditional commercial banks, they do mobilize deposits and produce loans. But their modes of operation, based on Shariah, are different from the other traditional commercial banks.
2.2.1 Role of Bangladesh Bank in Promoting Islamic Banking in Bangladesh
Though there is no complete Islamic Banking Act for controlling, guiding and supervising the Islamic banks in Bangladesh, some Islamic banking provisions have already been incorporated in the amended Banking Companies Act, 1991 (Act No. 14 of 1991). Bangladesh Bank did not set up any separate Department at its Head Office to control, guide and supervise the operation of the Islamic banks. Inspection and supervision of the Islamic banking operations are conducted by the Bangladesh Bank as per the general guidelines framed for the conventional banks. So, ensuring implementation of Shariah principles in the Islamic banks are being conducted by their own Shariah Councils. The role of Bangladesh Bank in controlling, guiding and supervising the Islamic Banks in Bangladesh in accordance with Islamic Shariah is very minimal. In observing the Shariah implementation status of the Islamic banks.
Bangladesh Bank examines only the report of the respective banks’ Shariah Councils. Recently Bangladesh Bank try to establish separate team/division for control, guideline, supervise & monitor the Islamic banks in Bangladesh.
However, the inspectors and supervisors of Bangladesh Bank are not equally familiar with the technicalities of the different operational methodologies of the Islamic banking. This is because of the fact that there is no separate Department to look into this important matter. International Journal of Islamic Financial Services Vol. 2 No.1 A committee of experts set up by the Governors of Central Banks and Monetary Authorities of the OIC countries examined the whole range of relationships between the Central Banks and the Islamic Banks and submitted a report in 1981 on the “Promotion, Regulation and Supervision of Islamic Banks”. The report highlighted the need to provide for central bank assistance to the Islamic banks on a basis compatible with the Shariah. The report also discussed many monetary aspects such as liquidity requirements, reserve requirements, supervision of Islamic banking activities, and fiscal treatment of income from participation, ownership, capital requirements, and the maintenance of sound relationships between capital, reserves and total assets. The report recommended the fostering of interest-free financial instruments to enable the Islamic banks to meet the statutory liquidity requirements of the central banks.
2.2.2 Theoretical Basis and Business Practice of Islamic Banking
From the viewpoint of Islamic Shariah, in order to be justified islami thought the banking system has to avoid interest. Consequently, financial intermediation in Islamic banking between the bank and the client takes place as a partner rather than a debtor-creditor. The financial activities of modern conventional banks are based on a creditor-debtor relationship between depositors and bank on the one hand and between the borrower and the bank on the other. Interest is regarded by conventional banks as the price of credit reflecting the opportunity cost of money. As interest is prohibited in Islam, commercial banking in an Islamic framework could not be based on the creditor debtor relationship. The other aspect of the theoretical basis of Islamic banking is that the interest free bank is
not risk free. This principle is applicable to two main factors of production, i.e. labor and capital. According to this principle, 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 risk.
2.3 Organizational Overview:
2.3.1 Brief History
Shahjalal Islami Bank Limited (SJIBL), a Shariah based commercial bank in Bangladesh, was incorporated as a public limited company on 1st April, 2001 under Companies Act 1994.The bank commenced commercial operation on 10th May, 2001 by opening it’s first branch i.e. Dhaka Main Branch at 58, Dilkusha, Dhaka obtaining the license from Bangladesh Bank, the Central Bank of Bangladesh. Its first corporate head office was situated at 10, Dilkusha C/A, Jibon Bima Bhaban, Dhaka-1000 which is shifted to, Uday Sanz, Plot No. SE (A) 2/B, Guishan South Avenue, Guishan – 1, Dhaka1212, Bangladesh. The bank opened two branches in 2001, six branches in 2002, two branches in 2003, two branches in 2004, and four branches in 2005, eleven branches in 2006, 2007 and 2008, about 31 branches opened in the year 2009, 2010 & 2011. Total number of branches stood at 63 in 2011 and some more branches are likely to open in important business locations of the country during this year subject to the approval of Bangladesh Bank.
