AN INTERNSHIP REPORT ON

Financial Performance Analysis of AL-Arafah Islami Bank Ltd.

Prepared by
Jinnat ara Nezum. BBA (7th) Major in HRM ID# B093852

INTERNATIONAL ISLAMIC UNIVERSITY CHITTAGONG

DHAKA CAMPUS

SCHOOL OF BUSINESS

AN INTERNSHIP REPORT ON
Financial Performance Analysis of AL-Arafah Islami Bank Ltd.

Prepared For:
Mamun Abdul Kayeum Asst. Prof. & Co-Ordinator of BBA Uttara University

Prepared By:
Jinnat ara Nezum. BBA (7th) Major in HRM

Md. Mahbub Alom Pathan. ID# M20521111010 (7TH) Major in Finance BBA

INTERNATIONAL ISLAMIC UNIVERSITY CHITTAGONG

DHAKA CAMPUS

May 26th, 2009

Mr. Mamun Abdul Kayeum Assistant Professor & Co-Ordinator Faculty: BBA Uttara University (UU).

Subject: Seeking permission to submit Internship Report on Al-Arafah Islami Bank Limited.

Dear Sir, I am pleased to submit my Internship Report on Financial Performance Analysis of AL-Arafah Islami Bank Ltd. which was prepared from the job experience in AL-Arafah Islami Bank Ltd. Joydebpur Chowrasta Branch, Gazipur. I am submitting this report in order to fulfill the requirement of the course. I had the opportunity to gain more ideas and insights about Organizational structure and customer services.

I had also to learn and work a lot to know the overall Banking and accumulate the relevant data to prepare this report. I express my deep gratitude to you for giving me scope and assist me to prepare this report properly.

I trust you will find it nice.

Yours sincerely

. Md. Mahbub Alom Pathan. ID# M20521111010 (7TH) Major in Finance BBA

Acknowledgement
First of all, I would like to express my deeply gratitude to the almighty Allah for fruitfully prepare this internship report. It is my practical work as well as my responsibility to perform my jobs. I acknowledge the contribution of my honorable teacher and internship supervisor Mr. Mamun Abdul Kayeum, for his guidance in conducting the study and writing the report. He has been gracious enough to take time out from his schedule for giving me all the necessary assistance through out the entire internship period. Without his help this report might not have been a comprehensive one. I would like to express my sincerest thanks the very first persons of AL-ARAFAH ISLAMI BANK LTD. to whom I would like to express my gratitude to M.Mohiuddin Sharifi (Manager) received me as an intern at AL-ARAFAH ISLAMI Bank. I also like to thanks Md. Mozahed Hossain (Second Manager), Md. Mahfuzul Haque (Officer) in charge ( G.B), Md. Khalilur Rahman (Officer), Mr. Lalon Sheik in charge (Foreign Exchange) who helped me by making understand many banking terms work procedure in Joydebpur Chowrast Branch of AIBL.

But I would like give special thanks M. Mohiuddin Sharifi (Manager) who was frankly, dynamic and helped me seriously and given me his valuable time during my internship program. Some time I did interfere in their most important work by asking many questions for my internship purpose and they were very polite and willing to answers my questions with patience. Finally, a silent flow of gratitude is for most adorned Parents, Brother, Brother-in-law, and Sisters, whose dreams and blessings are always with me.

Executive Summary
The report is prepared on the basis of practical experiences at AL-ARAFAH ISLAMI Bank Ltd. This program helps me a lot to learn about the practical situation of a financial as well as also assist to implement my theoretical knowledge into practical realistic environment. In the age of modern civilization Bank is playing its spending role to keep to the economic activity. In fact there is hardly any aspect of development activity whether state inspired or otherwise where Bank do not have a major role to play. Bank provides means and mechanism of transferring command over resources from those who have an excess of income over expenditure to those can make use of the same for adding to the volume of productive capital. There are large numbers of small saver with small amount of saving who are generally reluctant to invest their surplus income because of their lack of adequate knowledge about complicated investment affaires. The Bank provide them with the safety, liquidity and profitability by means of different saving media offering varying degrees of mix liquidity, return and safety of saving.

I have equally faced co operation and many obstacles simultaneously. I hope this report would be able portray the status of General Banking, Investment and Foreign Exchange Operation of AIBL. My efforts will meaningful if this report serves the purpose effectively. I have faced many Challenges in different steps of banking procedure. I also tried to overcome every case. All the banking activities from my personal point of view presented in this report. Al- Arafah Islami Bank Limited is schedule commercial Bank is registered by the Bangladesh Bank. It follows the rules and regulations prescribed by the Bangladesh by the Bangladesh Bank for scheduled commercial Banks.

TABLE OF CONTENTS
Chapter 1. Introduction Part 1.1. Introduction 1.2. Origin of the report 1.3.Background of the study 1.4. Objective of the report 1.6. Methodology 1.6.1. Source of data 1.6.2. Primary data 1.6.3. Secondary data 1.7. Limitation of the report 2. Organization Part 2.1. Historical background of the study 2.2. Board of director 2.3. Managing director 2.4. Central Executive of the Bank 2.5. Shariah council of the Bank 2.6. Organization Structure of the Bank 2.7. Special feature of the Bank 6 Contents Page No.

2.8. Pledges & commitments of the sponsor directors of the Bank 2.9. Structure of the Branch 2.10. SWOT Analysis 2.11. Branch location 3. Project Part 3.1. Introduction 3.2. General Banking 3.2.1. Introduction 3.2.2. Account opening section 3.2.2.1. Current account 3.2.2.2. Saving account 3.2.2.3. Monthly saving scheme 3.2.2.4. Muduraba MDS 3.2.2.5. Muduraba LDS 3.2.2.6. Muduraba KDS 3.2.3. Cash Section 3.2.3.1. Cash receiving procedure 3.2.3.2. Cash payment procedure 3.2.4. Deposit section 3.2.4.1. Remittance section 3.3. Accounts Section 3.3.1. Tasks of accounts department 3.4. Investment section 3.4.1. Investment scheme 3.5. Foreign Exchange 3.5.1. Letter of credit (L/C) 3.5.2. Types of (L/C) 3.5.3. Requirement paper for opening L/C
3.5.4. Important particular for L/C opening register 3.5.5. Important particular for column of Bill

3.5.6. Back to Back L/C 3.5.7. Foreign Exchange remittance

1.1. Introduction
In recent years Financial Institutions have diversified their services by creating new subsidiaries that perform additional services or by merging with other types of financial institutions. The result has been the creation of financial conglomerates, composed of various units offering specialized services. Diversification also offers benefits to financial institutions. Through this internship program, I come to know about the organization structure, problems, prospects and operational procedures of AL-ARAFAH ISLAMI Bank Ltd. I was not only learned about the activities and operations of correspondent Bank, but also gathered some knowledge about the basic business of the banking in first three month for the purpose to build up my career. As a student of finance department in Uttara University of Bangladesh, I have earned theoretical knowledge, which is not exactly same with the practical business environment. The company internship program applied by the faculty of Business study helps us to have practical experience and its reporting also.

1.2. Origin of the report

The report entitled Financial Performance Analysis of Al-Arafah Islami Bank Limited what has been prepared for the completion of the B.B.A of the Dept. of Business, Uttara University of Bangladesh. It is possible to gather theoretical knowledge passing through books but it is insufficient to acquire practical experience. We collect data to know about unknown factors, we can have accurate knowledge about the factors by analyzing data.

1.3. Background of the study

This study is made to fulfill to the partial requirement of the BBA program. As the internee was assigned in the Financial Performance Analysis of Al-Arafah Islami Bank Limited during the internship period, practical knowledge has been gathered on the sector. And as observation is the main task of the division, the report is aimed to work on that topic. Practical work situation is sometime may different from what is learn theoretically. Through the business processes are based on theory, the application has to be different to meet the requirement of a situation. The Financial Performance Analysis of Al-Arafah Islami Bank Limited has been observed practically and presented in this report to observe the real situation.

1.4. Objective of the Report

The broad objective of the study is to expose the banking activities as a financial purpose. This report is designed to know more about the overall banking systems of the aforesaid bank/branch and analyze the ratio of the organization and identify the financial conditions of organization. More specifically, the topic is selected to identify the following objectives: To identify the system of Banking Activities. To observed the internal control system of Al-Arafa Islami Bank Limited. To identify the financial strength of the institution. To see the document maintained by the sections. To know, how the banks invest in other organization and their interest rate and also know how way bank generate profit. Analysis the financial statement.

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Identify the Islamic bank comparable of the other Bank.

1.5. Scope of the Report

In organization part, the report generates an overview of the AL-Arafah Islami Bank Limited. But it was so difficult if Mamun Abdul Kayeum, assistant professor and coordinator of BBA and M. Mohiuddin Sharifi, (Manamer, AIBL) does not help to generate information. The scope of the report is restricted in to the collection record and disbursement that process the financial data of the Al-Arafah Islami Bank Limited. But it was not possible for me to collect any information of payroll and planning and cash management as their activities are highly confidential.

1.6. Methodology
The proposed study will be constructed through an exploratory research. Various aspects of research methodology are given bellow 1.6.1. Source of Data Both primary and secondary data has been used in making the report thought more emphasis was given on primary source of data in order to carry out the objectives of the report. 1.6.2. Primary Data Primary data has been collected through interviewing and with the help of questionnaire, which has been enclosed at Appendix-1 and I also used my observation to gather knowledge of Islami Banking system of Al-Arafah Islami Bank Limited. Most of the questions are opened ended to get a details idea about the project. I also generate information to communicate the officer in different position. Selected position was

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Manager, Second Manager, Senior Officers, Officer of Al-Arafah Islami Bank Limited also the advisor of the institution. 1.6.3. Secondary Data Secondary data means the Existing primary data that was collected by someone else or for a purpose other than the current one.

