Foreign Exchange Activities of Al-Arafa Islami Bank Ltd.

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Foreign exchange activities of AIBL
Foreign Exchange Activities
Of
Al-Arafah Islami Bank Ltd.
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INTERNSHIP REPORT
On
Submitted to: d. am!n!r "ashid
Lect!rer
#e$artment of B!siness Administration
%tamford &niversit' Bangladesh
Submitted by: d. on(!r orshed
I# )o. * BBA +,11+-1.
Batch / ,1
st
0 %ection-A
a(or1 Finance

Date of submission: January 13, 211!
Foreign Exchange Activities
Of
Al-Arafah Islami Bank Ltd.
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2an!ar' 1,0 2+11
"amunur Ras#id
Lect!rer
#e$t. of B!siness Administration
%!3(ect1 %!3mission of internshi$ $a$er.
#ear am!n %ir0
I here3' s!3mit the internshi$ re$ort on the to$ic $%orei&n E'(#an&e
)(ti*ities of )+,)rafa# Is+ami -an. /td!00 intended to f!l4ll the $artial
re5!irement of m' BBA $rogram.
It 6o!ld 3e di7c!lt for me to get the 6ork done 6itho!t 'o!r $ro$er s!$ervision
8 g!ideline. I tried m' 3est to 6ork sincerel' to cover all as$ects regarding the
matter. 9ho!gh I faced some limitations in $re$aring this re$ort0 I have
thoro!ghl' en(o'ed in $re$aring this internshi$ re$ort0 6hich has contri3!ted
signi4cantl' to m' !nderstanding on the essentials and im$ortant $ractical
kno6ledge.
I therefore ho$e that the re$ort 6ill f!l4ll the re5!isite o3(ectives that 'o!
6anted to get done 3' me.
%incerel' 'o!rs :hecked 8 signed
;;;;;;;;;;;
;;;;;;;;;;;..
d. on(!r orshed am!n!r
"ashid
I# )o. * BBA +,11+-1.
Batch / ,1
st
0 %ection A
#e$t of B!siness Administration
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Students Declaration
I here3' declare that the re$ort of internshi$ namel' $%orei&n E'(#an&e
)(ti*ities of )+,)rafa# Is+ami -an. /td!0

B' me after the com$leting of , <three= months of internshi$ 6ith )+,)rafa#
Is+ami -an. /td at Naya1a+ton 23IP4 Road -ran(# and a com$rehensive
st!d' of the existing activities of Al-Arafah Islami Bank Ltd and its
im$lementation.
I also declare that this $a$er is m' original 6orked and $re$ared for academic
$!r$ose 6hich is a $art of BBA and the $a$er ma' not 3e !sed in act!al market
scenario.
d. on(!r orshed
I# )o. * BBA +,11+-1.
Batch / ,1
st
0 %ection A
#e$t of B!siness Administration
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Supervisors Declaration
I here3' declare that the concerned re$ort entitled $%orei&n E'(#an&e
)(ti*ities of )+,)rafa# Is+ami -an. /td!0 is an original 6ork 3' "d! "on5ur
"ors#ed, bearin& ID No: --) 311617 a(or in Finance0 #e$artment of
B!siness Administration0 %tamford &niversit' Bangladesh0 com$leted his
internshi$ !nder m' s!$ervision and s!3mitted for the $artial f!l4llment of the
re5!irement of the degree of Bachelor of B!siness Administration <BBA= at
%tamford &niversit' Bangladesh.
am!n!r "ashid
Lect!rer
%tamford &niversit'0 Bangladesh

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To Whom It May Concern
9his is to certif' that0 "d! "on5ur "ors#ed a st!dent of BBA $rogram0 3earing
ID No: --)311617, a(or in Finance0 #e$artment of B!siness
Administration0 and %tamford &niversit' Bangladesh has com$leted the
internshi$ re$ort titled Foreign Exchange ctivities o! l"ra!ah Islami #an$ %td&'
s!ccessf!ll' !nder m' s!$ervision.
I 6ish him ever' s!ccess in his life.
%!$ervisor
"amunur Ras#id
Lect!rer0
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c$no(ledgement
At the ver' 3eginning0 I 6o!ld like to thank m' honora3le teacher 8
s!$ervisor of m' internshi$ $rogram "amunur Ras#id!
I am ver' m!ch $leased to o>er m' thanks and gratit!de to the ?"# of
)+,)rafa# Is+ami -an. /td for giving me the o$$ort!nit' to 6ork 6ith
the 3ank in its )a'a $alton<@IP= "oad Branch. I 6o!ld also like to give
thanks to d. a(i3!r "ahman-Assistant <@ice $resident= 8 anager0 d.
?ar!n !r "ashid <Princi$al O7cer=0 d. Elies ?ossain <Princi$al O7cer= 8
Investment In charge0 d. oin Ahamed <%enior O7cer=0 d. onir!((am
<%enior O7cer=0 d. Arif ?ossain0 d. "a(! Ahamed0 0 d ?a3i3!r
"ahman0 d. %amim Ahamed of )a'a$alton <@IP= "oad Branch to hel$ me
thro!gho!t m' internshi$ $rogram.
I also give a s$ecial thanks to all the $ersonnel of )a'a$alton <@IP= "oad
Branch of )+,)rafa# Is+ami -an. /td for hel$ing me to collect data.