As per Article 30 of the Article of Association of the Bank, Shariah Council for the bank has been constituted. The Shariah Council of the bank consists of prominent Ulamas, Bankers, Lawyers and Economists to advise and guide on the implementation of Islamic Shariah in business activities. The council enjoys a special status in the structure of the bank and playing a vital role to make the bank as Shariah compliant. Members of the Shariah Council meet frequently and deliberate on different issues confronting the Bank on Shariah matters. They also conduct Shariah inspection of branches regularly so as to ensure that the Shariah principles are implemented and complied with meticulously by the branches of the Bank.
Figure 2.3.1- Members of Shariah Council
SJIBL offers a full range of banking services for the personal and corporate customers, covering all segment of society within the framework of Banking Company Act 1994 as well as rules and regulations laid down by central bank. Diversification of products and
Services include corporate banking, retail banking and consumer banking right from industry to agriculture, real estate to software and is backed by the latest technology.
The bank is being managed by a group of highly experienced professionals with diversified experience in finance and banking. The bank has already achieved tremendous progress in only five years. The bank has already ranked as one of the quality service providers and is known for its reputation.
2.3.2 Vision of SIIBL
To be the unique modem Islami Bank in Bangladesh and to make significant contribution to the national economy and enhance customer’s trust & wealth, quality investment, employees’ value and rapid growth in shareholders’ equity.
2.3.3 Mission of SJIBL
· To provide quality services to customers.
· To set high standard of integrity.
· To make quality investment.
· To ensure sustainable growth in business.
· To ensure maximization of shareholders’ equity.
· To extend our customers innovative services acquiring state-of-the-art technology blended Islamic principles.
· To ensure human resource development to meet the challenges of time.
2.3.4 Strategies of SJIBL
• To strive for customers best satisfaction & earn their confidence.
• To manage and operate the bank in the most effective manner.
• To identify customers’ needs and monitor their perception towards meeting those needs.
• To review and update policies, procedures and practices to enhance the ability to extend better services to the customer.
· To train and develop all employees and provide them adequate resource so that the customer needs are reasonably addressed.
· To promote organizational efficiency by communicating company plan, policies and procedures openly to the employees in a time fashion
· To cultivate a congenial working environment.
· To diversify portfolio both the retail and wholesale market.
2.3.5 Nature of business
Shahjalal Isiami Bank Limited offers services for all banking needs of the customers, which include deposits, making loans & advances, discounting bills, conducting money transfer and foreign Trade transactions and performing other related services such as safe keeping, collections, issuing guarantees, acceptances and letters of credit.
Name of . .
Shahjalal Isiami Bank Limited the Company
A public limited company incorporated in Bangladesh on 1st April 2001 Legal Form under the companies Act 1994 and listed in Dhaka Stock Exchange
Limited and Chittagong Stock Exchange Limited.
Commencement
10th May2001
of Business
Uday Sanz, Plot No. SE (A)
Head Office 2/B Guishan South Avenue,
Gulshan – 1, Dhãka-1212.
Telephone No. 88-02-8825457,8828142,8824736,8819385,8818737
Fax No. 88-02-8824009
Website www.shahjalalbank.com.bd
SWIFT SJBL BD DH
E-mail sblho@shahjalalbank.com.bd
Chairman Alhaj Anwer Hossain Khan
Managing Md. Abdur Rahman Sarker
Director
Auditors M/S. Hoda Vasi Chowdhury & Co.
Chartered Accountants
Ispahani Bhaban
14-15 Motijheel C/A
Dhaka- 1000
Phone: 88-02-9555915, 9560332
Tax Advisor M/S K.M Hasan & Co.
Chartered Accountants
87, New Eskaton Road
Dhaka.
Phone: 88-02-935 1457, 9351564
Hasan & Associates
Legal Advisor Chamber of Commerce Building
(6th floor), 65-66 Motijheel C/A, Dhaka
No. of Branches 63
No. of ATM 14
Booth
No. of SME 06
Centers
Off-Shore 01
Banking Unit
No. of 1,671
Employees
Stock Summary:
Authorized
CapitalTk. 6,000 million
Paid up Capital Tk. 4452.70 million
Face Value per
Share Tk 10
Figure : 2.3.5 – Nature and Legal status of SJIBL
2.3.6 Objectives of SJIBL
Twenty first century opened the predictable door of globalization. The whole world is being changed with a modem, extensive & technological revolution. Life style & status are widely changing to have a artistic, delightful & flourishing environment. Demand and
attitude of the whole mankind escalating with time revolution. Everyone has a vision of such a life and status. To fulfill such a vision, it needs possessions, prosperity, fortune, prudent deposit and consistent investments. Unfortunately, the Banks did a few to be a prosperous, service oriented, technology based banking. Shahjalal Islami Bank Limited is committed to fulfill the requirements of the mass people. Shahjalal Islami Bank Limited is patterned of Islamic norms & ethics with modem technology to achieve the goal in the new era. Humanitarian perfection, Economic progress, Assistance & service to the mass people are the basic objectives of Shahjalal Islami Bank Limited.
