Internship Report

On Modes of Investment of Islami Bank Bangladesh Limited Mohammadpur Krishi Market Branch

Shahana Shofi ID NO. BBA070102072 Major in Human Resource Management

Date of Submission: 16th January, 2011.

Internship Report
On Modes of Investment of Islami Bank Bangladesh Limited Mohammadpur Krishi Market Branch

Supervised By Syed Mustafizur Rahman Chowdhury Senior Lecturer, MIS Department of Business Administration Northern University Bangladesh

Submitted By Shahana Shofi ID NO. BBA070102072 Major in Human Resource Management

Date of Submission: 16th January, 2011.

ii

Students Declaration
I am Shahana Shofi, bearing ID BBA070102072, student of BBA program of Northern University Bangladesh, Major in Human Resource Management; do hereby declare that the internship report titled Modes of Investment Operation of Islami Bank Bangladesh Limited at Mohammadpur Krishi Market Branch is an original. The assigned work is done by me for partial fulfillment of my BBA degree, as a part of academic curriculum. It has not been submitted by me before for any other degree.

Shahana Shofi BBA 070102072 Major in Human Resource Management Department of Business Administration Northern University Bangladesh

iii

Certification

This is to certify that Shahana Shofi student of Northern University Bangladesh bearing ID NO-BBA070102072 under faculty of Business Administration has done an internship report titled Modes of Investment of Islami Bank Bangladesh Limited at Mohammadpur Krishi Market Branch under my supervision.

The student is found to be intelligent, sincere and hardworking. The student has put in lot of work and has also brought forth her views and ideas which are being studied for implementation at appropriate time. It is a record of research carried out by Shahana Shofi under my supervision. No part of project and thesis report has been submitted for any degree, diploma, and title of recognition before.

I wish her every success in her future endeavor.

Supervisor

Syed Mustafizur Rahman Chowdhury Senior Lecturer, MIS Department of Business Administration Northern University Bangladesh

Committee Chairman Department of Business Administration Northern University Bangladesh

iv

Letter of Transmittal

Date: 16th January, 2011

Syed Mstafizur Rahman Chowdhury Senior Lecturer in MIS Department of Business Administration, Northern University Bangladesh

Subject: Submission of Internship Report.

Sir, I am pleased to submit the internship report as a partial fulfillment of BBA program. I tried my best to present this internship report on Islamic Banking System Practiced By Islami Bank Bangladesh Ltd. as per your guideline. I tried my best to work sincerely to cover all aspects regarding the matter. Though I have faced some limitations to prepare the report due to scarcity of organized data, time limitation and not enough knowledge about banking sector.

However, if you need any clarification, suggestion, directions for further improvement of the report, I will be obligate to provide with further explanation. I sincerely hope that you will appreciate my effort.

Sincerely yours,

Shahana Shofi ID No-BBA070102072 Major in HRM Department of Business Administration Northern University Bangladesh v

ACKNOWLEDGEMENT

First I would like to thank almighty Allah for blessing me with the ability to write and submit this report. A large number of individuals have contributed directly and indirectly in the preparation of this report. I am thankful to all of them for their assistant and encouragement. At first I dedicate all the credits to the Northern University Bangladesh.

Special mention must be made to some persons from whom I have received continuous support without which it might not be possible for me to complete the report. Among them Syed Mustafizur Rahamn Chowdhury Senior Lecturer Department of Business Administration Northern University Bangladesh who has spent his valuable time in supervising my study very closely and cordially. I cannot deny his suggestions to apply new indebted to his contribution.

I would like to thanks my gratitude to Md. Shahid Uddin Ahmed (Vice-President & Manager) at Mohammadpur Krishi Market branch of Islami Bank Bangladesh Ltd. I also would like to thank Muhtarima Mahmuda Sultana, Senior Principal Officer and faculty member, Islami Bank Training and Research Academy (IBTRA) of IBBL for her full support and encouragement. I am also grateful to other personnel of this academy. They tried their best to manage their valuable time for me in finishing information, as well as give me suggestion to conduct the study.