Sources can be classified as:

Paper-based sources books, journals, periodicals, abstracts, indexes, directories, research reports, conference papers, annual reports, internal records of organizations, newspapers and magazines.

Electronic sourceson-line databases, Internet, and broadcasts.

1.7. Limitation of the Report

Like any other report, this one also has some limitation. I know that bank and banking as well as Islami banking is very widely functions, all of the business department. In this report I have tried to use more information as possible. Some financial data are

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confidential and private for the organization, which prevents to explore some areas of the project. Collecting data from the busy employees of the Al-Arafah Islami Bank Limited through interview and questionnaire was another hard task. And more information is strictly private and most confidential, which are not possible to add in the report.

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2.1. Historical Background of the Study

Al-Arafah Islami Bank incorporated in Bangladesh as a banking company in 1995 with limited liability by shares. It started business on 27 September of that year with an authorized capital of Tk 1,000 million. At inception, its paid up capital was Tk 101.20 million divided into 101,200 ordinary shares of Tk 1,000 each. 23 sponsors of the bank subscribed the total issued capital. In 2000, the paid up capital of the bank increased to Tk 253 million, of which Tk 126.50 million were paid by the promoters/sponsors and Tk 126.50 million by the general public. The bank is listed in the two
STOCK EXCHANGEs

of the

country and has offered 126,000 shares for subscription and trading by the public. AlArafah Bank is an interest-free shariah bank and its modus operandi is substantially different from those of regular commercial banks. The bank however, renders all types of

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commercial banking services under the regulation of the Bank Companies Act 1991. It conducts its business on the principles of musharaka, bai-murabaha, bai-muajjal and hire purchase transactions. A Shariah Council of the bank maintains constant vigilance to ensure that the activities of the bank are being conducted according to the precepts of Islam. It is mentionable that Al-Arafah Islami Bank Limited is one of the largest Islami bank of the country. Its shariah principalities application is the better then another bank.

Short History of the bank:

Date of Incorporation Date of formal Inauguration Authorized capital Paid-up Capital Statuary Reserve Number of branches Number of Employees

18th June 1995 27th September 1995 Tk 250.00 Crore. Tk 138.38 Crore Tk 73.13 Crore 50 (Fifty) 1091 (02/12/08)

2.2. Board of Director

The board consists of 12 (Twelve) directors. The numbers of the board of Directors of the bank hold very respectable position in the society. They are from highly successful group and Industrial group of Bangladesh. It is mentionable that the whole members of the Directors board of the bank carried a special carrier i.e. they are Hajji and they already committed `the whole activities in the bank will be as a Ibadah. Jb. Al -Hajj Md. Badiur Rahman is the Chairman of the board while Jb. Al-Hajj Md. Harun-ur-Rashid is the vice

15

President & the Company secretary is Jb. Md. Mofazzal Hossain (the Executive Vice President of the bank).

2.3. Managing Director

Jb. Md. Abdus Samad Sk. is the Managing Director of the bank who is a renowned & dynamic banker of Bangladesh. Jb. A.T.M Harunur Rashid Chodhury is the Additional Managing Director & Jb.Ihsanul Aziz is the Deputy Managing Director of the bank.

2.4. The Central Executives of the bank

Sl 01 02 03 04 05 06 07 08 09 10 11 12 Name of the executives Jb. Md. Abdus Samad Sk.
Jb. A.T.M Harunur Rashid Chodhury

Designation Managing Director Additional Managing Director Deputy Managing Director (1) Company secretary (EVP) Executive Vice President Executive Vice President Executive Vice President Senior Vice President Senior Vice President Senior Vice President Senior Vice President Senior Vice President

Jb. Ihsanul Aziz Jb. Md. Mofazzal Hossain Jb. Md. Rafiul Alam Jb. ASM Mozurul Alam Jb. Mohd Abdul Jalil Miah Jb. ANM Abdus Shahid Jb. Md. Emdadul Haque Jb. Yakub Md. Faruque Jb. Md. Mominul Haque Bhuyan Jb. Md. Rezaur Rahman

2.5. Shariah Council of the bank

The board of the Shariah Council of the bank consists of 8 (Eight) persons. The numbers of the Council hold very respectable position in the society. They are carrying high skilled and learned accordingly Quaran and Hadith and the honorable chairman of the council is high respectable `Alim-e-Din of the country. The members of the council Jb. Mufti Ruhul Amin, Jb. Moulana Abdul Basit Barkatpuri, Jb. Moulana Mukhlesur Rahman, Jb. Mufti

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Moinul Islam & Secretary General Jb. Md. Abdur Rahim Khan are also high learned persons and they also obtained highest degree from Alia Madrasha. And another member of the council carried a special carrier i.e. Jb. AL-Hajj AZM Samsul Alam is retired Secretary of the Ministry of the Religion affairs of the Government and retired Director General of `Islamic Foundation of Bangladesh and Jb. AL-Hajj Badiur Rahman is Chairman of the Board of the Directors. They are Hajji and they already committed to `the whole activities in the bank will be as Ibadah. The list of the Shariah Council as hereunder:

Sl 01 02 03 04 05 06 07 08

Name of the board Jb. Mufti Abdur Rahman Jb. Mufti Ruhul Amin Jb. Moulana Abdul Basit Barkatpuri Jb. Moulana Mukhlesur Rahman Jb. Mufti Moinul Islam Jb. AL-Hajj AZM Samsul Alam Jb. AL-Hajj Badiur Rahman Jb. Md. Abdur Rahim Khan

Designation Chairman Member Member Member Member Member Member Secretary (CC)

2.6. Organizational Structure of the Bank:

Chairman

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Vice Chairman

Board of Directors

Managing Director

Additional Managing Director

Deputy Managing Director

Deputy Managing Director

Executives

Executive Vice President

Senior Vice President

Vice President

Assistant Vice President

Senior Principal Officer

Principal Officer

Senior Officer

Non-Executives
Officer

Junior Officer

Assistant Officer

2.7. Special Features of the Bank

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As an Islami bank, we are singular in every positive aspect. We provide a bunch of state-ofart banking services within the wide bracket of shariah. We are unique with our products, strict with our principle and uncompromising with our honesty. Here are some special features of us that make us notable in Islami banking sector.

All activities of AIBL are conducted under a profit/loss based system according to Islamic Shariah to get the nation rid of Usury.

Its investment policies under different modes are fully Shariah compliant and well monitored by the board of Shariah Council.

During the year 2009, 70% of the investment income has been distributed among the Mudaraba depositors.

In 2010, AIBL has included online banking in its wide range of services. Bangladeshi software has been introduced in this feature to promote the local developers.

AIBL regularly arranges its AGMs (Annual General Meeting). Whenever needed EGMs (Extraordinary General Meeting) are also arranged.

We regularly pay dividend to our valued shareholders. For the year of 2007, we declared 20% bonus dividend to our shareholders.

We believe in providing dedicated services to the clients imbued with Islamic spirit of brotherhood, peace and fraternity.

The bank is committed towards establishing a welfare-oriented banking system to meet the needs of low income and underprivileged class of people.

The Bank upholds the Islamic values of establishment of a justified economic system through social emancipation and equitable distribution of wealth.

Following the Islamic traditions, it is assisting in the economic progress of the socially deprived people; in the creation of employment opportunities and in promotion of rural areas to ensure a balance development of the country.

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The Bank believes in social and philanthropic activities and has established AIBL English Medium Madrasha and AIBL Library. More endeavors will inshallah follow in future.

2.8. Pledges & Commitments of the Sponsor Directors of the bank:

The sponsors and promoters of Al-Arafah Islami Bank Ltd made a few firm pledges and commitments in the name of Allah. Such categorical commitments have never been made by the promoters of any bank in Bangladesh or anywhere in the subcontinent, to our knowledge. These pledges and commitments have been included in the Memorandum and Articles of Association (Article 159) of Al-Arafah Islami Bank Ltd. (pp65-71) incorporated with Bangladesh Bank, Registrar of joint Stock Companies, Securities and Exchange Commission, etc. Let us have a look at some of these commitments, titled Agreements, Pledges and Commitments of the Promoters, Sponsors and Directors of Al- Arafah Islami Bank Ltd. 2.8.1. Objectives of the Sponsors We declare that Al-Arafah Islami Bank has not been set up with the objectives of economic welfare and financial benefit of the sponsors and Promoters in this world, on the country, we are desirous of our welfare in the next world and Nazat in akhirat (hereafter) which could be achieved more by rendering credit services by the sponsors and bankers to others than any service to themselves. 2.8.2. Misuse of Power and Undue Advantages We shall not try to avail undue advantages of any kind from the bank for ourselves, or for firms, companies, institutions in which we have financial or other interests. The facilities which are legal, just and due to us that we shall avail of should be transparent and known to the Board of Directors leaving little scope for misunderstanding.

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Motivating Spirit of Qurbani We are determined to rise above Nafsaniyyat of self-service and have come forward imbued with the spirit of Qurbani and sacrifice and to build up a model credit institution in which selfish Nafsaniyyat shall not be cultured on the mere pretext of majority view of the sponsors.

2.8.3. Inspiration for Qurbani of Nafsaniyyat or self-interest The Promoters and sponsors of Al- Arafah Islami Bank are imbued with the spirit of sacrifices and Qurbani of the family of Hazrat Ibrahim (A.), and which was rekindled by our beloved prophet Muhammad (S.) and Sahaba -i- Keram and thereafter by the Sufisaints who made supreme sacrifices and Qurbani for preachings of Deen of Allah to all corners of the world, Particularly to this region. 2.8.4. Clean Banking is Ibadah We agree to conduct clean banking under patronization of the government, and firmly believe that the association with this bank would be nothing but Ibadah and that we shall act accordingly.