2.3.7 Organizational Structure:
There are different wings to consist the organizational structure of SJIBL. There are —
· Board of Directors
· Board Committees
· Executive Committees
· Policy Committees
· Management Team
2.3.8 Board of Directors
There is a board of Directors of 13 members in the bank. The board of Directors is the apex body of the bank. It appears like this-
2.3.9 Name of the Board of Directors
| Chairman | Alhaj Anwer Hossain Khan |
| Vice Chairman | Alhaj Md. Harun Miah |
| Vice Chairman | Alhaj Khondoker Shakib Ahmed |
| Director | Alhaj Sajjatuz Jumma |
| Director | Alhaj Mohammad Faruque |
| Director | Alhaj Tofazzal Hossain |
| Director | Alhaj Md. Sanaullah Shahid |
| Director | Alhaj Md. Farooq |
| Director | Alhaj Mohammed Hasan |
| Director | Alhaj Md. Abdul Barek |
| Director | Alhaj Mohammed Solaiman |
| Director | Alhaj Syed Nurul Arefeen |
| Director | Alhaj Abdul Halim |
| Director | Alhaj Mohiuddin Ahmed |
| Director | Alhaj Akkas Uddin Mollah |
| Director | Alhaj Md. Towhidur Rahman |
| Director | Alhaj A.K. Azad |
| Director | Alhaj Mohammed Younus |
| Independent Director | Alhaj Nazmul Islam Nuru |
| Alternative Director | Alhaj Md. Masud |
| Alternative Director | Alhaj Rukun Uddin Khan |
| Sponsors | Alhaj Md. Abdul Mannan |
| Managing Director | Md. Abdur Rahman Sarker |
| Company Secretary | Md. Emran Hossain |
2.3.10 Management Hierarchy
2.3.11 Policy Committee
Al matters relating to the principles, rules and regulation, ethics etc. for operation and management of the bank are recommended by the committee to the board of directors.
2.3.12 Management Team
2.4 Products and Services of SJBL
The bank is managed by a team of professional executives and officials having profound banking knowledge and experience in different sectors management and operation of banking. During the short span of time SJIBL so far introduced a good number of attractive deposit products to broaden the resources base and also investment products to deploy the deposit products. SJIBL always try to introduce a wide verity of attractive deposit, investment and services for suiting taste and requirement of the client.
2.4.1 Products
Bank means mobilizing fund from surplus unit and deployment of fund for deficit unit. SJIBL mobilize its fund from surplus unit through different types of deposit schemes and deployment this fund for deficit unit through various investment schemes. So the main products of SJIBL are different kinds of deposits and investment schemes.
2.4.2 Deposit scheme
Deposit is the “life-blood” of a bank. Bank has given utmost importance in mobilization of deposits introducing a few popular and innovative schemes. The mobilized deposits were ploughed back in economic activities through profitable and safe investment. This type of deposit schemes of SJIBL are:
• Mudaraba Monthly Income Scheme
• Mudaraba Double/Triple Benefit Scheme
• Mudaraba Monthly Deposit Scheme
• Mudaraba Millionaire Scheme
• Mudaraba Hajj Scheme
• Mudaraba Housing Deposit Scheme
• Mudaraba Cash Waqf Scheme
Other than these deposits schemes SJIBL also operate some traditional deposit schemes these are:
• Al-Wadia Current Deposit
• Mudaraba Saving Deposit
• Mudaraba Short Notice Deposit
• Mudaraba Term Deposit
• Mudaraba Scheme Deposit
The total deposit of SJBL stood at TK. 76,648.87 million as on 30th June 2011, which was about 62,964.95 million at the end of 31 December, 2010.
Figure: 2.4.2.2 – Trend of Deposit from 2007 to 2011 (Amount in Millions)
2.4.3 Investment Schemes
The special feature of the Investment policy of Shahjalal Islami Bank Limited is to invest on the basis of profit loss sharing system in accordance with the tenets and principles of Islamic Shariah. Earning of profit is not only the motive and objective of the bank’s investment policy rather emphasize is given in attaining social good and in creating employment opportunities.