I also express my thanks and gratitude to the authority of IBBL to allow me to complete my practical orientation at their bank and helped me by providing all sorts of information to prepare of this report. I would like to thank all other officers in this branch to help me despite tremendous work pressure. I would very much appreciate and sincerely acknowledge suggestions from friends for improving of this report.

vi

Executive Summary

This report focuses my experience in Islami Bank Bangladesh Limited. This report has provided a clear idea about the Modes of investment of Islami Bank Bangladesh Limited. It contains five main parts. First part is the introduction part. Second part is the profile of IBBL which gives a clear idea about establishment of IBBL. Third part focuses on Internship Position and Duties. Fourth part discusses about analysis and learning points of Mohammadpur Krishi Market Branch. End of the report there have conclusion and recommendation.

Basically IBBL is an Islamic Bank based on Islamic Shariah. It follows the alternative concept of Islamic Banking which represents unique human approaches to credit and banking based on profit-oriented economy devoid of interest. In this regard IBBL has introduced a number of income generating programs for the million of urban and rural poor. With that objective in view IBBL has formulated a profitable investment option for the poor a credit program to earn and live in a better society with greater security and peace.

Modes of investment of Mohammadpur Krishi Market Branch are divided into three parts. Bai-mechanism, Share-mechanism, and Ijarah-mechanism. This type of investment also divides into many other parts, like Bai-mudaraba, Bai-muajjal, and Hire purchase under Shirkatul Meelk etc.

Investment performance of IBBL, Mohammadpur Krishi Market Branch is increasing day by day. Because most of the people in our country are religious minded and they want to invest their money according to Islamic Shariah. Moreover people of all walks of life can easily transact with IBBL comparing to other commercial private banks in the country.

vii

ABBREVIATION

AOF AVP AWCA BBA DD EVP HPSM IBBL IBTRA IT KYC MDDS MMDS MMPS MSDA MSNDA MTD NUB PO PO SBIS SPO SVP SWOT TT VP

: : : : : : : : : : : : : : : : : : : : : : : : : :

Account Opening Form Assistant Vice President Al-Wadiah Current Accounts Bachelor of Business Administration Demand Draft Executive Vice President Hire Purchase under Shirkatul Meelk Islami Bank Bangladesh Limited Islami Bank Training & Research Academy Information Technology Know Your Customer Mudarabah Deposit Deouble Scheme Mudarabah Monthly Deposit Scheme Mudarabah Monthly Deposit Double Scheme Mudarabah Savings Deposit Accounts Mudarabah Special Notice Deposit Accounts Mudarabah Term Deposit Northern University Bangladesh Pay Order Principal Officer Small Business Investment Scheme Senior Principal Officer Senior Vice President Strength week opportunities Threats Telegraph Transfer Vice President

viii

Table of Content Name of the Topic

Executive Summary

Chapter

Page No:
i-viii 1

Introduction Part
1.1 Introduction 1.2 History behind the report 1.3 Objective of the study: 1.4 Justification of the study 1.5 Methodology of the report: 1.6 Limitations of the study:

Chapter One

2 2 3 3 4

Profile Of the IBBL

2.1 Definition of IBBL: 2.2 Basic Objective of IBBL 2.3 Misson of IBBL 2.4 Vision of IBBL 2.5 Membership of different organization 2.6 Present programs of the organization 2.7 Characteristics of IBBL 2.8 Function of IBBL 2.9 Hierarchy Management of IBBL 2.10 Hierarchy Management of IBBL:(Muhammadpur Krishi Market Branch) 2.11 Profile of the Bank

Chapter Two

5 6 6-7 7 7 7 8 8 8 9 10

11

ix

Internship Position & Duties

3.1 Description of Job 3.2 Specific Responsibilities of the job 3.3 General Banking Activities 3.4 Foreign Exchange 3.5 Investment Activities 3.6 Modes of Investment 3.7 Bai- Mode 3.7.1 Bai-Mudaraba 3.7.2 Bai-Muazzal 3.7.3 Bai- Salam 3.7.4 Quard 3.8 Share-Mode 3.8.1 Mudaraba 3.8.2 Musharaka 3.9 Ijarah Mode 3.9.1 Hire Purchase under ShirkatulMelk 3.9.2 Shirkatul Meelk 3.9.3Ijarah 3.9.4 Sale 3.10 Investment Processing of IBBL 3.11 Investment Scheme of IBBL

12 13 13 13 14 15 15-16 16 16 16 17 17 17 17 18 18 18 18 18 19 19 20 21 22 22 23 23-24 24 25 25-26 27 28-30 31