2.8.5. Environment of Al-Arafah Islami Bank Al-Arafah Islami Bank shall bear the mark of the Sunnah of our prophet Muhammad (S.), of our faith and conviction, our values and attitudes towards life and that the entire environment of Al- Arafah Islami Bank shall be in conformity with Sunnah, simple in style, noble and rich in thought, but dynamic and far- reaching in impact, exemplary in efficiency and service to the customers. 2.8.6. Sunnah of Keeping Deposit as Amanah We firmly and solemnly pledge and promise to hold the deposits and other fund at our disposal as Amanah and sacred trust keeping in mind the Sunnah of our beloved prophet

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Mohammad(S.) who would hold the money and materials deposited with him even by the infidels in great trust for which he earned the title of Al-Ameen.

2.8.7. Grouping and Lobbing We shall not indulge in grouping and lobbying most particularly, in financial matters and banking business for the personal interest of anybody. We shall not take informal decisions among ourselves on the agenda of the meeting before the meeting is held. In other words, we agree to discuss the issues of agenda of any meeting concerning the business of the bank and take decisions in the meeting.

2.8.8. Responsibility to Depositors We are conscious that the deposit of our clients might be more than 90% of the disposable loans and credit and we shall put priority on their interest over that of shareholders or directors. 2.8.9. Employment Policy: We agree that all recruitment be made on merit and rules. All employees after employment must conform to Faradh and Wajib within the time determind, but not exceeding two years. As regards, confirmation and promotion of officers and staff, adherence to Faradh and wajib shall be kept in view along with merit and performance. Freedom from Nepotism and Districtism We are totally committed not to indulge overtly or covertly in any kind of nepotism or favoritism due to relationship, friendship, acquaintance, regionalism, districtism or locality as regards to loan facilities or employment or any other aspect directly or indirectly. 2.8.10. Bases of Conscience of Directors We do hereby promise and pledge that in addition to the laws, regulations in force in the country, we shall be bound to and abide by the dictates of our conscience based on faith

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and trust on Allah and expectation of Shafayat from our beloved prophet Hazrat Muhammad (S.). We seek your Dua and prayer to Allah Subhanahu Wa-Taala to keep us firm on the commitments and pledges, we the promoters, sponsors and directors collectively agreed and signed on 05-06-1995.

2.9. Structure of the Branch

Manager

2ndOfficer

In-charge,
General Banking

In-charge,
Investment

In-charge,
Foreign Exchange

Dispatch

Custome r Service Accounts

Remittance
(DD,TT,PO)

Custome r relation

Disburs ement

Recovery

Cash Deptt.

Clearing

Import

Export (IBP)

Received, Payment & do transaction

Received, Payment & do transaction

Foreign Remittance (Inward)

Received, Payment & do transaction

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One stops customer service

i.

2.10. SWOT Analysis of the Al-Arafah Islami Bank Ltd.

SWOT analysis means the analysis of Strength, Weakness, Opportunity and Threats of the company. Strength and Weakness is internal subject. Opportunity and Threats is subject to external. It is happen frequently within the organization to assess own self through SWOT analysis. With this Bank can find their Strength and Weakness, as well as they can formulate their strategy by analyzing the opportunity in the society.

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Strength: Corporate Identity. Branch image Strongly Communication with other Branch. Linkages with international organization. Broadly business in our country.

Weakness: Coordination of different department. Decision making process. Lack of marketing activities. Lack of maintain properly documentation. Lack of communication. Lack of Employees

SWOT

Opportunity: Threats: With GDP growth, the Market competition may served product demand may increase. increase. Decrease competitive May increase the new advantage. branch. Branch image go down because of employees turnover. May increase Global network. Not available skill employees in the branch. Need to increase employees. For additional demand market may Figure: SWOT Analysis of AL-Arafah Islami Bank Ltd. increased.(ATM service)

2.11. AIBL 46 Branch-Location all over Bangladesh

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3.1. Introduction
The Banking Industry in Bangladesh is one characterized by strict regulation and monitoring from the central governing body, the Bangladesh Bank. The chief concern is that currently there are far too many banks for the market to sustain. As a result, the market will only accommodate only those banks that can transpires the most competitive and profitable ones in the future.

There are four nationalized commercial banks (NCB), 5 specialized banks, 11 foreign banks, 4 Islamic banks and 26 domestics private banks, currently operating in Bang ladesh. Among them The Al-Arafah Islami Bank Limited is one of the best leading private commercial bank in Bangladesh. Al-Arafah Islami Bank incorporated in Bangladesh as a banking company in 1995 with limited liability by shares. It started business on 27 September of that year with an authorized capital of Tk 1,000 million. At inception, its paid up capital was Tk 101.20 million divided into 101,200 ordinary shares of Tk 1,000 each. 23 sponsors of the bank subscribed the total issued capital. The banks schemes are becoming very popular in the country. To understand the scenario of modern banking system in Bangladesh and economic scale which are related with banking, Al-Arafah Islami Bank Ltd. is one of the examples. I have found an opportunity to study the Financial Performance Analysis of AlArafah Isl Bank Ltd. through the internship program of UU.

This banking system can be allotment in different section. Those Ares General Banking Account Section Investment section. Foreign Exchange.

Bank is a one of the financial institution that is doing business by money. Bank received money from the customer and providing loan at a high interest rate. Like other commercial Banks AL-ARAFAH ISLAMI Bank performs all traditional Banking business

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including introduction of a wide range of saving and credit products, rattail Banking and professional management. But the AL-ARAFAH ISLAMI Bank Ltd, emphasize its functions in export and import trade handling and financing of export oriented industrious and reduces in the balance in the balance of payment of the country. Its also have to maintain Islami Sharih activities. Local Bank Global Network The World AL-ARAFAH ISLAMI Bank implies the meaning of its operation. Through it is a new type of Bank in Bangladesh; it is familiar with so many countries in the world such as Export Import Bank of United states, Export Import Bank of Japan. Despite it is a local Banking. To achieve the desire goal, it has intention to pursuit of excellence at stages with acclimate of continuous improvement. Because it believes, the line of excellence is never ending.

3.2. General Banking

3.2.1. Introduction
The general Banking Department doses the most important and basic of the Banks. All other departments are liked with this departments are liked with this department. It also plays a vital role in deposit mobilization of the branch. AL-ARAFAH ISLAMI Bank is Provides different types of accounts locker facilities and special types of saving Scheme, under General Banking. For proper function and excellent customer services this department is divided into various sections namely as follow: Accounts opening sections Cash sections. Deposit sections. Bill and clearing sections. FDR sections. Accounting sections.

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3.2.2. Accounts Opening Section

This section deals with opening of different types of accounts. It is also deals with issuing of books and different deposit books to the different accounts openers. A customer can open different types of accounts through this department such as:

Al-Wadia Current Deposit (CD) A/c. Mudaraba Savings Deposit (MSD) A/c. Mudaraba Tern Deposit (MTD) A/c. Mudaraba Short Notice Deposit (SND) A/c. Mudaraba Monthly Profit Tern Deposit (PTD) A/c. Mudaraba Installment Tern Deposit (ITD) A/c. Mudaraba Tern Hajj Deposit (THD) A/c. Mudaraba Monthly Hajj Deposit (MHD) A/c. Mudaraba Monthly Investment Scheme Deposit (SID) A/c. Mudaraba Marries Investment Deposit Scheme (MIS) A/c. Foreign Currency Deposit (FCD) A/c. Mudaraba Pension Deposit Scheme (PDS) A/c. Mudaraba Cash Waqf Deposit Scheme (CWD) A/c. Mudaraba Lakhopati Deposit (LDS) A/c. Mudaraba Millennium Deposit (MDS) A/c. Mudaraba Kutipati Deposit (KDS) A/c. Mudaraba Pension Deposit (MPS) A/c. Mudaraba Double Benefit Deposit (DBS) A/c. Mudaraba Triple benefits Deposit (TBS) A/c.

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Requirements of opening an account: There are some requirements that have to be completed for opening an Account.

3.2.2.1.

Current Account

Current Account is an account where the account holders can make numerous transactions with in a working day. There is no restriction on the number and the amount of with drawls from the current within availability of funds. As the Banker is under the obligation to repay this deposit on demand on interest is paid in this account. Generally, current Account is opened for Business and trades for easy transaction. But a person can open CD Account for special purpose. Requirement for the different types of Accounts holders are discussed.

i. Proprietorship firm: There is a different account opening from for the proprietorship firm by the AL-ARAFAH ISLAMI Bank Ltd. For this account, a customer must need to submit the papers with the from: Photograph. Signature and Rubber- stamp seal of the client. And introducer of AL-ARAFAH ISLAMI Bank Ltd. Introducer must be account holder. Chairmen certificate of the proprietor. Trade license. Voter ID Card Current deposit account is opened with neither a sum of nor less than 1000. The introducer must attest photographs.

ii. Partnership firm: 31

There is a different account opening from for the proprietorship firm. Interaction for running an account is giving in this. The following documents are required to open this type of accounts.

Photograph. Signature and Rubber-stamp seal of the service receiver. Chairman certificate of the partners. And introducer of AL-ARAFAH ISLAMI Ltd. Introducer must be CD Account holder. Trade license. Partnership deed registered by Notary public. Partnership letter along with address and signature. Voter ID Card Current deposit Account is opened with neither a sum of nor less than Tk. 2000. The photographs must attested by the introducer.

iii. Limited company:

A separate account from is used for limited company. There are two kinds of limited company public company and private limited company. The Bank always takes precautions for opening this type of accounts. Several documents are submitted by the clients, which should be checked carefully by the Bank to be legally in a safe position. Requirements to open an account are as follows:

iii. a. Private limited company:

Photograph. Signature and Rubber- stamp of the client. Chairman certificate of the owner.

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 An introducer of AL-ARAFAH ISLAMI Bank of Bangladesh Ltd. Introducer must be CD account holder. Trade license Certified copy of memorandum and articles of association. Incorporation Certificate. Membership Certificate. Memorandum.

iii. b. Public limited company:

Photograph. Signature and Rubber- stump seal of the client. Chairman certificate of the directors. An introducer of AL-ARAFAH ISLAMI Bank Ltd. Introducer must be CD account holder. Trade license. Certificate of Incorporation. Certificate copy of memorandum and articles of association. List of directors as per return of joint stock Company with signature. Certificate of commencement of business. iv. Club society:

The following document duly completed shall be obtained from the customer at the time of current deposit account of Association/Club/Charity/Trust/Society etc.