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Executive summary
9his internshi$ re$ort is a $artial re5!irement for the Bachelor of B!siness
Administration $rogram. 9he re$ort is 3ased on A+ da's <,
rd
Octo3er 2+1+ to ,
rd
2an!ar' 2+11= 6orking
ex$erience on Al-Arafah Islami Bank Limited <AIBL=. I 6as assigned in the
)a'a$alton <@IP= "oad Branch0 #haka of AIBL. 9his re$ort gives a clear idea of
the activities0 o$eration strategies and the $erformance of AIBLBs foreign
exchange activities
9here are several varia3le taken for anal'sis of the re$ort 6hich are n!m3er of
letter of credit o$ening0 irrevoca3le letter of credit0 commission on foreign
exchange0 vol!me of im$ort0 3ack-to-3ack LC:0 foreign doc!mentar' 3ills for
$!rchase0 ex$ort 4nance0 vol!me of ex$ort0 foreign c!rrenc' de$osit etc0
exchange gain0 foreign remittance.
9he data has 3een collected from $rimar' 8 secondar' so!rces. Primar' so!rces
are gro!$ disc!ssion0 $ractical 6ork ex$erience0 case st!d' 8 intervie6.
%econdar' %o!rces are #%E li3rar'0 several 3ooks and $eriodicals related to the
3anking sector0 Bangladesh BankBs re$ort0 #i>erent circ!lar sent 3' the head
o7ce of AIBL0 Ann!al "e$ortBs of AIBL and other $rivate 3anks.
9he anal'sis of AIBLBs $erformance in foreign exchange transactions has 3een
cond!cted 3ased on the trend anal'sis0 factor anal'sis 8 :om$arative Anal'sis in
6hich recent $erformance in foreign exchange transactions of AIBL 6ith
other selected 3anks.
9he re$ort consists of six $arts. 9he 4rst $art descri3es the introd!ctor' matters
of a formal re$ort 6hich incl!des acron'ms 8 a33reviations0 rationale of the
st!d'0 limitations etc.
9he second $art gives a concise descri$tion of the organiDation. 9hese incl!de
origin 8 eval!ation of AIBL0 Islami 3anking s'stem0 conce$ts 8 $rinci$les etc. 9o
their $oint of vie6 / Islam provides us a complete lifestyle. Main objective of Islamic lifestyle
is to be successful both in our mortal and immortal life. Therefore in every aspect of our life we
should follow the doctrine of Al-Quran and lifestyle of Harat Muhammad !sm." for our supreme
success.' Al-Arafah Islami Bank <AIBL= started its (o!rne' in 1AA- 6ith the said
$rinci$les in mind and to introd!ce a modern 3anking s'stem 3ased on Al-E!rBan
and %!nnah.
A gro!$ of noted Islamic scholar0 economist0 6riter and ex-3!rea!crat of
Bangladesh Fovt. r. A. G. . %hams!l Alam is the fo!nder chairman of the Bank.
?is $rogressive leadershi$ and contin!o!s ins$iration $rovided a 3oost for the
3ank in getting a foothold in the 4nancial market of Bangladesh .A gro!$ of 2H
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dedicated and noted Islamic Personalities of Bangladesh are the mem3er of
exec!tive co!ncil of the Bank. Al-Arafah Islami Bank Ltd. <AIBL= has IH Branches
and 1+,, em$lo'ees <as on #ecem3er 2++.=. Its a!thoriDed ca$ital is 2-++
million 9k. and $aid !$ ca$ital is taka 11-, million 9k.
9he third $art gives a 3rief descri$tion of macroeconomic environment incl!ding
the 4nancial sector of Bangladesh 8 foreign exchange activities 3' the co!ntr'.
9he econom' of Bangladesh has once again faced a great challenge mainl' for
the devastating nat!ral and other catastro$hes com3ined 6ith $olitical
!ncertainties0 a3olition of 5!ota regime of read'made garments ind!stries0
a3normal $rice-hike of im$orted commodities incl!ding oil $osed great
challenges for the economies.
%ome 3rief foreign exchange information of the co!ntr' is- E'1orts 228,74:
&%J 121...KH mn0 Im1orts 228,74: &%J 1.1-H.K+ mn0 Trade De9(it: &%J
IA.K.A+ mn0 %orei&n E'(#an&e Reser*e: &%J --1I.H+ mn, Remittan(es:
&%J ,II..,2 mn.
9he fo!rth $art of the re$ort anal'Des the theoretical as$ects of foreign exchange
transactions of AIBL. 9here are three kinds of foreign exchange transactions-
Ex$ort0 Im$ort 8 "emittance. Foreign exchange 3!siness starts 6ith a Letter of
:redit <LC:=. 9he $art also descri3es vario!s terms !sed in foreign exchange
3!siness like 3ack-to-3ack LC:0 FOB0 !nderstanding0 shi$ment0 LI0 L9" etc.
According to im$ort and ex$ort control act0 1A-+0 the o7cer of the chief
controller of im$ort and ex$ort $rovides the registration <I":= to the im$orter.
After o3taining this0 this $erson has to sec!re a letter of credit a!thoriDation
<L:A= from Bangladesh Bank and then a $erson 3ecomes a 5!ali4ed im$orter. ?e
is the $erson 6ho re5!ests or instr!cts the o$ening 3ank to o$en an LC:. he is
also called o$ener or a$$licant of the credit.