Chapter Three

Analysis & Learning Points

4.1 Learning Points

Chapter Four

4.2 Analysis: 4.2.1 Bai-Murabaha (General) 4.2.2 Bai-Muazzal 4.2.3 HPSM 4.2.4 QTDR 4.2.5 Furniture, Fixture& Library 4.3 (SWOT) Analysis

Chapter Five

Recommendations And Conclusion References

Chapter-1
Introduction

xi

1.1 Introduction:
Because of globalization todays world enhances the opportunities of business and investment, for economic empowerment modern world put a great effort favoring from all aspect. As a result, in the modern society commercial banks occupy a position of economic importance. They play a significant role to meet up the needs of the society such as large-scale production, capital formation, industrialization, growth of trade and commerce etc. Islami bank Bangladesh Limited is an unconditional and specialized financial institution which is first of its kind in South East Asia performs most of the standard banking service and investment activities on the basis of profit-loss sharing system conforming to the principles of Islamic Shariah. Islami Bank does not pay interest to depositor. Instead depositors participate in the profitability of the bank. The Bank participates in financing long-term projects on the basis of profit-loss sharing instead of granting credit facilities with interest. IBBL also performs various social welfare activities through its subsidiary organ named Islami Bank Foundation (IBF). In this report, I undertake microscopic analysis mainly on Different Investment Modes of IBBL and sketch picture of the same.

1.2 History behind the report:

Under internship program each student has to prepare a report on the particular topic related with the organization. According to this requirement, I have already completed our internship program from IBTRA under Islami Bank Bangladesh Ltd., Muhammadpur Krishi Market Branch. On the basis of our practical experience as well as theoretical knowledge, I have completed the report regarding Different Investment Modes of IBBL The main focus of my study is to analyze the investment strategy and its strength and weakness. Islami Bank does not lend money or issue securities with fixed interest. Instead it finance in various schemes approved by Shariah Board to achieve its goal.

xii

1.3 Objectives and Philosophy of the study:

The objective of the study is to fulfill the requirement of BBA program as well as to gain practical exposures about investment of IBBL. In line with the broad objective, the detailed objectives of the study may be spelled out as follows: To familiar the history and operations of Islami Banking in Bangladesh. To fined out the overall pictures of investments of IBBL. To identify strength and weakness of investments of IBBL. To identify the problems related to investments faced by IBBL. To recommend actions that may be necessary to redesign the investments of IBBL.

1.4 Justification of the study:

There are three types of schedule commercial banks are in operation in our economy. They are Nationalized Commercial Banks, Local Private Commercial Banks and Foreign Private Commercial Banks. Islami Bank has discovered a new horizon in the field of banking area, which offers different General Banking, Investments and Foreign Exchange banking system. So I have decided to study on the topic Different Investment Modes of IBBL. Because the Internship program of the university is an integral part of the BBA program. So it is obligatory to undertake such task by the students who desirous to complete and successfully end-up their BBA degree. This also provides an opportunity to the students to minimize the gap between theoretical and practical knowledge. During the internship program the teachers of the Institute are attached to actively and constantly guide the students. Students are required to work on a specific topic based on their theoretical and practical knowledge acquired during the period of the internship program and then submit it to the teacher. That is why we have prepared this report.

xiii

1.5 Methodology of the study:

The study is performed based on the information extracted from different sources collected by using a specific methodology. This report is analytical in nature. The methodology is: Data collection: Source of data of this report can be divided into two categories: Secondary Sources: Annual Report of IBBL. Website. Relevant books, Research papers, Newspapers and Journals. Internet and various study selected reports.

1.6 Limitations and restrictions of the report:

From the beginning to end, the study has been conducted with the intention of making it as a complete and truthful one. However, many problems appeared in the way of conducting the study. During the study it was not possible to visit the whole area covered by the bank although the financial statements and other information regarding the study have been considered. The study considers following limitations: All the concerned personnel of the bank have not been interviewed. Lack of in-depth knowledge and analytical ability for writing such report. Lack of experience. The time period for this study was short

xiv

Chapter-2
Profile of the Islami Bank Bangladesh LTD.

xv

2.1 Definition and Concept of Islamic Bank:

Islamic Bank developed under Islamic frame work, performs most standard banking service and investment activities on the basis of profit-loss sharing system conforming the principles of Islamic Shariah. It operates with the objectives to implement and materialize the economic and financial principles of Islam in the banking arena. According to Organization of Islamic Conference (OIC), Islamic bank is a financial institution whose statutes, rules and procedures expressly state its commitment to the principles of Islamic Shariah and to the banning of the receipt and payment of interest on any of its operations. According to Dr. Ziauddin Ahmed Islamic Bank is essentially a normative concept and could be defined as conduct of banking in consonance with the ethos of the value system of Islam. Although Islamic Bank is a financial institution, its operations and activities shows that Islamic Bank as a Business firm with Halal transaction within the boundary of Islami Shariah .The main objective is not only to earn profit but also to make welfare oriented interest free and exploitation free economy of a country.