Photograph. Signature and Rubber-stamp seal of the client. An introducer of AL-ARAFAH ISLAMI Bank Ltd. Introducer must be CD account holder. 33

 Chairman certificate of the client. Certified true copy of constitution/By-laws/Trust deed/Memorandum and articles of association. Certified of registration of the association/Club/Charity/Trust/Society (For inspection and returned only certified.) List of members of the Governing body/Executive committee of the Association /Club/Charity/Trust/Society with their address. Exact of resolution of the Association/Club/Charity/Trust/Society for opening the account and authorization for its operation duly certified by the chairman sectary of the Association/Club/Charity / Trust/ Society. Etc.

3.2.2.2. Saving Account (individual/joint)

Saving account (SB) is meant for the people of the lower and middle classes who wish to save part of their income to meet future needs and intended to earn an income from their saving. For opening of this type of accounts the following requirements are necessary:

Photographs attested by the introducer. Chairman certificate of the account holder. An introducer of AL-ARAFAH ISLAMI Bank Ltd. Introducer must be CD account holder.

For joint of saving deposit and short-term deposit (STD) are as follows.

SL. NO 1 2

Name of Account Saving Deposit Short term Deposit(SND)

Interest rate 4% 5%

3.2.2.3. Monthly Saving Scheme (MSS):

34

It is project of AL-ARAFAH ISLAMI Bank, which is a Scheme like DPS. The slogan of this Scheme is securing your future with case. A small saving to day will provide you comfort tomorrow.

i. Saving period and monthly installment rate:

The saving period is for5, 8, 10, or 12 years. Monthly installment rate is Tk. 500, Tk. 2000, or Tk. 5000.

ii. Monthly installment deposit: The saving amount is to be deposit with in the 10th of every month. In case of holidays the deposit amount is to be made on the following date. The deposits may also be made in advance. The depositor instruction can be giving to transfer the monthly deposit in the Schemes account. In case the deposit falls to make the monthly installment in time there will be no charge added with the following months installment.

iii. Withdrawal

Generally, withdrawal is not advised before a five- year term, but if it is withdrawn before the above term, then interest will be paid saving rate. However, no interest will be paid if the deposit is withdrawn within one year of opening the account.

35

 Incase the depositor to withdraw between the 5,8,10, or 12 year period then full interest will be paid for a completed term and saving rate will applicable for the fractional period.

iv. Loan advantage: After 3 years of saving in this Scheme the depositor (in an adult) is eligible for a loan up to 80% of his deposited amount. In that case, interest rates on the loan will be applicable as per prevailing rate at that time.

Reasons for disqualification from this Scheme: If the depositor fails to pay three installments in a raw, then he will be disqualified from this Scheme and interest will be applicable as mentioned in withdrawal clause. If the depositor fails to five installments in a raw after completion of 5 years term then the Bank reserve the right to close the account and interest will be paid as mentioned in withdrawal clause. In case of death of the depositor the Scheme will case to function. The amount will be handed over to the nominee of the deceased depositor. In case of absence of the nominee the bank will hand over the accumulated amount to the successor of the deceased.

Rule:

A from has to be filled at the time of opening the account. NO introduction is needed but attested photographs are advised. The depositor can select any of the installment accounts. Which can not be subsequently changed? 36

 Incase of minors the guardians may open and supervise the account in his favors. A single person can open more then one account for saving under several installment rates. The accumulated deposit with interest will be returned within one month of completion of a term. The depositor should notify the bank immediately of any change of address. The government tax will be deducted from the interest accumulated in this Scheme. If necessary, at the request of the depositor, the Scheme can be transferred to different branches of the same bank. The bank reserves the right to change the rules and regulations of the Schemes as and when deemed necessary.

v. Monthly Installment Statement Charge:

Years Monthly Installment (Tk) 500 5 8 10 12 39041 74202 105095 144461

Monthly Installment (Tk) 1000 78082 148404 210190 288923

Monthly Installment (Tk) 2000 156164 296809 420380 577847

Monthly Installment (Tk) 5000 390411 742024 1050952 1444618

vi. Monthly Income Scheme (Steady Money) Bangladesh is a developing country. But in our country opportunity of investment is very low. People of our country always try to save their excess money and there looking for where they can deposit the money. According to their demand AL-ARAFAH ISLAMI Bank

37

started this money income Scheme. A monthly income Scheme their really makes good sense an investment for steady return.

Vii. Highest of the Scheme: Minimum deposit Tk. 2, 39500. Higher Monthly Income for higher deposits. The Scheme is for three year period. Monthly income will be created to the depositors account on the fifth of each month. After three years the Account holder would received Tk 10000000.00

Viii. Objectives of the Scheme

An account is to be opined by filling up a form. The Bank provides to the customer a deposit receipt after opening the account. This receipt is non- transferable. If the deposit is withdrawn before a five years term, then saving interest rate will be applicable and paid to the depositor. However, no interest will be paid if the deposit is withdrawn within one year of opening the account and monthly income paid the customer will be adjusted from the principal amount.

3.2.2.4. Muduraba Millionaire Deposit Scheme-

Year 3 4 5

Monthly Deposit Amount 23950 16950 12750

Matured Amt. 1000000 1000000 1000000

38

6 7 10 12 15 20

9950 8000 4600 3345 2170 1150

1000000 1000000 1000000 1000000 1000000 1000000

3.2.2.5. Muduraba Lakhapati Deposit Scheme-

Year 3 5 8 10 12

Monthly Deposit Amount 2375 1275 670 460 335

Matured Amt. 100000 100000 100000 100000 100000

3.2.2.6. Muduraba Kotipoti Deposit Scheme-

Year 3 4 5 6 7 10 12 15 18 20

Monthly Deposit Amount 239500 169500 127500 99500 80000 46000 33450 21485 14330 11100

Matured Amt. 10000000 10000000 10000000 10000000 10000000 10000000 10000000 10000000 10000000 10000000

39

3.2.3 Cash Section

Cash section of any Bank plays a vital role in general banking procedure. Because it is deals with the most liquid assets. There are several counter works simultaneously in cash section of AL-ARAFAH ISLAMI Bank Joydebpur Chowrasta branch. There are also some electronic counting machines by which a huge amount of case money can be counted within a few minutes.

3.2.3.1. Cash receiving procedure:

The work of case receiving counter is examining deposit slips. Depositor user the prescribed deposit slip supplied by the Bank for deposit cash, draft, cheque, pay order etc. In all types of deposits teller must cheek the following things:

The slip has been properly filled up. The title of the account and its umber. The amount in figure and in words is same. Instrument signed by the depositor.

After checking all these things the teller will accept the cash, cheque, draft, pay order etc. Against deposit slip, the teller will please the cash in the drawer account to denominations. The teller will place signature affix cash receipt, rubber stamp seal and record in the cash received register book against the account number, at the end of this procedure, the cash officer passes the deposits slip to the computer section for posting purpose and returns the customers copy.

40

Accounting treatment: Date Particulars Cash A/C Dr. To Customers A/C Debit Xxx Credit(Tk.) Xxx

3.2.3.2. Cash payment procedures Precaution: In order to safeguard the position the paying Banker has to observe the following precaution before honoring the cheque:

A cheque must look whether it is an opened or closed cheque. The paying officer should see whether the cheque is drowning on his branch. He must see if the cheque is postdated .A letter must not pay post- dated cheque. The officer must carefully see the apparent tenor of the cheque. If it is mutilated of materially altered then the officer must not honor it. The offer must compare the signature of the cheque with the signature of the specimen signature card. The officer must verify the regularity of the endorsement. The officer may allow overdue against a cheque if prior arrangement is done with the bank.

Padding a cheque: After verifying the above mentioned things the offer to make payment by putting pay cash seal the cash officer make it clear to pay. The cash officer gives the cash amount to the holder and record in the cash paid register. Account treatment:

Date

Particulars

Debit(Tk)

Credit(TK)

41

Customer A/C Dr. To Cash A/C

Xxx

Xxx

3.2.4. Deposit Section:

The function of the deposit is very important. It is fully computerized. The officer of the deposit section maintains account numbers for different account number of all the customers of the Bank. They are used different code numbers for different account. By this section a depositor/drawer can know what is the present position of his/her account. The officer makes posting three types of transactions such as cash, clearing and transfer. This section performs the following tasks. Post all kinds of transactions. Provide on demand report. Claque maintenance. Preparation of day transaction position. Preparation of closing monthly transaction.

3.2.4.1. Remittance Section Banks have a wide network of branches over the country and offer various kinds of remittance of the public. The main instrument used by the AL-ARAFAH ISLAMI Bank of remittance of funds is:

a. Payment order b. Demand Draft (DD)

42

c. Telegraphic Transfer (TT) d. On-Line Transfer.

a. Demand Draft (DD)

It is an instrument containing an unconditional order of one Bank to another to pay a certain amount of money to the named or order the amount therein on demand. DD is very munching popular instrument for remitting money from one corner of a country to another. Commission for DD is 0.1% of the principle amount.

b. Accounting treatment

(DD by Cheque/cash)

Date

Particulars Cheque/Cash A/c To Demand Draft To DD commission A/c Dr.

Debit(Tk.) Xxx

Credit(Tk.)

Xxxx Xxxx

C. Different between pay order and demand draft

There are some different between pay order and demand draft, which are: In case of demand draft both the payee need to have account. But there is no certain rule for pay order. PO is used in the same clearing area. DD is used for all kinds. DD can not be done in the same clearing area. DD is drawn on a certain Bank officer. But there is no certain rule for PO.