The investment and credit department is very important department of a Bank. The money mobilized from ultimate surplus units are allocated through this department to the ultimate deficit unit (Borrower). The success of this department keeps a great influence over the profit of a bank. Failure of this department may lead the bank to huge losses or even to bankruptcy. So special care should be given to this department. Bank landing is important to the economy. Adequate finance can maintain a stable output. But as liquidity and profitability are conflicting considerations, SJIBL, as a bank, while employing the funds pays due regard to both profitability and liquidity.
The bank entertains good investment clients, having credit worthiness and good track record. The bank has different profitable investment projects these are:
o Mudarabaha
o Bi-Muajjal
o Hire Purchase and Ijara
o Investment Against L/C
o Bill Purchase/Discounted
o Investment Against Scheme Deposit
o Quard
The bank has got a few investment schemes to provide financial assistance to comparatively less advantage group of people; which are:
• Household Durable Scheme
• Small Business Investment Scheme
• Small entrepreneur Investment Program
• Medium Entrepreneur Program
• Housing Investment Scheme
• Rural Investment Program
• Car Investment Scheme
• Woman Entrepreneur Investment Scheme
Total investment of the bank stood at TK. 66,269.66 million as on 30th June, 2011. Mode wise investment portfolio of SJIBL as on 30th June, 2011 is given below:
| SL.No | Modes of Investment | Taka in million | Percentage of |
Total Investment1Murabaha15,211.0223%2Bi-muajjal26,407.7640%3Hire-purchase & Ijara11,245.6417%4Bill purchase & discounted9,429.0914%5Investment against scheme deposits1,325.392%6Others2,650.764% Total66,269.66100%
Table 02: Investment Portfolio as on 30th June, 2011
Figure: 2.4.3.1- Investment Portfolio as on 30th June, 2011
Figure: 2.4.3.12- Investment Portfolio as on 30th June, 2011
2.4.4 Services
Shahjalal Islami Bank Limited is an industry standard, Islami Shariah and latest technology based modern bank. The bank is equipped with state-of-the-art technology and committed to provide technology based modern banking to its valuable customers. Services provided by SJIBL are:
2.4.5 Online Banking
To provide better services to the valued customers using the latest technology and electronic media competing with other private banks to set the establish full automated, on-line, centralize banking systems interfacing with all delivery channels link, like ATM (Automated Teller Machine), POS (Point of Sale-Fund Transfer Machine for purchasing at any shop/service center.), any branch banking, home banking, tele banking, internet banking etc. Online banking or any branch banking is a system where transactions, queries and statements of any client of a certain branch may be carried out from another branch of the bank.
2.4.6 SJIBL VISA Card
Card is considered as a new dimension of product resulting from technological development in the banking arena. In line with our affiliation with VISA International for VISA ATMs and POS, the following two products are launched broadening service product of the bank to the clients:
i. VISA Electron (SJIBL VISA Debit Card — Local)
ii. VISA Prepaid (SJIBL VISA Prepaid Card — Local and International)
The important features of SJIBL VISA Card are given below:
• Sense of satisfaction of having an international brand.
• Any where any time banking.
• 24 hours and 7 days a week banking.
• Directly linked with cardholders account.
• Convenient cash withdrawal at ATMs.
• Acceptability at huge number of Q-cash ATMs around Bangladesh.
• Accepted at all VISA terminals locally and globally.
• Local and international transaction with the same card (for duel card).
• Balance Inquiry.
• Mini statement.
• PIN change.
• Shopping at a large number of Q-cash POS terminals around Bangladesh.
• Payment of utility bill.
• Avoid pressure of at counter of bank.
• Minimizing risk of carrying cash.
2.4.7 SMS / Pull Push Service
This is a service provided by the bank through mobile phone. This new technology based service will helps the bank to attract new customer base. Through SMS or Pull Push service client will be facilitated with cell phone based banking service. This SMS service will help the bank to enhance and extend customer service levels on a collaborative basis and reduce teller queues.