AIBL is an a!thoriDed dealer <A#= to o$erate foreign exchange transaction. Lith
the legal formalities the 3ank serves the c!stomers 6ith ex$ort0 im$ort 8
remittance services. In the $rocess of $roviding remittance service it sells and
3!'s foreign c!rrenc'0 the conversation of one c!rrenc' into another takes $lace
at an agreed rate of exchange 0 6hich than Banker 5!ote one for 3!'ing and
another for selling. 9here are vario!s t'$es of Income of the Bank in Foreign
Exchange %ector.
9he main concentration of the re$ort is in 4fth $art. In this $art the $erformance
of the 3ank has 3een assessed in the foreign exchange 3!siness. 9he anal'sis
6as done 6ith some stated $rinci$les 6hich are some s$eci4c ass!m$tions. 9he
ass!m$tions 6ere /
9he re$orted 4nancial data are free from error 8 3ias 3eca!se there 6ere
no sco$es of the st!d' is to verif' the data
Anal'sis 8 4ndings are valid !$ to June 2007 3eca!se the other data are
not availa3le
9he data sho6n of 2++K are estimated 4g!res
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I have selected 3anks 6ith the follo6ing classi4cation criterion
o Local commercial 3anks <P:B=
o Foreign 3anks <FB=
o Fovt.Bs s$ecialiDed 3anks
9he 3anks selected are ass!med to 3e the re$resentatives of 3anking
sector of o!r co!ntr'
%elected 3anks are - #haka Bank Ltd.0 )ational Bank Ltd.0 AB Bank Ltd.0 %tandard
:hartered Bank0 ?%B:0 :iti Bank ). A.0 %onali Bank Ltd. 8 Basic Bank Ltd.
9he gro6th statistics sho6s that the economic do6nt!rn in 2++- 8 2++K
inM!enced the 6hole 3anking ind!str'.
In the com$arative anal'sis it 6as revealed that /
Al-Arafah Islami Bank is lagging 3ehind com$ared to the other 3anks in
forei&n e'(#an&e business! B!t the 3ank has a consistent $erformance
6ith the trend of ind!str'Bs $erformance
9he remittance 3!siness for Al-Arafah Islami Bank is signi4cantl' lo6er
than the other local com$etitors.
9his can 3e a ca!se of c!stomer foc!s Cmarket segment of the 3ank
9he 3ank has a h!ge amo!nt of loan incentives for ex$ort 8 im$ort
3!siness com$ared to other $erformances in foreign exchange activities
9he 3ank $rovides com$arativel' higher loan facilities in ex$ort 8 im$ort
3!siness
?o6ever0 a 3rief $erformance overvie6 on de$osit 8 investment division of the
3ank revealed that the 3ank is heavil' concentrating on de$osit schemes. Lith
the advantage of religio!s 3elief hence Islamic Banking conce$t0 the 3ank is
getting an edge 6ith de$osit schemes 6hich is a strong s!ccess factor of the
3ank.
9he 6orking environment of AIBL is ver' cond!ctive and friendl'. Altho!gh the'
donBt maintain strict hierarchical $rotocol among the sta>s the environment is
m!ch more relaxed 8 eas'. 9he sta>s are s$ecialiDed in their res$ective 4elds.
Each of them 6orks on their o6n and there is close s!$ervision from the to$. 9he
motivation of the em$lo'ees comes from the ver' sense of res$onsi3ilit'. 9he
sixth $art ends !$ the re$ort 6ith ma(or 4ndings 8 com$lementar' remarks.
9he h!man reso!rces division is lacking of ens!ring modern inde$endent 6ork
environment as 6omen are es$eciall' disco!raged to (oin the 3ankBs
6orkforce. ?o6ever0 to their vie60 the' donBt like to see 6omen as 6orking
o!tside the home as Islami %hariah doesnBt.
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:O)9E)9%
Ackno6ledgement
Exec!tive s!mmar'
+.
+K
:?AP9E" O)E1 I)9"O#&:9IO) 1,
1.1 Introd!ction
1.2 Origin of the re$ort
1I
1I
1., "ationale of the %t!d' 1I
1.I Acron'ms 8 a33reviations 1-
1.- ethodologies 1H
1.H %o!rce of #ata 1H
1.. O3(ective of the st!d' 1.
1.K Limitations of the st!d' 1.
:?AP9E" 9LO1 BA:NF"O&)# OF AIBL 1A
2.1 @ision of AIBL
2.2 ission of AIBL
2., arketing %trategies ?istor' of AIBL
2+
2+
2+
2.I ?istor' of AIBL
2.-%$ecial feat!res of AIBL
21
21
2.H anagement of AIBL 22
2.H.1 ?ierarch' of the exec!tive 3od' 2,
2.. :or$orate c!lt!re 8 :%" 2I
2.K Lorkforce of )a'a Polton<@IP= "oad 3ranch 2.
2.A Information technolog' of AIBL 2.
2.1+ :lassi4cation of 3ankBs $rod!cts 2K
2.11 %ervices $rovided 3' AIBL
2.12 Fro6th of AIBL
2A
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:?AP9E" 9?"EE1 I)#&%9"O O@E"@IEL ,-
,.1 Flo3al econom' ,H
,.1.1 Flo3al com$etitors ,H
,.1.2 %ocio-economic Phenomena ,H
,.2Bangladesh econom' ,.