43

d. Telegraphic Transfer (TT)

Telegraphic transfer is the quickest method of transferring funds from one place of another. Sometimes the remitter wants that the money to be available to the payee immediately. In that case bankers are requested to remit the fund telegraphically. Here the remitter bears the additional charge of telex/telephone. Charge for TT is 0.15% of the principal amount and the addition charge telex/telephone is Tk. 30.00 In case of TT both the parts must have accounted.

3.3. Account Section:

This is a very much crucial department for each branch of a commercial Bank. Recodes of all the trisection of every department are here as will as with order respective branches. Accounting department verifies all financial amounts and contents of transaction. If any discrepancy arises regarding any transaction this department report to the concerned department.

3.3.1. Tasks of accounts department:

Accounts department plays vital role in commercial banking. In privet banking sector accounts department of AL-ARAFAH ISLAMI Bank Bangladesh Ltd. Performs its tasks properly. The activities of account section are as follows: o Record all transaction in the cash book. o Record all transaction in the general subsidiary ledger. o Prepare daily fund function, weekly position, period statement of affairs etc.

44

o Prepare necessary statement for reporting purpose. o Make salary statement and pay salary. o Branch to branch fund remittance and support for accounting treatment. o Budgeting for branch. Make charges for different types of duties.

3.4. Investment Section

Investment means the commitment of funds to one or more assets that will be held over some future time period.All activities of the Al-Arafah Islami Bank are conducted on an interest-free system according to Islamic Shariah. It invests all of its surplus funds on the basis of the trade mode of financing ensuring buying and selling of halal commodities and on a profit and loss sharing basis. A fixed percentage of income derived from investment of mudaraba deposits is distributed to the mudaraba deposit holders. The investment of the bank is supervised strictly so that no investment becomes overdue with consequential loss of investment income.

3.4.1 Investment Scheme in AIBL

Bai-Mudaraba Bai-Musharaka Bai-Murabaha (C.C Pledge) Bai-Muajjal (Commercial& Real State) (CC Hypothecation). Bai-Salam Bai-Istesna Izara-bil-Bai Bai-Murabaha Trust Receipt Hire Purchase Sirkatul Milk (Real State) Hire Purchase Sirkatul Milk (HPSM) Consumer Investment Scheme (CIS)

45

Small Enterprise Investment Scheme (SEIS) Mosjid-Madrasha Investment Scheme (MIS) Agriculture & Rural Small Investment Scheme etc.

Bai-Mudaraba Under this mode bank finances the scheme as a Shaheb-Al-Maal (owner of the capital). Profit is shared between the two sides as per pre-agreed ratio. Bai-Musharaka Under this mode the Bank and clients jointly participate in a project, in a scheme or project. Profit is shared between the Bank & the concerned client as per pre-agreed ratio. On the other hand loss is shared according to capital ratio. Bai-Murabaha These modes are applicable for working capital finance. Under these schemes bank purchases goods / raw materials as per requirement of the client. In case of Bai-Murabaha bank receives the sales proceed on deferred payment basis. On the other hand in case of Bai-Murabaha Bank receives the sale price at the time of delivery of the goods / raw materials. Before handing over the goods / raw materials the bank generally keeps the same in its custody under pledge. Finally, I can say that Bai-Murabaha Purchase and sale of commodities as per requests by clients permissible under shariah regulations. Bai-Muajjal - cost plus sale of the commodity on deferred payment basis against adequate collateral Bai-Salam (advance sale) - buying of goods from producers/suppliers on payment in advance after entering into a firm contract and receipt of their delivery at a future specified date

46

Ijara bil-bai (hire purchase sirkatul meelk) - purchase of durable items on equity participation by both the bank and the client and handing them over to the client on installment sale rental basis; Sector of Investment Islamic Banking Wing of the bank finances in all sectors i.e., Industry, business, Agriculture, Real Estate etc. if purpose of the investment is permissible under Islamic Shariah. Limit of Investment Investment is offered to the extent of single borrower exposure limit as fixed by the Bangladesh Bank from time to time.

3.5. Foreign Exchange

As more than one currency is involved in foreign trade, it gives rise to exchange of currencies which is known as Foreign Exchange. The term `foreign exchange has three principal meanings firstly it is a term used referring to the currencies of the other countries in terms of any single one currency. To a Bangladeshi Dollar, Pound Starling etc. are foreign currencies and as such foreign exchange. Secondly, the term also commonly refer to some interments used in international trade, such as bill of exchange, Drafts Travels cheque (TC) and other means of international remittance. Thirdly, the terms foreign exchange is also quite of ten referred to the balance in foreign currencies held by a country. In terms of section 2 (d) of the foreign exchange regulations 1947, as adopted in Bangladesh, Foreign Exchange means foreign currencies and includes any instruments drawn, accepted made or issued under clause (13) of article 16 of the Bangladesh Bank Order 1972, all the deposits, Investments and bill of exchange expressed or drawn in Bangladesh currency but payable in any foreign country. In exercise of the power conferred by section 3 of the foreign exchange regulation 1947, Bangladesh Bank issues license to the schedule bank to deal with exchange. These banks are known a Authorized Dealers. Licenses are also issued by Bangladesh Bank to persons

47

or firms to exchange foreign currencies, instruments such as T.C, currency Notes & Coins. They are known as Authorized Money Changers.

3.5.1. Definition of Letter of Credit (L/C)

A Letter of Credit (L/C) is an undertaking by a bank on behalf of its clients to pay a certain amount of money to a certain person/seller on the fulfillment of the terms and conditions as laid down in the L/C. Since the agreed conditions include, amongst other things, the presentation of some specified Documents, letter of Credit is called Documentary

Letter of Credit. *The Uniform Customs and Practices for Documentary Credit (UCPDC) published by International Chamber of Commerce (ICC) publication No. 500 & 600 defined documentary credit].

3.5.2. Types of L/Cs

Documentary Credit may be classified as hereunder: A) Revocable & B) Irrevocable. As per payment also Documentary Credit may be classified as follows : I) At sight & II) Deferred. Revocable Letter of Credit A revocable letter of credit is a credit which can be amended or cancelled by the issuing bank at any time without prior notice to the seller. Irrevocable Letter of Credit An irrevocable letter of credit constitutes a definite undertaking of the issuing bank (since it cannot be amended or cancelled without the agreement of all parties thereto), provided that the stipulated documents are presented and the terms & conditions are satisfied by the seller. An irrevocable letter of credit can be either confirmed or unconfirmed

48

depending on the desire of the seller. This sort of credit is always preferred to revocable letter of credit. At Sight letter of credit A letter of credit which is would be made payment when the documents received by beneficiary/Exporter within seven working days. Deferred Letter of Credit A letter of credit which will be made payment in later, it may be either 60 (Sixty) days, 90 (Ninety) days, 120 (One Hundred Twenty) days nor 160 days; and which are paid as per acceptance made by the beneficiary bank.

3.5.3. Requirement of papers/documents

3.5.3.3. Before opening of the L/c. the party/Importer must be submitted

the documents/papers:

Valid Trade License of the firm Valid IRC/ERC (issued by the CCI&E) Tax Identification Number (TIN) certificate. VAT registration certification Membership certificate issued by chamber of commerce. Bank solvency certificate. Photograph of the Importer.

3.5.3.2. At the time of L/c opening

Clients written application in his firms letter head L/C application & agreement form (F-101) duly stamped & filled & signed by the Importer. LCA form duly filled with HS code & signed (F-180)

49

IMP form duly signed & sealed (F-113) Indent/Pro-forma Invoice duly accepted by the Importer Insurance cover note with money receipt Necessary charge documents duly stamped & signed by the importer. One advance dated cheque which is covering the L/c value. Necessary another charge documents duly stamped & signed by the importer (in case of banks investment)

3.5.3.3.

By using Books/Register

L/c opening Register (to written all necessary information of the L/c) (B-37) Liability & security register (for contingent liability & cash security/margin (B-63) Inward Foreign bills register (for lodgment-retirement of the shopping documents & record) (B-38) Ledger balance book (for monthly balancing of liability & security) (B-37)

3.5.4. Important Particulars/Column of L/c opening register (B-37)

Date of L/c opening L/c Numbering Name of the importer with address IRC Number Amount of L/c (in local & foreign currency) % of Margin/Cash Security. Name of the Beneficiary & address Commodity Country of Origin of goods to be imported Mode of dispatch (by mail/SWIFT/TLX) Name of the foreign correspondents Tenor of the bills License No.

50

Date of amendment Date of Shipment Date of expiry of the L/c Recovers Amount of Margin held Commission, Vat, Postage, FCC, Cable Charge etc. Initials Remarks.

3.5.5. Important particulars/ Column of Bills/Lodgment Register

Date Received From, Drawn on, Amount: in FC, Exchange Rate, Eqvt BTK, Tenor, Due Date, No. of Docs Drafts No of BL/AWB/TR invoice & others Name of the carrier: BL/TR/AWB No + Date, Merchandise Date of arrived Date of goods cleared Initials Remarks.

3.5.6. Definition of Back to Back L/C.

51

Back to back letter of credit, a new L/C (an Import L/c) is opened on the basis of an original L/C (an Export L/c). Under the back to back concept, the seller as the beneficiary of the first L/C offers it is a `security to the advising bank for the issuance of the second L/c. The beneficiary of the back to back L/C may be located inside or outside the original beneficiarys country. In case of a back to back L/C, no cash security (no margin) is taken by the bank; Bank liens the first L/C. In case of back to back L/C the drawn bill is usage/time bill. In Al-Arafah Islami Bank Limited AD branches papers/documents required for opening of back to back L/C as hereunder:

Back to back L/C is one same of pre-shipment finance to Export oriented Industries. Received a letter of credit from abroad. BB L/C generally opened on differed payment basis from 60 (Sixty) days sight to 120 (One hundred Twenty) days sight.