2.4.8 SWIFT
Society for Worldwide Inter-Bank Financial Telecommunication (SWIFT) is a bank owned co-operative serving the financial community worldwide. The SWIFT Transport Network (STN) is a dedicated global network for secure communication between SWIFT Customers. SWIFT supports the financial data communication and processing needs of financial institutions, through a range of financial messaging services and value-added processing, as well as, access through the STN and interface and application software. In short SWIFT is a pioneer in the automation of the global financial industries. Shahjalal Islami Bank Limited has introduced this SWIFT alliance entry system firstly in October 2002 and introduced SWIFT alliance access in October 2003.
2.4 Current Position of the Bank
Despite changing macroeconomic condition and volatile money market and foreign exchange market SJBL was successfully in achieving much higher than national growth in deposit, investment (loan); export, and import and remittance business. The bank has maintained and achieved strong position in all key areas covering capital adequacy, asset quality, sound management, good earning and strong liquidity. Here shows current position of SJBL in different areas as on 30th June, 2011.
2.5.1 Equity
Authorized capital ………………………………….. Tk.6,000 million
Paid-up Capital ………………………………….. Tk.4,452.66 million
Total equity was ………………………………….. Tk.7,380.40 million
Comparative position of equity for the year 2011(30th June) & 2010 is given below:
(Amount in Million Taka)
| SL. No. | Particulars | 2011 | 2010 |
| 1 | Paid-up capital | 4,452.66 | 3,425.11 |
| 2 | Statutory reserve | 2,021.82 | 1,774.63 |
| 3 | Retained earnings | 905.93 | 1,548.61 |
| 4 | General Provision | 317.50 | 568.50 |
Source: Yearly Financial Statement of 2010 & Half Yearly Statement of 2011
Equity Composition as on 30th June 2011
Figure: 2.5.1- Equity Composition as on 30th June, 2011
2.5.2 Capital Adequacy
Total equity of the bank as on 31.12.2007 was Tk. 3040.88 million and the total equity stood at tk.4069.09 million on 3 1.12.2008, which wasl3.81% of the risk weighted Assets as against the requirement of 10.00%.
The core capital was 12.24% of Risk weighted Assets as on 31~ December 2008 as against requirement of 5%.
Capital Adequacy Position from 2001 to 2010
Figure: 2.5.2- Capital Adequacy Position from 2001 to 2010
2.53 Branch Network
The bank has been operating with a network of 63 branches all over the country as on 30th June 2011. In the year 2008 & 2009 the bank has opened 19 new branches. Among these 7 is in Dhaka and rest of the Braches are in Rajshahi, Khulna and Chittagong. Here shows zone wise branch distribution of SJIBL:
| OFFICE / ZONES | NUMBER |
| Dhaka | 34 |
| Chittagong | 13 |
| Sylhet | 5 |
| Khulna | 3 |
| Rajshahi | 6 |
| Barisal | 1 |
| Offshore Banking Unit | I |
| Total | 63 |
Table 03 : Zone-wise number of Branches
Figure : 2.5.3 – Number of Branches
2.6 Corporate governance
The Board of Directors of the bank consists of successful distinguish personalities emerging from area of trade, commerce and industries. The bank conducts it’s business and operations under the policy, directions and guidelines of the Board. The bank has also a Shariah Council consisting of prominent Faquih, Economists, Lawyers, Bankers to advise and guide the Board and the Management of Shariah matters relating to the business and operations.
Under the table guidance of the Board of Directors and the Shariah council, the professional management team carries out the business operation of the bank, ensuring good governance practicing sound, best corporate and risk management process. The result that was achieved by the bank so far is due to the constant guidance, cooperation and support of the Board and Shariah Council and devoted, dedicated and hard work of the management team and all functionaries of the bank.