2.2 Basic Objectives of Islamic Banks:

The basic objectives of Islamic bank can be pointed out as follows: To conduct interest free banking systems according to Islamic Shariah. To make investment through different modes permitted under Islamic Shariah. To avoid the production of harmful goods and services. To eliminate socio-economic in-justice. To establish economic equality. To eliminate economic exploitation. To avoid economic instability.

xvi

To avoid evil, wrong and injurious practices from economic life. To cover the fulfillment of the basic needs of the people. To realize the full potential of the economy. To provide safety net for the weak, poor and distressed.

2.3 Mission of IBBL

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

2.4 Vision of IBBL

Our vision is to always strive to achieve superior financial performance, be considered a leading Islamic Bank by reputation and performance.

2.5 Membership of different organization:

Bangladesh Institution of Bank Management (BIBM). The Institution of Bankers Bangladesh (IBB). Bangladesh Association of Banks (BAB). Bangladesh Foreign Exchange Dealers' Association (BAFEDA). Central Shariah Board for Islamic Banks of Bangladesh. International Chamber of Commerce- Bangladesh.

xvii

2.6 Present programs of the organization

Islami Bank Bangladesh Ltd.

Deposit Collection

Investment

General Banking

Foreign Exchange Business

2.7 Characteristics of Islami bank

It is a financial Institution. It is a business institution. It operates its business activities free from interest. It is run according to rules and regulation formed and amended by Shariah Council. It is profit-loss sharing business organization. It provide loan as Quard Hasana for social welfare. It gives Zakat on its capital according to Islamic Shariah. It leads all of its transaction according to Islamic law.

2.8 Function of IBBL

To maintain all types of deposit accounts. To make investment. To conduct Foreign Exchange Business. To extend other banking service. To conduct social welfare activities through Islamic Banking Foundation.

xviii

2.9 Hierarchy Management of IBBL:

Executive President

Deputy Executive President

Executive Vice President

Senior Vice President

Vice President

Assistant Vice President

Senior Principle Officer

Principle Officer

Senior Officer

Officer

Probationary Officer

Assistant Officer Grade-i

Assistant Officer Grade-ii

Assistant Officer Grade-iii xix

2.10 Hierarchy Management of IBBL: (Muhammadpur Krishi Market Branch)

Vice President

Assistant Vice President

Senior Principle Officer

Principle Officer

Senior Officer

Officer

Probationary Officer

Assistant Officer Grade-i

Assistant Officer Grade-ii

Assistant Officer Grade-iii

xx

2.11 Profile of the Bank Corporate Information:

(As on 28st December 2010)

Date of Incorporation Inauguration of 1st Branch (Local Office, Dhaka) Formal Inauguration Share of Capital Local Shareholders Foreign Shareholders Authorized capital Paid-up Capital Deposit Investment Foreign Exchange Business Number of Branches Number of Shareholders Manpower Number of SME Centers (Source: www.islmicbankbd.com) 42.64% 57.36% Tk.10,000.00 million Tk.7413.10 million Tk.265193Million Tk.255178 million Tk.277739million 247 55067 10068 26 12th August 1983 13th March 1983 30th March 1983

xxi

Chapter-3
Internship Position and Duties

xxii

3.1 Description of Job

I was assigned in the General Banking Section for the first two weeks, after that on site supervisor transferred me to the Foreign Exchange Section for another two weeks and later in the Investment Section as an intern. I aided by General Banking In charge, Investment In charge, Foreign Exchange In charge, Second officer of the branch, Manager and Vice President of the branch and other ranking officers in a number of activities.

3.2 Specific Responsibilities of the job

Provide detailed information to the clients about different Deposit Schemes. Making clear the clients about the difference between profit and interest. Cross Checking the Y-table of Telegraph Transfer(T.T) Issue cost memo of Telegraph Transfer (T.T) In the Investment section I had to deal with the papers and documents needed to fill up to apply and sanction of an investment procedure of different companies. I had to mainly deal with the Web Based Cash collection in the Foreign Exchange Section.