3.5.7. Foreign Exchange Remittance

Remittance means sending of fund. The word remittance we understand sending/transferring of fund through a bank from one place to another which may be within the country or between two countries, one in to be abroad is called foreign remittance. ``Foreign Remittance means purchase and sale of freely convertible foreign currencies as admissible ``Foreign Exchange Regulations Act-1947 and ``Guideline for Foreign Exchange Transaction VOL. 1&2 of the country. Purchase of foreign currencies constitutes inward foreign remittance and sale of foreign currencies constitutes outward foreign remittance. Foreign Remittance will be classified as hereunder: A) Inward foreign remittance which will be through TT, MT, FDD, PO, TC, Foreign Currencies Notes etc. i) ii) iii) Family maintenance Indenting commission Donation

52

iv) v) vi) vii)

Gift Foreign Investment Export proceeds Others

B) Outward foreign remittance, which will be as hereunder: a) Foreign Telegraphic Transfer (FTT) b) Foreign Mail Transfer (FMT) c) Foreign Demand Draft (FDD) d) Travels Cheques (TC) e) Foreign Currencies Notes. f) Others

53

4.1. Introduction:
A financial institution that is licensed to deal with money and its substitutes by the accepting time and demand deposit, making loans, and investing in security. The Bank generates profits from the different in the interest rate charged and paid. Banks also may offer investment and insurance product which they were once prohibited from selling. All of the Banks position we can shortly summarize in the financial statement. So, financial statement is very important as a financial institution. An investor invests the money into the Banks or other institution is looking the organization financial statement.

4.2. Types of financial Statement

There are three types of Financial Statement. That are Balance Sheet. Income Statement (Profit & Loss Account) Cash flow Statement Statement of owner Equity

4.2.1. Balance Sheet

54

Balance sheet or statement of financial position is a summary of a person's or organization's balances. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A balance sheet is often described as a snapshot of a company's financial condition.[1] Of the four basic financial statements, the balance sheet is the only statement which applies to a single point in time. A company balance sheet has three parts: assets, liabilities and ownership equity. The main categories of assets are usually listed first and are followed by the liabilities. The difference between the assets and the liabilities is known as equity or the net assets or the net worth or capital of the company and according to the accounting equation, net worth must equal assets minus liabilities.

AL-ARAFAH ISLAMI BANK LTD. BALANCE SHEET As at 30th June 2008 Particular
PROPERTY & ASSETS CASH Cash in Hand (Including foreign Currencies) Balance with Bangladesh Bank & Sonali Bank (Including foreign Currencies) BALANCE WITH OTHER BANKS & FINANCIAL INSTITUTIONS In Bangladesh Outside Bangladesh 298,320,990 1,611,564,596 1,909,885,586 381,766,435 1,637,443,244 2,019,209,679

June-2008

December-2007

3,841,720,333 418,767,924 4,260,488,257 -

2,437,841,149 245,142,485 2,682,983,634 -

MONEY AT CALL ON SHORT NOTICE INVESTMENTS Government Others

900,000,000 122,564,190 1,022,564,190

800,000,000 68,583,386 868,583,386

55

INVESTMENT & ADVANCES Murabaha, Bai-Muazzal, Hire Purchase etc. Bills Purchased and Discounted TOTAL INVESTMENT Fixed Assets including Premises, Furniture & Fixture Other Assets Non-Banking Assets TOTAL ASSETS LIABILITIES & CAPITAL
LIABILITIES

25,019,788,538 2,083,343,835 27,103,132,373

21,116,394,966 1,789,972,964 22,906,367,930

372,292,657 1,775,469,060 -

334,476,460 1,370,702,317 -

36,443,832,122

30,182,323,406

Borrowing from other Banks, Financial Institutions and agents DEPOSITS AND OTHER ACCOUNTS : Al-Wadia Current Accounts & Other Accounts Mudaraba Savings Deposit Mudaraba Short Notice Deposit Mudaraba Term Deposit Mudaraba Special Deposit Bills Payable Bearer Certificate of Deposit Total Deposit
OTHER LIABILITIES

2,680,000,000

1,320,000,000

3,227,406,729 3,987,237,105 870,061,313 13,779,831,791 4,391,874,776 429,032,463 26,685,444,177 4,643,882,995

3,097,906,953 3,932,227,170 761,766,781 11,233,591,127 3,629,539,263 354,096,993 23,009,128,287 3,815,696,649

CAPITAL/SHAREHOLDER'S EQUITY Paid up Capital Statutory Reserve Exchange Equalization Asset Revaluation Reserve Profit and Loss Surplus Account TOTAL SHAREHOLDER'S EQUITY TOTAL LIABILITY AND SHARE HOLDER'S EQUITY OFF BALANCE SHEET ITEMS Contingent Liabilities : Acceptance and endorsement Letters of Guarantee Letters of Credit Bills for Collection Other Contingent Liabilities 1,383,810,480 731,252,590 2,057,198 64,603,248 252,781,434 2,434,504,950 1,153,175,400 586,886,597 2,057,198 64,603,248 230,776,027 2,037,498,470

36,443,832,122

30,182,323,406

890,945,926 7,893,692,015 364,626,744 -

601,880,518 3,860,037,680 198,760,887 -

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Total Less, Margin Other Commitments : TOTAL

9,149,264,685 666,317,498 8,482,947,187 8,482,947,187

4,660,679,085 773,194,261 3,887,484,824 3,887,484,824

Table: Balance Sheet of AIBL.

4.2.2. Income Statement (Profit & Loss Account)

Income statement, also called profit and loss statement (P&L) and Statement of Operations, is a company's financial statement that indicates how the revenue (money received from the sale of products and services before expenses are taken out, is transformed into the net income (the result after all revenues and expenses have been accounted for). The purpose of the income statement is to show managers and investors whether the company made or lost money during the period being reported.

AL-ARAFAH ISLAMI BANK LIMITED INCOME STATEMENT For the Period Ended June 30, 2008 Particular
INCOME & EXPENDITURE

June-2008 Taka
1,662,607,141 (1,008,720,053) 653,887,088

June-2007 Taka
993,527,975 (789,966,577) 203,561,398

Growth %
67.34% 27.69% 221.22%

Investment Income Profit paid on Deposit and Borrowing Net Investment Income
INCOME FROM COMMISSION,EXCHANGE & OTHERS

Commission, Exchange and Brokerage Income from Investment in Share /Securities Other operating Income Total = (a + b) Total operating Income (A)

361,686,864 26,493,001 46,494,726 434,674,591 1,088,561,679

281,718,309 48,992,796 330,711,105 534,272,503

28.39% 0.00% -5.10% 31.44% 103.75%

57

Salary and allowances & Contribution to P.F Managing Director Salary & Allowances Directors and Sharia Council fees & Expenses Rents, Taxes, Insurance, Lighting etc. Postage, Telegram, Telephone & Stamps etc Law charges Depreciation & Repairs to the Banks Properties Stationery, Printing, Advertisement etc. Other Expenses Total operating expenses (B) Profit/(loss) before provision and tax C = (A - B) Provision against Investment & Off-balance sheet exposures Provision for against decreasing value of Investment Other Provision Total provision ( D ) Total Profit/ (Loss) before Taxes E = (C - D) Provision for Taxation Net Profit after Tax Retainned Earning Brought forward Profit available for appropriation Appropriations : Statutory Reserve Retained earning Carried forward Earning per Share (EPS) ( Tk. 100)

209,112,318 2,400,000 2,094,811 33,464,614 9,505,914 1,031,457 2,641,617 7,139,920 20,714,063 288,104,714 800,456,965

171,839,950 1,600,000 2,852,231 31,807,762 6,139,031 1,317,948 2,907,821 8,385,842 24,104,615 250,955,200 283,317,303

21.69% 50.00% -26.56% 5.21% 54.84% -21.74% -9.15% -14.86% -14.07% 14.80% 182.53%

78,627,000 78,627,000 721,829,965 324,823,484 397,006,481 140,947 397,147,428

150,278,053 150,278,053 133,039,250 59,867,662 73,171,587 30,592 73,202,179

-47.68% -47.68% 442.57% 442.57% 442.57% 360.73% 442.53%

144,365,993 144,365,993 252,781,435 28.69

26,607,850 26,607,850 46,594,329 6.35

442.57% 442.57% 442.52% 352.14%

Table: Income Statement (Profit & Loss Account)of AIBL.

4.2.3. Cash Flows Statement

A cash flow statement or statement of cash flows is a financial statement that shows how changes in balance sheet and income accounts affect cash and cash equivalents, and

58

breaks the analysis down to operating, investing, and financing activities. As an analytical tool, the statement of cash flows is useful in determining the short-term viability of a company, particularly its ability to pay bills. International Accounting Standard 7 (IAS 7) is the International Accounting Standard that deals with cash flow statements. People and groups interested in cash flow statements include:

Accounting personnel, who need to know whether the organization will be able to cover payroll and other immediate expenses

Potential lenders or creditors, who want a clear picture of a company's ability to repay

Potential investors, who need to judge whether the company is financially sound Potential employees or contractors, who need to know whether the company will be able to afford compensation

AL-ARAFAH ISLAMI BANK LIMITED CASH-FLOWA STATEMENT

As at 30 June, 2008

N/A

Particular
Cash flows from operating activities Profit received in cash Profit paid by cash Income from Investment Fees & Commission received in cash Recoveries of loans previously written off Cash paid to employees Cash paid to suppliers Income taxes paid Received from other operating activities

June-2008

June-2007

1,650,938,035 (1,008,720,053) 26,493,001 361,686,864 11,669,106 (211,512,318) (6,067,237) (200,000,000) 46,494,726

993,527,975 (789,966,577) 281,718,309 (173,439,950) (5,565,286) (300,000,000) 48,992,796

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Paid for other operating activities Operating profit before changes in operating assets and liabilities Increase/(Decrease) in Operating assets and liabilities Statutory deposits Purchase-sale of trading securities Investment and advances to other banks Investment and advances to customers (other than Banks) Other assets Deposits from other banks Deposits from customers (other than Banks) Other liabilities account of customers Trading liabilities Net Cash received from operating activities Cash flows from investing activities Proceeds from sale of securites Payments for purchases of securities Purchase of property, plant and equipment Sales proceeds of Fixed assets B Purchase-sale of subsidiary Net cash used in investing activities Cash flows from financing activities Increase in Exchange Equalization Account Increase in Share Capital Dividend paid C D Net cash received from financing activities Net (decrease)/ increase in cash (A+B+C) Effects of exchange rate changes on cash and cash-equivalents Opening cash and cash-equivalents Closing cash and cash-equivalents (D+E)

(70,525,159) 600,456,966

(71,949,963) (16,682,696)

(53,980,804) (4,196,764,443) (404,766,743) 1,360,000,000 3,676,315,890 624,735,860 1,605,996,726

(2,417,163,436) (108,794,222) (41,700,000) 3,911,668,683 446,325,718 1,773,654,047

(100,000,000) (37,816,197) (137,816,197)

(600,000,000) (33,433,977) (633,433,977)

1,468,180,529 4,702,193,314

1,140,220,070 2,781,899,413

E F

6,170,373,843

3,922,119,483

Table: Cash Flows Statement of AIBL.