,.2.1 Banking sector ,K
,.2.2 Im$ort sit!ation ,K
,.2., Ex$ort sit!ation ,A
,.2.I Ex$ort $olic' I+
:?AP9E" FO&"1 FO"EIF) EP:?A)FE #I@I%IO) OF
AIBL
I2
I.1 Foreign exchange o$erations I,
I.2 Im$ort I,
I.2.1 Im$ort registration certi4cate <I":= II
I.2.2 F!nctions of Im$ort section II
I.2., Letter of credit <LC:= I-
I.2.,.1 Parties to the LC: I-
I.2.,.2 echanism of LC:
o$eration
IH
I.2.,., Amendment of LC: -1
I.2.I Pa'ment $roced!re of im$ort
doc!ments
-2
I., Ex$ort -,
I.,.1 Ex$ort o$eration -I
I.,.2 Back-to-3ack LC: --
I.,., )egotiation of ex$ort doc!ments -.
I.I Foreign remittance H+
I.I.1 "emittance $roced!res of foreign
c!rrenc'
H+
I.- iscellaneo!s services 3' the de$artment H,
I.H "isk in foreign exchange 3!siness H,
:?AP9E" FI@E1 FO"EIF) EP:?A)FE PE"FO"A):E
A)ALO%I%
HI
-.1 ?istorical $erformance OF AIBL H-
-.2 Foreign exchange $erformance over time H.
-.2.1 Ass!m$tions to the anal'sis H.
-.2.2 List of 3anks selected for com$arison H.
-.2., Fro6th statistics in Foreign
exchange 3!siness
HK
-.2.I Aggregate $erformance of the selected
3anks
HK
-.2.- %ector 6ise com$arison HA
-.2.H "egression anal'sis .,
-.2.. %ta3ilit' of Ex$ort and Im$ort B!siness
of AIBL
.H
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-., F!t!re $ros$ects of the 3ank ..
-.I Pro3lems in the 3!siness sector .K
-.- :ritics of Islamic Banking .A
-.H %!3(ective (!dgments K+
-.. Performance in other sectors K1
:?AP9E" %IP1 PE"FO"A):E OF AIBL
H.1 Financial ?ighlights
H.2 Fro6th of AIBL
H., Performance of the 3ranch
H.I Anal'sis of #ata
H.- %LO9 Anal'sis
H.H Findings and anal'sis

K-
KH
A+
A.
AK
1+1
1+,
:?AP9E" %E@E)1 "E:OE)#A9IO)% 8
:O):L&%IO)%
1+-
..1 Pro$osal 1+H
..2 :oncl!sions 1+A
BIBLIOF"AP?O 8 APPE)#IP 11+
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Chapter One
Introduction

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)&) Introduction
Banking system occupies an important place in a nation's economy A !anking institution is
indispensa!le in a modern society Financial institutions are very much essential for the
overall development of a country "specially !anks play an important role in the field of
promotion of capital# encouragement of entrepreneurship# generation of employment
opportunities etc $arket economy or free economy is %idely used&concept a!out the present
economy of Bangladesh 'he country adopted the concept in the late seventies %ith the
privati(ation of significant num!er of enterprises 'he practices of free market economy
started from the eighties %ith the changing of the %orld economy A num!er of initiatives
%ere taken from the nineties to increase the competition and efficiency in money market#
relaxation of un%anted rules and regulations# improvement of loan related la% and other
situations and improve the financial !ase of the !anks of the country In recent times the
!anking sector over the %orld has !een undergoing a lot of changes due to deregulation#
technological innovation# glo!ali(ation etc Banking sector in Bangladesh is lagging !ehind
in adopting these changes
)&* +rigin o! the report
'he internship program is re)uired course for the students %ho are completing BBA from the
*epartment of Business Administration in the faculty of !usiness studies of +tamford
,niversity Bangladesh It is a - credit hour program %ith duration of three months +tudents
%ho have completed all the re)uired courses are eligi!le for this program In the internship
program I %as attached to the Al&Arafah Islami Bank Limited for three months *uring this
period I have learned ho% the organi(ation %orks and ho% it manages its credit
)&, -ationale o! the Study
'his report is on the !asis of the course re)uirement of BBA .rogram in the Department of
Business Administration of +tamford ,niversity Bangladesh 'heoretical kno%ledge %ill !e
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little important unless it is applica!le in practical aspects As some practical experience is
re)uired after the completion of BBA program from as part of course re)uirement# I %as
assigned to the l"ra!ah Islami #an$ %td&/ayapalton 01I.2 Road Branch for 34 %orking
days from -
rd
Octo!er 5464 to -rd 7anuary 5466
'he report is prepared on the !asis of 34 days practical experience at l"ra!ah Islami #an$
%td !AI#$" that helped a lot to learn a!out the practical situation of a financial institution and
implement theoretical kno%ledge in corporate %ork environment
For a country like Bangladesh the foreign exchange activities are ma8or indicators of national
economy 'o o!serve 9 reali(e the movement of foreign exchange I choose the !ank:s
foreign exchange department for my internship paper %ith my supervisor:s consent I tried
here to analy(e ela!orately the facts related to foreign exchange activities
)&. cronyms / a00reviations
AIBL Al&Arafah Islami Bank Ltd
A* Authori(ed *ealer
BB Bangladesh Ban
BC Bangladeshi Currency
B" Bills of "xchange
B;L Bill of lading
B'B Back&to&Back
CC 0<2 Cash Credit 0<ypo2
CC 0.2 Cash Credit 0.ledge2
CCI9" Chief Controller of Import and "xport
C* Current *eposit
** *emand *raft
"RC "xport Registration Certificate
FBBC Foreign *ocumentary Bills For Collection
FBB. Foreign *ocumentary Bills For .urchased
FC Foreign Currency
FOB Free On Board
=*. =ross *omestic .roduct
<R <uman Recourse
IBC In%ard Bills for Collection
IBCA Inter Bank Credit Advice
IB*A Inter Bank *e!it Advice
I* International *epartment