2.7 Operational Performance of SJIBL
HIGHLIGHTS OF PERFORMANCE
| SL # | PARTICULARS | June2011 | June2010 |
| 1. | Paid up Capital | 445.27 | 342.51 |
| 2. | Total Capital (Core + Supplementary) | 875.16 | 647.42 |
| 3. | Capital Surplus | I ,122,702,335 | 1,189,432,802 |
| 4. | Total Assets | 45,216,968,653 | 28,346,996,395 |
| 5. | Total Deposit | 7,664.89 | 5,444.70 |
| 6. | Total Investment (Loans & Advance) | 6,626.97 | 5,239.13 |
| 7. | Total Contingent Liabilities and Commitment | 10,771,113,500 | 6,402,844,932 |
| 8. | Investment Deposit Ratio (%) | 86.46% | 96.22% |
| 9. | Classified Investment against total Investments | 127.39 | 65.80 |
| 10. | Profit after Tax and Provision | 64.73 | 89.42 |
| 11. | Amount of Classified Investment | 143,243,000 | 128,246,000 |
| 12. | Provisions kept against classified Investment | 28,009,403 | 23,009,403 |
| 13. | Provisions surplus | 20,801,366 | 10,723,827 |
| 14. | Cost of Fund | 10.99% | 10.40% |
| 15. | Profit Earning Assets | 39,889,424,692 | 25,303,841,268 |
| 16. | Non-Profit Earning Assets | 5,327,543,961 | 3,043,155,127 |
| 17. | Return on investment in Securities (ROT) | 16.84% | 11.41% |
| 18. | Return on Assets (ROA) | 2.22% | 2.60% |
| 19. | Income from Investment in Securities | 192,717,942 | 97,974,405 |
| 20. | Earnings Per Share (2008: Basic EPS, 2007: Adjusted BPS) | 36.41 | 28.81 |
| 21. | Net Income Per Share | 36.41 | 28.81 |
| 22. | Price Earnings Ratio (Limes) | 8.55 | 10.58 |
2.7.1 Income
Total income of SJIBL mainly derives from two important sources; investment income and non-investment income.
· Investment Income: Total investment income of the bank as at 31st December 200Swas Tk.4,428.89 million as against Tk. 3071.41 million of the preceding year registering 44.20% growth over last year, which was 83.80% of the total income against 85.58% of 2007
· Non-Investment Income Total Non investment income of the bank as at December 2008 was Tk. 856.49 million as against Tk. 517.43 million of the preceding year registering 65.53% growth over last year, which was 16.20% of the total income compared to 14.42% of 2007.
2.7.2 Expenditure
Total expenditure of SJIBL mainly derived from two important sources; profit paid on deposit and operating expense.
· Profit Paid on Deposit: Bank distributed profit of Tk. 4,657.92million among the Mudaraba Depositors in the year 2010 against Tk. 4,200.28 million in the year 2009 which is 61.93% of the Investment income earned from deployment of Mudaraba Fund and 77.89% of total expenditure of 2010 against 82.75% of 2009.
· Operating Expenses: Total operating expenses as on 31.12.2010 was Tk. 1,322.25 million as against Tk 875.60 million of 2009, which was 22.11% of the total expenditure of the year 2010 against 17.25% of 2009.
Particulars20102009Total income9,508.887,117.04Less: Total Expenditure5,980.185,075.88Net profit before provision & Taxation3,528.712,041.16Less: Provision for investment, off Balance Sheets & Others568.50246.00Net Profit before Taxation2,960.211,795.16Less: Provision for taxation887.87724.60Net Profit after tax2,072.341,070.56
Appropriation: 20l0 2007
Statutory Reserve 592.04 359.03
Retained Earnings 1,480.30 711.53
2.8 An Overview of Foreign Exchange Branch of SJIBL
Foreign Exchange Branch started its operations as 5th branch of Shahjalal Islami Bank Limited in 2002. The branch is located at Modern Mansion (1st Floor), 53 Motijheel C/A, Dhaka-1000. Office floor is spacious that can accommodate good number of customers comfortably.
Branch has efficient human resources that can meet up customer’s needs. Order wise work load is distributed properly. Besides, interpersonal relationship is remarkable. Most noted strength is customer service. Prompt, cordial & enthusiastic service satisfies almost all customers. Flexible banking hour attracts more clients doing banking transactions with the branch. In some cases, customers, coming outside the banking hour can honor the cherub & others without delay.
Now under the charge of Senior Vice President M. Samsul Arefin the branch has been performing very well. Under his efficient handling, the branch has already been able to introduce itself as one of the best performers among all other branches of SJIBL. Last year (2007) Foreign Exchange Branch earned a net profit of Tk. 2013 lac. From this viewpoint the branch was in the second position among all other branches of SJIBL in the country.
Even after it has an organized Foreign Exchange Department, the import and export businesses that are usually done in this branch make it a profitable one.