4.2.4. Statement of Owners Equity

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Owners Equity is a Financial statement showing the beginning balance, additions to and deductions from, and the ending balance of the shareholders' equity account, for a specified period. It also called the statement of shareholders equity. The Statement of Owner's Equity shows the change in owner's equity during a given time period. It lists the owner equity balance at the beginning of the period, additions and subtractions to the balance, and the ending balance. Additions come from owner investments and income; subtractions from owner withdrawals and losses.

4.2.5. AIBL at a Glance

Capital, Reserves, Deposit, Investment & Profit-Loss (Position) of AIBL as hereunder:
Particulars
Authorized capital
Paid-up Capital

1995
1000.00 101.20 --201.45 12.48

1996
1000.00 101.20 2.48 1305.63 779.16

1997
1000.00 101.20 25.32 2256.65 1745.54

1998
1000.00 253.00 55.66 4534.74 2259.76

1999
1000.00 253.00 145.56 6415.79 3793.71

2000
1000.00 253.00 219.55 7307.59 3728.41

2001
1000.00 253.00 303.12 7879.18 5079.20

2002
1000.00 253.00 322.62 7463.00 6403.60

2003
1000.00 506.00 231.89 8643.27 7571.54

2004
1000.00 586.96 488.00 10108.28 8150.16

2005
1000.00 677.94 542.22 11643.66 11474.41

2006
2500.00 854.20 835.98 16775.33 17423.19

2007
2500.00 1153.18 1091.95 23009.13 22906.37

Reserve Fund

Deposit Investment

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Import Export
Total Income

----1.37

1030.20 83.60 50.98 46.29 103.93 4.69 1.72 0.05 --2412.91 19.89 0.49 23 171 10 17

3222.45 592.12 196.17 128.93 129.09 62.81 24.03 26.07 25.00 3833.25 37.05 257.60 23 320 20 16

5279.50 1103.00 322.98 240.39 309.27 82.06 28.72 36.93 15.00 6749.48 47.86 145.96 7604 427 30 14

5555.51 2304.21 534.76 464.30 299.86 70.47 24.66 31.70 12.00 7746.04 50.35 181.04 6319 664 35 19

5979.90 3313.20 752.19 598.45 326.07 67.00 23.45 30.15 12.00 8585.95 52.44 172.14 5849 674 37 18

5559.27 2524.63 800.35 678.84 365.72 39.48 13.82 19.53 7.50 9253.77 58.54 101.43 5778 659 40 16

5162.51 1894.77 835.42 415.76 671.48 136.81 57.76 50.71 20.00 8759.33 114.83 312.42 5557 670 40 17

7698.29 3075.52 987.68 681.34 737.89 306.34 103.96 127.06 16.00 10886.82 126.23 251.10 5584 685 40 17

9337.49 3699.34 1120.85 771.96 957.26 348.89 157.00 154.76 15.50 12874.61 195.17 263.67 5379 803 40 20

12631.60 4932.90 1452.68 904.48 1220.16 548.20 215.10 262.90 26.00 15336.89 208.00 387.80 5402 771 41 19

18821.40 9142.70 2172.48 1202.71 1690.18 969.77 385.45 470.02 35.00 21368.16 215.10 550.24 4487 912 46 20

27042.72 12714.91 2955.61 2199.43 2037.50 756.18 235.53 347.31 20.00 30182.32 334.48 630.12 12013 1033 46 23

Total Exp. Shareholders Equity Profit b. Tax Income tax Profit a. Tax Dividend Total assets Fixed asset EPS
No of Shareholders

3.35
101.20 -1.98 ---1.98 --519.80 5.13 -19.66 23 54 5 11

No of employees
No of Branch

Employee per Branch

4.3. Analysis of the Financial Statement

Financial analysis refers to an assessment of the viability, stability and profitability of a business, sub-business or project. Financial analysts often assess the firm's:

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1. Profitability - its ability to earn income and sustain growth in both short-term and longterm. A company's degree of profitability is usually based on the income statement, which reports on the company's results of operations; 2. Solvency - its ability to pay its obligation to creditors and other third parties in the longterm; 3. Liquidity - its ability to maintain positive cash flow, while satisfying immediate obligations; 4. Stability- the firm's ability to remain in business in the long run, without having to sustain significant losses in the conduct of its business. Assessing a company's stability requires the use of the income statement and the balance sheet, as well as other financial and non-financial indicators.

4.3.1. Ratio Analysis

Ratio analysis means the relationship between two numbers. We can use ratio analysis to try to tell us whether the business 1. is profitable 2. has enough money to pay its bills 3. could be paying its employees higher wages 4. is paying its share of tax 5. is using its assets efficiently 6. has a gearing problem 7. is a candidate for being bought by another company or investor

4.3.2. Profitability Ratio

1. Profit margin on sales (2008) =
NetIncome Sales
Net income= 397,006,481, Sales=653,887,088

= 0.607148

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= 6%

Profit margin on sales (2007) = 0.359457

= 4%

Net income- 73171587, Sales= 203561398

Comments
This ratio indicates that how much the profit turns against on sales. The Industrial average ratio is 5%. On this organization profit margin ratio is 6%. The organization profit turn over is better then 2007.

2. Return on asset (ROA-2008) =

NetIncome TotalAsset

Net Income= 397,006,481, Total Asset=36443832122

= 0.010894
= 1.09%

Return on asset (ROA-2007) =

NetIncome TotalAsset

Net Income=73171587, Total Asset=30182323406

= 0.002424 = 0.24%

Comments
An indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. The industrial average ratio is 9%. But both ratios are lower then the industrial ratio.

3. Return on Equity (ROE-2008) =

NetIncome Net Income=397,006,481,TotalEquity= 2434504950 TotalEquit y

=0.163075 =16.31% Return on Equity (ROE-2007) =

NetIncome Net Income=73171587, Total Equity= 2037498470 TotalEquit y

= 0.035912 =3.59%

Comments

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The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested. In FY 2008 is higher then FY 2007.

4. Basic Earning Power (BEP-2008) =

EBIT TotalAsset

EBIT-800,456,965, Total Asset=36,443,832,122

= 0.021964
= 2.20%

Basic Earning Power (BEP-2007) =

EBIT TotalAsset

EBIT-283,317,303, Total Asset=30,182,323,406

= 0.009387

= 0.94%

Comments A business's ability to generate profit from conducting its operations. Earnings power is used to analyze stocks to assess whether the underlying company is worthy of investment. Possessing greater long-term earnings power is one indication that a stock may be a good investment. Earning power2008 is better then 2007. So, company are increase investment power day by day.

4.3.3. Solvency Ratio

1. Debt-Asset Ratio/ Debt Ratio (2008) =

TotalDebt , TotalAsset

Total

debt=34009327172,

Total

asset=36,443,832,122

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= 0.933198 =93.32%

Debt-Asset Ratio/ Debt Ratio (2007) =

Asset=30,182,323,406

TotalDebt , TotalAsset

Total debt= 28144824936, Total

= 0.932494 = 93.25%

Comments A ratio that indicates what proportion of debt a company has relative to its assets. The measure gives an idea to the leverage of the company along with the potential risks the company faces in terms of its debt-load. The industrial average ratio is 40%.

2. Debt-Equity Ratio (2008) =

TotalDebt . Total debt=34009327172, Total Equity= 2434504950 TotalEquit y

= 13.9697096 =1396.97%

Debt-Equity Ratio (2007) =

TotalDebt . Total debt= 28144824936, Total Equity= 2037498470 TotalEquit y

= 13.81342138

= 1381.34%

Comments A measure of a company's financial leverage is calculated by dividing its total liabilities by stockholders' equity. It indicates what proportion of equity and debt the company is using to finance its assets.

4.3.4. Liquidity Ratio

1. Current Ratio (2008) =
26,685,444,177.

CurrentAsset .Current CurrentLiability

Asset= 27,103,132,373, Current Liability=

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= 1.015652 = 1.02: 1

Current Ratio (2007) =

23,009,128,287

CurrentAsset CurrentLiability

Current

Asset=22,906,367,390

Current

Liability=

= 0.995534
=1:1

Comments A liquidity ratio that is measures a company's ability to pay short-term obligations. It also known as "liquidity ratio", "cash asset ratio" and "cash ratio". The industrial average ratio is 2:1. So, this company ratio is very effective.

2. Quick Ratio/ Acid test Ratio (2008) =

CurrentAsset Inventory CurrentLiability

= 1.015652
=1.02: 1

Quick Ratio/ Acid test Ratio (2008) =

CurrentAsset Inventory CurrentLiability

= 0.995534
=1:1

Comments The quick ratio is more conservative than the current ratio. The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets. The higher the quick ratio is the better the position of the company. But this company has no inventory. The ideal ratio is 1:1.