IRC Import registration Certificate
L;C Letter of Credit
LCA Letter of Credit Authori(ation
LI$ Loan against Imported $erchandise
L'R Loan against 'rust Receipts
$' $ail 'ransfer
/OC /o O!8ection Certificate
OBC Out%ard Bills for Collection
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.A* .ayment against *ocuments
.C .acking Credit
.I .erforma Invoice
.O .ay&Order
.'R .ayment against 'rust Receipt
+B +avings Bank
+O* +ecured Overdraft
+'* +hort 'erm *eposit
'C 'raveler:s Che)ue
'I/ 'ax Identification /um!er
'' 'elegraphic 'ransfer
)&1 Methodologies
'o meet the o!8ectives of the study I:ve applied various )ualitative 9 )uantitative
techni)ues like statistical tools 9 soft%are and other relevant methods Formal and
oral discussion# direct o!servation# )uestioning clients and printed papers of the !ank
%ere found useful
)&2 Source o! Data
'his study is mainly !ased on secondary data availa!le from the various relevant 8ournals#
annual reports of Al&Arafah Islami Bank Ltd# *+" li!rary and pu!lications of other relevant
institutions <o%ever the !ank %as a tough source of data as they lack of a useful %e!site 9
some excuse of confidentiality
3rimary sources o! data4
Face to face conversation %ith the !ank officers 9 staffs
Conversation %ith the clients
*ifferent' manuals of AIBL
Secondary sources o! data4
.rocedure manual pu!lished !y the Al&Arafah Islami Bank Ltd
Files and documents of the !ranch
Annual reports of Al&Arafah Islami Bank Limited
*ifferent papers of Al&Arafah Islami Bank
*+" li!rary
Bangladesh Bank 7ournals
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)&5 +06ective o! the Study
7eneral +06ective4
'o get practical exposure to corporate culture
'o understand the system and methodology adopted in conducting day to day
!anking !y AIBL
'o get an overall idea of !anking from !anker:s point of vie%
Speci!ic +06ective4
'o o!serve the foreign exchange operation of AIBL and their services revie%
the techni)ues used !y the !ank to make it lucrative
An analysis and discussion of foreign exchange services of the !ank
'o evaluate of the present performance of the !ank regarding foreign
exchange
'o search the pro!lems of this !ranch of AIBL
*etermining the dra%!acks of the existing foreign exchange system
Recommending some guidelines to improve the effectiveness of foreign
exchange services
)&8 %imitation o! the Study
'he study %as thorough 9 systematic !ut there %ere some pro!lems %hich can !e the
limiting factors of the significance of the study>
'he financial statements %ere up to 544?# recent data %ere not pu!lished yet
$acroeconomic data are also unavaila!le after 544?
@ithin such a short period of time# it %as not possi!le for me to study
everything a!out Al&Arafah Islami Bank# /ayapalton 01I.2 Road Branch
'he officers are so much !usy that they cannot properly co&operate %ith me#
%hich is a pro!lem
Bank:s policy of not disclosing some data and information for o!vious reason#
%hich could !e very much useful
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+ometimes the officials %ere reluctant to give proper information regarding
their activities !ecause they felt hesitation and am!iguity to give data and
information
Lack of personal kno%ledge and experience
Lack of a useful %e!site of the !ank
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Chapter '%o
Background of AIBL
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*&) 9ision o! I#%4
'o !e a pioneer in Islamic Banking in Bangladesh and contri!ute significantly to the gro%th
of the national economy
*&* Mission o! I#%4
Achieving the satisfaction of Almighty Allah !oth here and hereafter
.roliferation of +hariah Based Banking practices
Auality financial services adopting the latest technology
Fast and efficient customer service
$aintaining high standard of !usiness ethics
Balanced gro%th
+teady and competitive return on shareholders: e)uity
Innovative !anking at a competitive price
Attract and retain )uality human resources
"xtending competitive compensation packages to the employees
Firm commitment to the gro%th of national economy
Involving more in $icro and +$" financing
*&, To attain the a0ove vision and mission I#% !ollo( the !ollo(ing
Mar$eting Strategies4
'he main strategy of the !ank is using Islami Banking +ystem to attract its market
.roviding efficient customer service
$aintaining corporate and !usiness ethics
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Being trusted repository of customers: and their financial advices
$aking its products superior and re%arding to the customers
*isplay team spirit and professionalism
+ound capital !ase
"nhancement of shareholders %ealth
Fulfilling its social commitments !y expanding its charita!le and humanitarian
activities
.roviding high )uality financial services in export and import trade
Building tight personal relationship %ith customers and clients
'aking less promotional activities and emphasi(ing on relationship marketing
*&. :istory o! l"ra!ah Islami #an$ ;I#%<
Islamic ideology encourages us to succeed in life here9 hereafter 'o achieve this success %e
must follo% the %ay dictated !y the <OLB A,RA/ and the path sho%n !y Rasul 0+$2 @ith
this goal in vie% AL Arafah Islami Bank Ltd %as esta!lished 0registered2 as a pu!lic limited
company on 6C 7une 633D 'he inaugural ceremony took place on 5? +eptem!er 633D 'he
authori(ed capital of the Bank is 'E5D4444 million and the paid up capital 'E66D-