3.3 General Banking Activities

Account opening. Had to provide different information about mudaraba Deposits. Balance Statement checking. KYC from fill up. Handling transfer transaction. Debit and Credit Voucher Fill up. Issue cost memo of Telegraphic Transfer (T.T).

xxiii

3.4 Foreign Exchange Activities

There is a section called foreign remittance section where customers collect foreign remittance. I had to deal with two types of remittance: Spot Cash and Web Based Cash.

Web Based Cash: I had to mainly deal with the Web Based Cash collection. The
activities I had to do are as follows:

When a customer comes to collect a Web Based Money at that time I had to
collect a PIN Number and his/her name to download the money from internet. It is compulsory to bring National ID card or Passport main copy and photocopy to collect the money and the beneficiary has to come by him/herself otherwise I was not bound to pay the money. Then I had to provide an application form to the customer to write the remitters name, the country name, PIN Number his/her name, address, cell phone number, and signature. After that my onsite senior officer downloads the money information from website and printouts three copies of that to maintain other formalities. Then he gives the 3 copies to me to make credit voucher where I had to write the beneficiarys name, TT No, date, amount of the money very carefully. And I had to take signature of the beneficiary beside of the credit voucher. After that I had to input all the information of the beneficiary in the Web Based Remittance Register, 1st had to credit the amount in the beneficiarys account then again had to debit the money in the same account as the beneficiary is taking the cash instantly. The client had to give a signature in his/her account column. Finally I had to check the Application form which filled up by the beneficiary and staple that with a copy of the web money and his/her photocopy of National ID card or Pass Port. The credit voucher also had to staple with a copy of the web money.

xxiv

3.5 Investment Activities

In this section I had to mainly deal with the papers and documents needed to fill up to apply and sanction of an investment procedure of different companies. The Bank should have these documents against each investment of any company for future dealings. The papers and documents which I had to fill up for each company are as follows: Clients Application. Quotation. Request Letter for an investment. Authorization Letter. Demand promissory note. Demand promissory note Delivery Letter. Agreement form. Cash memo.

3.6 Modes of Investment of IBBL, Muhammadpur Krishi Market Branch

When money is deposited in the IBBL, the bank, in turn, makes investments in different forms approved by the Islamic Shariah with the intention to earn a profit. Not only a bank, but also an individual or organization can use Islamic modes of investment to earn profits for wealth maximization. Some popular modes of IBBLs Investment are discussed below. Islami Bank Bangladesh Ltd. operates its investment activities mainly through 3 (three) mechanisms: (Muhammadpur Krishi Market Branch) Bai Mechanism, Share Mechanism Hire Purchase Under shirkatul Melk

xxv

Bai Mechanis m

Share Mechanism

Ijara Machanism

Bai-Murabaha Bai-Muazzal Bai-Salam Istishnaa Quard

Mudaraba Musharaka

Hire Purchase under Shirkatul Meelk

3.7 Bai- Modes:

Under Bai-Modes of Islami Bank Bangladesh Ltd practiced different kinds of investment modes. These are given below

3.7.1 Bai-Murabaha (Contract Sale on Profit)

Bai-Murabaha" means sale on agreed upon profit. Bai-Murabaha may be defined as a contract between a Buyer and a Seller under which the Seller sells certain specific goods permisIBBLe under Islamic Shariah and the Law of the land to the Buyer at a cost plus agreed profit payable in cash or on any fixed future date in lump sum or by installments. The profit marked-up may be fixed in lump sum or in percentage of the cost price of the goods.

3.7.2 Bai-Muazzal (Deferred Sale)

Bai-Muazzal means sale for which payment is made at a future fixed date or within a fixed period. In short, it is a sale on Credit. The Bai-Muazzal may be defined as a contract between a buyer and a seller under which the seller sells certain specific goods, permisIBBLe 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.

xxvi

3.7.3 Bai-Salam (Advance payment)

Bai-Salam means advance sale and purchase. Bai-Salam may be defined as a contract between a buyer and seller under which the seller sells in advance in the certain commodities and products IBBL under Islamic Shariah and the law of the land to the buyer at a agreed price payable on execution of the said contract and the commodities and products to the buyer at a future time in exchange of an advanced price fully paid on the spot. Here the buyer makes an advance payment, but the delivery is delayed until sometime in the future. Usually the seller is an individual or business and the buyer is the bank.