4.3.5. Stability Ratio

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1. Fixed Asset Turnover Ratio (2008) =

Sales FixedAsset

. Sales= 653,887,088, Fixed Asset= 372,292,657

= 1.756379224 = 175.64%

Fixed Asset Turnover Ratio (2007) =

Sales . Sales= 203,561,398, Fixed Asset= 334,476,460 FixedAsset

=0.608597083

= 60.89% Comments An accounting measure used to quantify a firm's effectiveness in extending credit as well as Asset. The Fixed Asset turnover ratio is an activity ratio, measuring how efficiently a firm uses its fixed assets.
Sales TotalAsset

2. Total Asset Turnover Ratio (2008) =

Sales= 653,887,088, Total Asset= 36,443,832,122

=0.017942325 =1.79%

Total Asset Turnover Ratio (2007) =

Sales TotalAsset

Sales= 203,561,398, Total Asset= 30,182,323,406

= 0.006744391

=0.67%

Comment An accounting measure used to quantify a firm's effectiveness in extending credit as well as Asset. The Total Asset turnover ratio is an activity ratio, measuring how efficiently a firm uses its assets.

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4.4. My Findings
Data analysis and interpretation based on questionnaire and interviews on the customers/clients. 1. What is your opinion about the banking environment of AL-ARAFAH ISLAMI bank Ltd?

Table 1 (About environment of AL-ARAFAH ISLAMI Bank)

SL No: 1 2 3 4

Comments Very Good Good Fair Poor Total

No of person 35 60 5 0 100

Percentage% 35 60 5 0 100

Interpretation From the data analysis we can see, most of the clients agreed that banking environment of AL-ARAFAH ISLAMI Bank is good. Some people committed it is very good and a few said that its fair. 2. Employees are always ready to help the customers. Do you agree?

SL No. 1 2 3

Comments Yes No Some times Total

No. Of person 95 0 5 100

Percentage % 95 0 5 100

Interpretation: Analysis shows that most of the customer agreed that employees are always ready to help. They are very cooperative.

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3. Do you think customer is getting more facilities here in comparison with other bank? SL No. 1 2 3 Comments Yes No Not all cases Total No. Of person 60 0 40 100 Percentage % 60 0 40 100

Interpretation From the analysis it is found that customers are getting more facilities comparing to other bank. At the same time a large number of clients expressed that in some specific cases such as interest rate etc. They are getting more facilities, but not all sectors of banking service.

3. What is your suggestion to improve the service quality of Al-Arafah Islami bank ltd? In order to improve the service quality customer expressed different opinion in their point of view. I can summarize their opinion, which is the gist of their suggestions. They have of take some more steps to improve the service quality. Each department of the Banks should computerized the cash transaction process would be easier and very prompt that it would take a very short time. More branches should be opened in Dhaka City and other cities of his country. They will have customer credit Scheme and other Scheme that will help the customer. It is badly needed to provide modern Banking services such as Credit Card, ATM card, Visa card etc. AL-ARAFAH ISLAMI Bank is providing better service comparing to other privet Banks. But there are almost 52 Bank in our country. In the near future some new banks are going to be opened. So, in order to complete in the market ALARAFAH ISLAMI Bank should be have to improve their service. They should increase their manpower and will have to improve their service quality and provide more facilities.

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4. Finding in different sections of the Bank: I found that all the sections of the Bank are facing lack of manpower as a general problem. In general banking department they follow the traditional banking system. The entire general Banking procedure is not fully computerized. As a result some processes for example collection money from the deposit take a long time to perform. I think that is manpower and computer problem. Thats why the service is not prompt as the customers demand. Lack of variety of services is also a drawback of the general Banking area of the AL-ARAFAH ISLAMI Bank of Bangladesh Ltd. As result Bank is falling behind in competition. In comparative area, other bank use modern technology, more effective software, and different service (ATM, SME) and other social activities. If the bank wants to create competitive advantage, they need to provide Modern/ecommerce service.

71

4.5. Recommendations
Banking is service oriented marketing. Its business profit depends on its service quality. Thats why the authority always should aware about their service quality. To provide service to the customer it is necessary to have a trained team of an organization of an institution. For this reason the Bank should recruit more fresh, bright and energetic person. Bank should offer Bank is launching Customer Credit Scheme AL -ARAFAH ISLAMI Bank is failing to launch this kin of Scheme. The management can undertake such sort of Schemes and earn more profit. As soon as possible the Bank should stat more benches in Dhaka City as well as the other cities of the country. Now a days world is going very fast. Now most of the Bank opens online customer service system. So, in order to compete in the world market they should adopt online Banking system. The recruitment process of the Bank is very length an expensive. The bank should select the employee by reducing the lengthy process.

In general banking department it is necessary to implement modern Banking process instead of tradition system. The department should be more computerized.

The loan sanction process should be easier that the clients can feel convenient to take loan from the Bank. 72

To make exchange process more prompt the authority should use modern communication system such as E-mail, Fax, win Fax Internet etc.

4.6. Conclusion
It is cleared that the success of a bank depends on improved service delivery to its customers. Al-Arafah Islami Bank Ltd. has an achieved success among its peer group within a short span of time with its professional and dedicated team of management having long experience, commendable knowledge and expertise in conversion with modern banking. With all its resources, the management of the Bank firmly believes that the bank would be able to encounter problem that may arise both at micro and macro economic levels. The Management of the bank is maintaining an efficient portfolio in order to have a healthy growth and retain customer satisfaction. AL-ARAFAH ISLAMI Bank is engaged in modern banking. It is expected that AL-ARAFAH ISLAMI Bank by its efficient Asset and liability management will be able to maintain its trend of growth and thus overcome the threat. Neither AL-ARAFAH ISLAMI bank nor any other commercial bank can effectively combat risk. However, AL-ARAFAH ISLAMI Bank having small and targeting niche markets is likely to be less affected by restrictive monetary and / or fiscal policy. The Management of the Bank is planning to meet the required capital adequacy withering the stipulated time frame, and a loan and advance policy that expected the loan loss provisioning in future will be within tolerable limit having little material impact on future profitability as well as net worth. Although AL-ARAFAH ISLAMI bank is yet to fully automated and it is proceeding aggressively to enhance its technology level. As AL-ARAFAH ISLAMI bank is performing good in traditional general banking and there is a good demand for Islamic Banking and the opining if then (The management) that the performance of the Bank is getting much 73

better than past. With their strengths the bank (Al-Arafah Islami Bank Limited) can also reduce the threats existing in the market. We also call to almighty Allah, whole works and activities grant as an Ibadat. I wish and hope that in future AL-ARAFAH ISLAMI Bank will be Number one commercial Bank in Bangladesh.

Reference
Fundamentals of financial Management- Eugne F. Brigham, Joel F. Houston ( 10th Edition) Accounting Principle-Weygandt, Kieso, Kimmel ( 7th Edition) Annual Report of Al-Arafah Islami Bank Ltd. Web Service- www.google.com. Fundamental of corporate finance- Stephen A. Ross, Randolph W. Westerfield, Bradford D. Jordan (6th Edition)

74

Appendix-1

Survey Questionnaire for Internship Report On

Financial Performance Analysis of The Al-Arafah Islami Bank Limited

(A requirement of Uttara University for fulfillment of BBA Course)

1. What is your opinion about the banking environment of AL-ARAFAH ISLAMI bank Ltd? A. Good B. Very Good C. Fair D. Poor 2. How long are you Banking with The AL-ARAFAH ISLAMI bank Ltd? A. 1-3 Months 2/More years 3. How frequently you come to the Bank? A. 5 days/Week. times/month. 4. What is the main reason for choosing The AL-ARAFAH ISLAMI bank Ltd? B. 4 or Less days/week C. Once/month D. 2 to 3 B. 4-6 Months C. 6-12 Months D.

75

A. Pricing quality

B. Daily follows up

C. Global acceptance

D. Service

E. Cost Effective

F. Brand Image

G. Convenient Location

5. Employees are always ready to help the customers. Do you agree? A. Yes B. No If yes then answer the following question I. How satisfied are you about the customer service of The AL-ARAFAH ISLAMI bank Ltd? A. High B. Average C. Low D. Very Poor

II. How much time (minutes) taken by the officials to provide required services? A. 5 to 15 minutes B. 16 to 25minutes C. 26 to 35 minutes D. 36 minutes or more

III. How do you want to rank The AL-ARAFAH ISLAMI bank Ltd? A. First-Classed B. Second-classed C. Third-classed D. Fourth

If No then answer the following question

I. What problems do you face with The AL-ARAFAH ISLAMI bank Ltd? A. Lack of cooperation B. Lack of product knowledge bank policies E. Others II. Did you ever complaint about any problems/poor services of the Bank? A. Yes B. No III. Did any problems resolved by the Bank for your complete satisfaction? A. Yes, by the company or its representative B. Yes by me or someone outside the company C.AL-ARAFAH ISLAMI

D. Lack of support from the top management

76

C. No

Products/ facilities related questions

1. What types of financial product/ facilities you are getting? Please mention name. A. Deposit B. Loan/ Credit Name---------------------------------Name----------------------------------

2. How did you learn about this product? A. Television/Radio B. Internet/Website C. Newspaper/ Magazine D. Friend/Relative E. Other:

3. Please rate your overall judgment about the quality our products/services. A. High quality B. Average C. Low quality

4. The standards of products/services compared to other Banks of this type are: A. Much improved B. About the same C. poorer D. very poor 5. How satisfied are you with the interest rates of the financial product?

77

A. Very Dissatisfied B. Dissatisfied C. Satisfied D. Very Satisfied 6. How often are you recommend our product to your family, friends & colleague? A. Very often B. Not frequently C. Dont recommend If you are not satisfied and dont recommend our products to others then please comments about how we can improve your satisfaction with our products and services

78