million +ome very reno%ned Islamic personalities and pious !usinessmen of the country are
the sponsors of the !ank 'he total paid up capital %as invested locally
'he Bank is committed to contri!ute significantly in the national economy It has made a
positive contri!ution to%ards the to%ards the socio economic development of the country !y
opening FG !ranches on %hich 6G authori(ed dealer 0A*2 throughout the country
'he e)uity of the !ank stood at 'E54-? million Crore as on -6 *ecem!er 544C# the
manpo%er are 64-- and num!er of shareholders are 6546-
'he Bank conducts its !usiness on the principles of $usaraka# Bai&mua((al# and hire
purchase transactions approved !y Bangladesh Bank /aturally# its modes and operations are
su!stantially different from those of other conventional commercial Bank 'here is a +hariah
council in the Banks %ho maintains constant vigilance to ensure that the activities of the !ank
are !eing conducted on the precepts of Islam 'he +hariah council consists of prominent
,lema# reputed# Bankers# reno%ned la%yers and eminent "conomist
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*&1 Special Features o! I#%
All activities of the !ank are conducted according to Islamic +hariah %here
profit is the legal alternative to interest
'he !anks investment policy follo%s different modes approved !y Islamic
+hariah !ased on Auran 9 +unnah
'he !ank is committed to%ards esta!lishing %elfare oriented !anking system#
economic upliftment of the lo%&income group of people# create employment
opportunities
According to the needs and demands of the society and the country as a %hole
the !ank invests money to different <alal !usiness 'he !ank participates in
different activities aiming at creating 8o!s# implementing development pro8ects
taken !y the government and developing infrastructure
'he !ank is committed to esta!lish an economic system through social 8ustice
and e)ual distri!ution of %ealth It is committed to !ring a!out changes in the
underdeveloped rural areas for ensuring !alanced socioeconomic development
of the country through micro credit program
According to $udara!a system# the depositors are the partners of the
investment income of the !ank *uring the period under revie%# ?4H of the
investment income has !een distri!uted among the $udara!a depositors
'o render improved services to the clients im!ued %ith Islamic spirit of
!rotherhood# peace and fraternity and !y developing an institutional cohesion
'he !ank is contri!uting to economic and philanthropic activities side !y side
AIBL "nglish $edium $adrasah and AIBL li!rary are among mention %orthy
*&2 Management l"ra!ah Islami #an$ %td&
'here are numerous !oards 9 committees to handle the !anks management decisions 9 tasks
0detailed list is given in appendix2 'he management includes the follo%ing>
6 Operating !ody
5 "xecutive committee
- Audit committee
F +hariah council
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:ierarchy o! the Executive #ody o! I#%4
#ranch %ocation all over #angladesh4
Currently the !ank is operating %ith FG !ranches scattered over the country 'he detailed
!ranch name 9 geographical locations are provided !y graph>
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*&5 Corporate Culture / CS-
'he !ank has a friendly %ork environment %hich is not usual in other commercial !anks
<o%ever the efficiency of the employees 9 a strict corporate protocol is not present in the
!ank 'he people in the Bank see themselves as a tight knit team;family that !elieves in
%orking together for gro%th 'he corporate culture has developed has not !een imposedI it
has rather !een achieved through their Corporate conduct
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Shariah #oard4
+hariah Council of AIBL consists of D mem!ers speciali(ed in Fi)hul $uamalat 0Islamic
Commercial La%2 according to guidelines given !y the Bangladesh Bank to ensure %hether
all !anking operations are transacted in accordance %ith Islami +hariah ie Aur:an# +unnah#
I8ma# and I(tihad
In the year 544? the +hariah Council has complied various decisions taken !y the council on
different matters at different times under the caption JIslami Banking +hariah /itimala
0633D&544G2 and prepared a +hariah $anual and pu!lished %hich is first of its kind in
Bangladesh +hariah Council advices every!ody concerned to comply %ith +hariah
re)uirements and render all out efforts to increase the standard of service rendered to the
clients
Wel!are 3ro6ects o! I#%4
Al&Arafah Islami Bank also runs some %elfare pro8ect %hich they term as their corporate
social responsi!ility 0C+R2 <ere are !rief descriptions of the pro8ects>
Sta!! Wel!are 3ro6ect4
'he Bank al%ays kept a careful eye on the economic security and !enefit of its staffs 9
officers 'he Bank operates a contri!utory provident fund# a social security 9 !enevolent
fund and a gratuity fund for its employees In the year 544? 'k ?D lac %as paid to %ife of
late $r +hahidul Islam# A1. 9 former !ranch manager of 7oydevpur Branch from !ank's
social security 9 !enevolent fund 'ill no% a total of 'k -4 lac has !een paid from the fund
to the families of late officers 9 staffs of the !ank
l"ra!ah Islami #an$ Foundation4
'he Bank has a Foundation launching philanthropic activities Al&Arafah "nglish $edium
$adrasah and Al&Arafah Islami Bank Li!rary are ma8or t%o %ings for launching
philanthropic activities