3.7.4 Quarde
There are different types of quarde in IBBL, these are bellow

Quarde-e-Hasana Term Deposit Recite

The word Quarde is an Arabic word which means loan or credit on advance. The literal meaning of Quarde is giving Fungible goods for use without any extra value returing those goods. It must follow the principal of equal foe equal return with homogeneous goods. Fungible goods may be rice, oil, salt, money etc. In banking sector money is used as quarde. Quarde is Halal by Islam for not to pay any extra or interest in return.

3.8 Share Modes:

3.8.1 Mudaraba (Investment made by the entrepreneur)

The word Mudaraba means travel for undertaking business The term Mudaraba 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. Mudaraba is also known a Qirad and Muqaradah

xxvii

3.8.2 Musharaka (Partnership based Investment)

The word Musharaka is derived from the Arabic word Sharikah meaning partnership. Thus the word Musharaka means a partnership established between two or more partners for purpose of a commercial venture participated both in the capital and management. Thus, it involves different types of profit and loss sharing partnership.

3.9 Ijarah Modes

3.9.1 Hire purchase Under Sirkatul Meelk

Hire Purchase under Shirkatul Melk is a Special type of contract which has been developed through practice. Actually, it is a synthesis of three contracts: Shirkat jara Sale These may be defined as follows:

3.9.2 Shirkatul Meelk

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

3.9.3Ijarah
The term Ijarah has been derived from the Arabic words Air and Ujrat which means consideration, return, wages or rent. This is really the exchange value or consideration, return, wages, rent of service of an asset. Ijarah has been defined as a contract between two parties, the Hire and Hirer where the Hirer (lessee) enjoys or reaps a specific service or benefit against a specified consideration or rent from the asset owned by the Hire (lessor). It is a hire agreement under which a certain asset is hired out by the Hire to a Hirer against fixed rent or rentals for a specified period.

xxviii

3.9.4 Sale
This is a sale contract between a buyer and a seller under which the ownership of certain goods or asset is transferred by seller to the buyer against agreed upon price paid / to be paid by the buyer.Thus Hire Purchase under Shirkatul Melk mode both the Bank and the Client supply equity in equal or unequal proportion for purchase of an asset like land, building, machinery, transports etc. Purchase the asset with that equity money, own the same jointly; share the benefit as per agreement and bear the loss in proportion to their respective equity.

3.10 Investment Processing of IBBL

Generally a bank takes certain steps to deliver its proposed investment to the client. But the process takes deep analysis. Because banks invest depositors fund, not banks own fund. If the bank fails to meet depositors demand, then it must collapse. So, each bank should take strong concentration on investment proposal. However, Islami Bank Bangladesh Limited (IBBL) makes its investment decision through successfully passing the following crucial steps:

xxix

3.11 Investment Scheme of IBBL

Islami Bank Bangladesh Limited came into being to introduce a welfare oriented banking system and also to establish equity and justice in the field of economic operations based on the principal and guidelines of Islamic Shariah. Islami Bank Bangladesh Limited applies eleven schemes for welfare activities.

SL No. 01. 02. 03. 04. 05. 06. 07. 08. 09. 10. 11. 12.

Schemes Name

Implemented Date

Household Durable schemes-HDS Investment schemes for Doctors Small Business Investment schemes(SBIS) Agricultural Implements Investment schemes(AIIS) Housing Investment schemes-HIS Real Estate Investment Program-REIP Rural Development schemes-RDS Transport Investment schemes-TIS Car Investment scheme-CIS Mirpur Weavers Investment schemes-MSWIS Micro Industries Investment scheme-MIIS Palli Griha Nirman Beniyog Prakalpa-PGNBP

27.01.1993 11.07.1990 06.03.1991 02.12.1992 30.11.1994 24.08.1991 31.08.1995 21.05.1995 14.11.1995 09.10.1999 18.07.2000 30.01.2010

xxx

Chapter-4
Analysis and Learning Points

xxxi

4.1 Learning Points

It was a great experience to have learnt some important banking, finance, marketing functions that will help me in future. I could learn how to file the official documents accordingly and to keep track of those files. This helped me understand the importance of file management system of Islami Bank Bangladesh Ltd. I have gathered a very good skill in handling Electronic Integrated Banking Software (EIBS), Web Based Remittance and Investment which will help me in my future job carrier. I also experienced that reimbursement of the expense claims is done in a systematic manner. Profit distribution, Investment Return collection, Foreign Remittance handling, Spot Cash Payment are some very useful assignments I have been involved with during my internship program that help me learn a lot about different aspects of these areas. I have learned organizational behavior which will help me to expand my career. I have also learned to maintain a good relation with the clients which will help me to develop my career.