The table below shows the performance of the branch:
TK. In Lac
| Year | Deposit | Investment | Profit | ||||
| Target | Achievement | Target | Achievement | Target | Achievement | ||
| 2008(up to June) | 28609 | 26683 | 36875 | 43029 | 1395 | 1284 | |
| 2007 | 30000 | 25426 | 35000 | 32273 | 2000 | 2013 | |
| 2006 | 22500 | 21500 | 22500 | 28900 | 1200 | 1200 | |
| 2005 | 20000 | 14790 | 17500 | 16088 | 500 | 578 | |
Table 04: Operational performance of SJIBL FEx. Br.
2.9 Future out Look of SJIBL
“Business policy and six years perspective plan” of the Bank from 2007 to 2012 has been formulated to attain the financial strength, sustainable growth and operational efficiency. To protect the interest of the stakeholders, bank has formulated the six years perspective plan for consolidation of the growth and profitability. During the period of perspective plan, Bank has the main objective to attain the height operational excellence and consolidation to turn the bank into a dynamic Islamic Bank in the country. During the period from 2007 to 2012, this period, new and potential avenues of Business in all areas of operation to be explored and expanded through the network of existing 26 branches and more new branches to be opened gradually during the plan period subject to permission of Bangladesh Bank.
Necessary change, adjustment, modification & re-allocation shall be made after periodical review keeping the real scenario in view.
All out efforts shall be made for promotion and improvement of quality-investment through effective supervision, control, follow-up and monitoring in order to lessen the quantum of over dues, to arrest further over dues and to recover, regularize the over dues and declassify the classified investments. Adequate care & caution to be exercised for compliance with 05 core risks as per Bangladesh Bank’s Policy/instructions during the planned period. Asset-Liability of the Bank shall be managed effectively through ALCO to avoid Liquidity Risk, profit rate risk, operational risk and other risks.
Thus, Shahjalal Islami Bank Limited will be turned into a dynamic Islamic Bank in the country and will expand its Banking Business all over the Country to provide the Banking services to the groups including the deserving economic groups of the society who have no easy access to the banking channel. This will help for alleviation of the poverty, income generation, creation of employment opportunity, up-grading of the standard of living of the lower economic groups, which will also contribute to the emancipation of the national economy of the country. Shahjalal Islami Bank Limited is looking forward to see such a bright day in the years to come.
2.10 Social Welfare Activities of SJIBL
With a view to proving financial assistance to the poor and needy people of the society and also for the welfare of the community, Bank has established “Shahjalal Islami Bank Foundation” the foundation among others has also objective to provide health care, relief & rehabilitation, education, dawa, distribution of winter cloths during the winter etc.
At present Shahjalal Islami Bank Foundation has a planning to establish the following projects soon:
· Shahjalal Islami Bank International School & College.
· Shahjalal Islami Bank Hospital.
2.12 Functions and Responsibilities of the Branch
The whole activities of the Foreign Exchange Branch of SJIBL are divided in to three major areas. These are:
· General Banking
· Investment
· Foreign Trade
General banking is the starting point of all the banking operations. This department does the most important and basic works of the bank. It is also the department, which provides day-to-day services to the customers. All other departments are linked with this department. It also pays a vital role in deposit mobilization of the branch. SJIBL provides different types of accounts, locker facilities and special types of saving scheme under general banking.
The special feature of the Investment policy of Shahjalal Islami Bank Limited is to invest on the basis of profit loss sharing system in accordance with the tenets and principles of Islamic Shariah. Earning of profit is not only the motive and objective of the bank’s investment policy rather emphasize is given in attaining social good and in creating employment opportunities.
Foreign Exchange means foreign currency and it includes any instrument drawn, accepted, made or issued under clause (13), Article 16 of the Bangladesh Bank Order, 1972. All deposits, credits and balances payable in any foreign currency and draft, travelers cherub, letter of credit and bill of exchange expressed or drawn in Bangladeshi currency but payable in any foreign currencies.
Chapter 3: The Overall Performance of SJTBL (Foreign Trade)
Foreign Exchange means foreign currency and it includes any instrument drawn, accepted, made or issued under clause (13), Article 16 of the Bangladesh Bank Order, 1972. All deposits, credits and balances payable in any foreign currency and draft, travelers cherub, letter of credit and bill of exchange expressed or drawn in Bangladeshi currency but payable in any foreign currencies.