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l"ra!ah English Medium Madrasah4
Al&Arafah "nglish $edium $adrasah has !een esta!lished !y the Al&Arafah Bank
Foundation %ith a vie% to !uilding next generation according to the ideals of peace and
e)uality of Islam and to esta!lishing !anking and other aspects of life in the %ay of Islam
'he prime aim of this madrasah is to contri!ute to%ards !uilding human resource and in the
!roader sense to ensure human %elfare @ith this in vie% Al&Arafah Islami Bank Foundation
has esta!lished an "nglish $edium $adrasah at *hanmondi in 6333 +uch institution up to
O level of its kind is for the first time in Bangladesh
l"ra!ah Islami #an$ %i0rary4
Li!rary is the carrier and reservoir of kno%ledge Al&Arafah Islami Bank has sho%n that
other than generating profit# it can also contri!ute significantly in the field of providing good
source of kno%ledge !y esta!lishing a pu!lic li!rary at -5# 'opkhana Road# Chittagong
Bha!an 06
st
floor2# *haka# thus strengthening social development It is placed in sound#
healthy surroundings It har!ours 5-#444 !ooks of reference for the researchers# students#
professionals# !ankers# physicians# engineers# politicians# %riters or 8ournalists# even for the
kids It is open to all from the year 5444 and %ell located 9 accessi!le to every!ody It
procured some exceptional collection of !ooks on Religion# "conomics# Banking# Computer
+cience# Business Administration# +ociology# "nglish 9 Ara!ic language and 8uvenile
literature in Bangla# "nglish# ,rdu 9 Ara!ic %hich are very rare
"ducation is the harmonious development of !ody# mind 9 soul If religion is not attached to
it the real attitude to%ards life and values %ill fail to develop It is mandatory to learn Elm-e-
Din to govern our life in the right %ay of Islam 'o fulfill this no!le intention Al&Arafah
Islami Bank Li!rary started Dars-ul-Quran 0'eachings of Auran2 program 'his program %ill
cover translation %ith detail explanation of Auran starting from +ura Fatiha upto +ura /as
gradually Dars-ul-Quran program takes place every $onday after $agri! prayer
Other than this Al&Arafah Islami Bank Li!rary arranges sho%s of feature films or
*ocumentary films on Islamic life 9 Culture
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*&8 Wor$!orce o! I#%s =ayapalton ;9I3< -oad #ranch
*&> In!ormation Technology o! I#%
AIBL started providing on&line general !anking services to the clients from 5- $ay 544C
through a net%ork of all !ranches in the country using satellite !ased Communication links
'his !ank is a mem!er of the +ociety for @orld%ide Inter!ank Financial 'elecommunications
0+@IF'2All of the Authori(ed *ealer Branches has +@IF' connectivity 'he !ank %ill
introduce a fe% more products for the client# such as# +$+ !anking# 'ele&!anking# Internet
Banking etc in near future 'o present the overall picture of the !ank to the *epositors#
+hareholders# and Investment Clients and @ell %ishers in home and a!road transparently
!ank has designed a %e! site as %%%al&arafah!ankcom
'he !ank present uses JABABILK as !anking solution soft%are <o%ever the soft%are is not
so much sophisticated 1ery often the soft%are related pro!lems hamper the operations
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*&)? Classi!ication o! #an$s 3roducts4

Produ(ts
iscellaneo!
s
Advance
s
#e$osits International
3anking
:ons!ltanc'
%elf-c!stod'0
%ale of drafts0
%tanding
instr!ction0
9r!steeshi$.et
c.
9erm
de$osits
LC:0 Foreign
c!rrenc'
9ax0
cons!ltanc'0
erchant
3anking $ro(ect0
:o!nseling0
Investment
co!nseling
)on-f!nd oriented F!nd oriented
F!arantees0
Letter of
credit.
9erms loans0
:lean loans0
Bills
disco!nting0 Pre
shi$ment0 Post
shi$ment0 Lines
of credit-
%ec!red0
!nsec!red0
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*&)) Services provided 0y I#%4
'he importance of mo!ili(ations of savings for the economic development of our country can
hardly !e over emphasi(ed @e considered savings and deposits as life!lood of the !ank
$ore the deposit# greater is the strength of the !ank 'he !ank intends to launch various ne%
savings scheme %ith prospect of higher return duly supported !y a %ell&orchestrated system
of customer services 'he !ank %ould cater to the credit needs of individuals as %ell as
corporate clients Initial it %ill emphasi(e on trade finance# %hich %ould !e short term and
self&li)uidating in nature Considering the importance of foreign trade in our national life#
financing and handling of export 9 import !usiness and also handling of foreign remittance
!usiness %ould !e given top most priority $oreover the !ank operates all of its activities
under the rules and regulations of Islamic +hariah 'he services provided !y the Al&Arafah
Islami Bank Ltd are given !ello%> &

Bank services
Ex$ort
Im$ort
"emittanc
e
%O# Feneral
loan0 ?o!se
3!ilding loan0
Lease 4nance0
?ire $!rchase0
:: h'$o0 %ta>
loan0 ::% etc.
Feneral 3anking Foreign exchange :reditCadvance
#i>erent
acco!nts o$en0
iss!es of ##.
99. PO0
:learing0
F#0 #i>erent
%cheme etc.
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*&)* 7ro(th o! I#%
Figure in Million T$&
Sl& =o& 3articulars *??. *??1 *??2 *??5
46 Authori(ed Capital 644444 644444 5D4444 5D4444
45 .aid&up Capital DCG3G G??3F CDF54 66D-6C
4- Reserve Fund FCC3G DF555 C-D3C 64363D
4F *eposits 6464C5C 66GF-GG 6G??D-- 5-4436-
4D Investment C6D46G 66F?FF6 6?F5-63 5534G-?