4.2 Analysis:
On the basis of partnership business of profit and loss Islami Bank Bangladesh Limited was established in Bangladesh to operate banking activities avoiding interesting like other Muslim countries. It is entirely a new banking system which was adopted for a better change in socioeconomical condition and to make the banking function dynamic By the construction of capital, production employment opportunities investment and strong economical structure bank is performing major role to meet up the demand of society.

xxxii

4.2.1 Bai-Murabaha (General)

Year BaiMurabaha(General) 2009 47.3 2010 88.97

Source of Data: Muhammadpur krishi Market Branch (IBBL)

Source of Data: Muhammadpur krishi Market Branch (IBBL) This Figure shows the upward trends for IBBL, Muhammadpur Krishi Market Branch, from 2009-2010. Investment under Bai-Murabaha in 2009 was tk47.3 million and in 2010 was increased tk88.97 million.

4.2.2 Bai-Muazzal
Year Bai-Muazzal 2009 21.65 2010 35.74

Source of Data: Muhammadpur krishi Market Branch (IBBL)

xxxiii

Source of Data: Muhammadpur krishi Market Branch (IBBL) This Figure shows the upward trends for IBBL, Muhammadpur Krishi Market Branch, from 2009-2010. Investment under Bai-Muazzal in 2009 was tk21.65 million and in 2010 was increased tk35.74 million.

4.2.3 HPSM
Year HPSM 2009 231.7 2010 284.33

Source of Data: Muhammadpur krishi Market Branch (IBBL)

Source of Data: Muhammadpur krishi Market Branch (IBBL) This Figure shows the upward trends for IBBL, Muhammadpur Krishi Market Branch, from 2009-2010. Investment under HPSM in 2009 was tk231.7 million and in 2010 was increased tk284.33 million.

xxxiv

4.2.4 QTDR
Year QTDR 2009 5.13 2010 22.75

Source of Data: Muhammadpur krishi Market Branch (IBBL)

Source of Data: Muhammadpur krishi Market Branch (IBBL) This Figure shows the upward trends for IBBL, Muhammadpur Krishi Market Branch, from 2009-2010. Investment under Qtdr in 2009 was tk5.13 million and in 2010 was increased tk22.75 million.

4.2.5 Furniture, Fixture& Library

Year Furniture, Library 2009 Fixture& 3.55 2010 3.32

Source of Data: Muhammadpur krishi Market Branch (IBBL)

xxxv

Source of Data: Muhammadpur krishi Market Branch (IBBL) This Figure shows the downward trends for IBBL, Muhammadpur Krishi Market Branch, from 2009-2010. Investment under Qtdr in 2009 was tk3.55 million and in 2010 was increased tk3.32 million. IBBL has achieved stable growth and continuous progress to be one of the leading private sectors Bank of the country. All activities are conducted on interest free system according to Islami shariah Investment is made though different modes as per Islami shariah. Extend socio economics and financial services to individuals of all economics backgrounds with strong commitment in rural uplift. Lack of strong initially to explore investment opportunities through research and markets. All employees are not expert of online banking system. Some of the employers try to violate Islami shariah when they deal with investment. Most of the employers and employees are not Business graduate/ Master. Security in bank is not standard. Some Investment deal is very much slow. Islami bank lacks efficient manpower.

4.3 Strengths, Weaknesses, Opportunities, Threats (SWOT) Analysis Strengths

xxxvi

 Weaknesses

Countrywide branch network. Expatriates faith & inclination towards Islamic Banking. Strong base of well-wishers. General support of beneficiaries towards IBBL. Wider network of arrangement. SWIFT arrangements with major Banks. Motivated and experienced human resources.

Lack of proper automation. Shortage of manpower. Insufficient logistic support. Concentration of remittance operation though a single location. Non-offering special deposit & investment schemes for the expatriates.