Taka In Million
| SL | Particulars | 2010 | 2009 | 2008 | 2007 | 2006 | |
| 1 | import | 60,066.24 | 39,543.12 | 42,551.30 | 25,490.10 | 18,684.40 | |
| 2 | Export | 48,856.76 | 29,434.03 | 26,347.30 | 15,084.00 | 11,281.94 | |
| 3 | Foreign Remittance | 6,155.96 | 10,473.09 | 9,497.50 | 4,294.50 | 3,534.62 | |
| Total | 115,078.96 | 79,450.24 | 78,396.10 | 44,868.60 | 33,500.96 | ||
Table: 05- Analysis of Foreign Exchange Business
3.1 Foreign Trade
Foreign Exchange means foreign currency and it includes any instrument drawn, accepted, made or issued under clause (13), Article 16 of the Bangladesh Bank Order, 1972. All deposits, credits and balances payable in any foreign currency and draft, travelers cherub, letter of credit and bill of exchange expressed or drawn in Bangladeshi currency but payable in any foreign currencies.
Bangladesh Bank issues Authorized Dealer (AD) license by observing the bank’s performance and also the customers associated with the bank for conducting foreign dealings. So, Shahjalal islami Bank Limitade, FEx. branch is an authorized dealer.
Banks play a vital role by minimizing the risk of two parties, namely buyer and seller. In fact without the help of banks we cannot think about a congenial international trade environment. The special feature of the Investment policy of Shahjalal Islami Bank Limited is to invest on the basis of profit loss sharing system in accordance with the tenets and principles of Islamic Shariah. Earning of profit is not only the motive and objective of the bank’s investment policy rather emphasize is given in attaining social good and in creating employment opportunities.
Now the question comes how banks help international trade. We know that in a local trade there is a chance to know about each other. But in international trade the involved parties stay two distant places. For a buyer the following risks are involved-
· Risk of non-delivery of goods.
· Risk of receiving sub standard goods.
· Risk of fraud in goods.
For the seller the following risk is involved
· Risk of non-payment.
To reduce the aforesaid risks an independent system is introduced which will safeguard the buyer as well as seller in an international trade. Actually banks play due role by getting into two parties and bind them.
Figure: 3.1- Area of Foreign Trade
The Bank has been providing services to import and export trade and for repatriation of hard-earned foreign exchange of Bangladeshis living and working abroad and has, by now, consolidated its position in these areas.
3.2 Import Section
In case of Import, the importers are asked by their exporters to open a letter of credit, so that their payment against goods is ensured.
Letter of Credit (LIC)is a payment guarantee to the seller by the buyer’s bank. It is in fact, a Credit Contract whereby the buyer’s bank is committed (on behalf of the buyer) to place an agreed amount of money at the seller’s disposal under some agreed conditions. If the conditions of the credit do not require for presentation of specified documents, it is called Clean Credit. On the contrary, if the presentation of specified documents is obligatory, the credit is called a Documentary Credit.
Buyers and sellers enter into contracts for buying and selling goods/ services and the buyer instructs his bank to issue L/C in favor of the seller. Here bank assumes fiduciary function between the buyer and seller.
SJIBL FEx. Branch deals with two types of L/C. These are –
1. SightL/C
2. Deferred L/C
3.2. l Forms of Letter of Credit:
A Letter of Credit (L/C) may be two forms. These as Below
· Revocable letter of credit
· Irrevocable letter of credit
· Revocable LIC
If any letter of credit can be amendment or change of any clause canceled by consent of the exporter and importer is known revocable letter of credit.
A revocable letter of credit can be amended or canceled by the issuing bank at any time without prior notice beneficiary. It does not constitute a legally binding undertaking by the bank to make payment. Revocation is possible only until the issuing bank or correspondent has honored the document. Thus a revocable credit does not usually provide adequate security for the beneficiary. Undertaking by the bank to make payment.
Revocation is possible only until the issuing bank or correspondent has honored the document. Thus a revocable credit does not usually provide adequate security for the beneficiary.
· Irrevocable L/C
A documentary credit takes many different forms. The first decision i.e. the choice of the basic form of the credit is usually made at the time of negotiation between the seller and the buyer. The terms of the credit will be determined in detail when the buyer instructs his bank to issue the credit. At this stage the seller, on being informed by the bank regarding the credit terms, should ensure whether the credit terms are agreeable and, if necessary, demand from the buyer a more precise wording of the credit terms or the necessary amendments. It is in the interest of both the parties to the contract that the individual terms of the credit transaction are clearly and correctly stipulated. This facilitates the examination of the documents at the ti