Opportunities Threats Entering third generation banks to remittance business Unusual exchange rate offered by competitor. Aggressive marketing by some banks. Operation of New Islamic Banks/ Branch New arrangement with some Exchange Houses. Increase in skilled/ semi-skilled expatriates in various countries. On-line banking facilities. Opening branches at the major remittance receiving localities. Enforcement of Anti Money Laundering Act. Floating and attractive Exchange Rate.

xxxvii

Chapter-5
Recommendation and Conclusion

5.1 Recommendations
Though Islamic bank is comparatively superior to conventional interest based bank from various aspects like abolition of interest based loan market, no fixed cost of capital, stimulation for accelerating saving and capital formation, efficient allocation of investment, production and profit, easy recovery of investment capital, lower inflationary

xxxviii

situation, etc. Islami bank has to fight for several obstacles in case of harmonious operation. Here I have tried to locate some vivid hindrance and suggested accordingly. Any kind of bank Shariah based or interest based has to operate under regulatory environment prepared and approved by the government. There are conflicts between Islami Shariah and general Government rules and banking law. Thats why Islami bank does not get the opportunity and help from the running law of government. Insurance company pools large amount of money, which is mainly invested by bank. Islami bank does not get benefit from insurance companies directly. Because insurance companies are not guided by Islami Shariah. So Islami Bank is not interested to get insurance from that companies thats why it is necessary to establish Islami insurance policy. Islami bank cannot accept securities & bonds from Bangladesh Bank because these securities & bonds are not well instructed by Islami Shariah. Besides the conventional banks get these benefits from Bangladesh Bank that helps them to increase their wealth. Islami bank lacks efficient manpower. In our country Islami bank spreading very rapidly but still skilled manpower is not sufficient. Islami banking and Islami economy must be included in the syllabus of schools and universities so that Islami educated people can have opportunity to get employed in Islami bank and the service of Islami bank can be better with the help of these skilled personnel.

5.2 Conclusion:
Islami banking system the collection of invested money is easier that the conventional banking because Islami bank concerns with the purpose of investment not with only the invested money. I also think that there is bright future waiting for the Islami banking in Bangladesh. And IBBL is in a position to go as a catalyst for this development in the banking sector in Bangladesh. Another thing I have to mention here that the IBBL is going through the path in which they need to go and as like today it will bring more new and welfare oriented activities in the banking sector in the years to come. The special

xxxix

feature of the investment policy of Islamic Banks is to invest on the basis of profit-loss sharing system in accordance with the tenets and principles of Islamic Shariah. Earning of the profit is not the only motives and objectives of the Islamic Banks investment policy rather emphasis is given in attaining social good and in creating employment opportunities. By concerning Islami Bank and its operations I come to the conclusion that the investment models of IBBL are more superior to the conventional bank. In conventional banking system loan is granted on the basis of interest, which is fixed. In Islami banking system investment is going on with profit-loss sharing system. In this system no fluctuation comes between growth of economy as well as growth of IBBL. In Islami banking system it is possible to create balance between money supply and the production of goods. On the other hand, conventional banking system creates inflationary problem. In conventional banking system, investment does not ensure employment opportunity besides Islamic banking system directly work with unemployment problem. At the time of increasing interest rate, investment decreases and at the same time unemployment also increases. In conventional banking system interest rate always fluctuates and events unrest in economy. Besides Islami bank always helps economic growth. In Islami banking system the collection of invested money is easier that the conventional banking because Islami bank concerns with the purpose of investment not with only the invested money. I also think that there is bright future waiting for the Islami banking in Bangladesh. And IBBL is in a position to go as a catalyst for this development in the banking sector in Bangladesh. Another thing I have to mention here that the IBBL is going through the path in which they need to go and as like today it will bring more new and welfare oriented activities in the banking sector in the years to come.

xl

REFERENCES
Web Sites: 1. IBBLweb site (2006),Aim and Objectives, Retrieved December 30, 2010, at 2.00 pm from http://www.islamibankbd.com/ Objectives.php 2. IBBLweb site (2006), Introduction, Retrieved December 22, 2010, at 6.00 pm from http://www.islamibankbd.com/ introduction.php 3. Bangladesh Bank Website (2007), from www.bangladesh-bank.org Retrieved December 05, 2010, at 2.30 pm. 4. IBBLweb site (2006),History, Retrieved December 20, 2010, at 6.30 pm from http://www.islamibankbd.com/ History.php

Reports:
1. Annual Report of, 2008-2009. 2. Brushier Published by IBBL on its different invest schemes and activities.

xli