4G Import 3--?F3 65G-6G4 6CC56F4 5?4F5?5
4? "xport -G-3-F F3-534 36F5?4 65?6F36
4C .rofit !efore 'ax and .rovision -FCC3 DFC54 3G3?? ?DG6C
43 .rofit after 'ax and .rovision 6DF?G 5G534 F?445 -F?-6
64 'otal Assets 65C?FG6 6D--GC3 56-GC6G -46C5-5
64 "arnings per +hare 5G-G -C?C DD45 -465
66 *ividend Bonus
6DD4H
Bonus
5GH
Bonus
-DH
Bonus
54H
65 /um!er of "mployees C4- ??6 365 64--
6- /um!er of Branches F4 F6 FG FG
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*&)*&) Deposit
'he total deposit of AIBL is increasing sharply 'he total deposit of !ank %as 'k 5-4436-
million at -6
st
*ecem!er 544? as against 'k 6G??D-- million at -6
st
*ecem!er 544G
recording gro%th of -?6GH of %hich 'k GCDD4 million %as !ank deposit and general
deposit %as 55-5-G- million 'k 'he graph sho%s that the deposit collection rate is
dramatically increasing year to year>
*&)*&* Investment
'he investment of the Bank stood at 'k 5534G-? $illion as on -6
st
*ecem!er 544? as
against 'k 6?F5-63 $illion in the previous year sho%ing an increase !y -6F?H 'he
gro%th of Investment from 544F to 544? sho%n graphically# graph sho%s that every year the
!ank earns a huge amount of income from Investment account
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*&)*&, +perating 3ro!it
'he Bank earned operating profit of 'k ?DG6C million during this year 544? !efore the pre&
tax profit of the !ank during the year 544G %as 'k 3G3?? million and thus the !ank attained
negative gro%th of 5545H in respect of operating profit 'he gro%th of operating profit for
the year 544F to 544? graphically given !elo% .olitical unrest# economic recession and
many other factors !adly affected they total !anking sector# so that it earn lo%er profit than
the previous year
*&)*&. Dividend
'he Bank has !een paying *ividend every year since 633C 8ust after conversion of a pu!lic
limited company 'he Board of *irectors of the Bank recommend 54H stock dividend in the
year 544?# %hich is lo%er than the previous year !ecause of lo%er operating profit *ividend
for different years sho%n !elo% graphically>
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*&)*&1 Export
'he total export earnings in 544F %ere 'k-G-3-F $illion and in 544? it %as 'k65?6F36
$illion +o it is seen that the export earnings %as -F3 times in 544? than 544F It is also
depicted from the figure
*&)*&2 Import
'he total Import earning in 544F %as 'k3--?F3 $illion and in 544? it %as 'k5?4F5?5
$illion +o it is seen that the Import earnings %as 53 times in 544? than 544F It is also
depicted from the figure
>
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*&)*&5 :uman -esources
'he total num!er of human resources in 544F %as ??6 and in 544? it %as 64--+o num!er of
employees in AIBL has increased !y 5G5 employees from the year 544F to 544?# %hich is
sho%n !elo% graphically>
*&)*&8 #ranches
'he total num!er of Branches in 544F %as F4 and in 544? it %as FG+o num!er of Branches
in AIBL has increased !y G Branches from the year 544F to 544?# !ut in 544? there %ere no
addition of Branches# this is sho%n !elo% graphically>
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Chapter 'hree
Industry Overvie%
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,&) 7lo0al Economy
"very firms operation is connected %ith the %orld# as a !ank it more affected !y glo!al
economy
Financial performance# )uality# price etc of =lo!al Competitors
+ocio&economic .henomena
Foreign "xchange Rate
,&)&) 7lo0al Competitors
As the !anking sector of our country involves glo!al partner# our domestic !anking sector
have to compete %ith the international competitors +o# it should provide services matching
%ith the improved international )uality If they are a!le to do so# they are a!le to gain higher
earnings Financial performances of some other glo!al !anks# operated in Bangladesh# are
)uite !etter than the t%o !anks# %hich is a potential threat for this company
,&)&* Socio"economic 3henomena
'%o important socio&economic varia!les are .olitical Condition and 'aste pattern 'he %orld
is no% in an insta!le economic condition And the main reason !ehind it is the terrorism#
%hich is the product of political condition 'he economy of a county is !iased !y its political
condition As maximum countries are in economic insta!le condition the %hole %orld is
economically insta!le As the environment# technology and income level is changing no%
day !y day# the taste pattern of the %orld customer is also changing rapidly 'o keep pace
%ith this rapid change our concerned !anks are also try to do something %hich may help
them to survive in the present changing %orld strongly
Foreign Exchange -ate4
'hough there is no huge change in the %orld economy# the economies of various countries
are fluctuating rapidly And this fluctuation effects to the exchange rate of that country:s
currency %ith dollar +ome of them are rising against dollar rapidly and some are falling
Foreign exchange rate of dollar in Bangladesh is comparatively very high 0L6 M 'E ?42 As
!anking sector is the main financial sector foreign exchange changes affects deeply to it
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,&* #angladesh Economy
'he economy of Bangladesh has once again faced a great challenge mainly for the
devastating natural and other catastrophes com!ined %ith political uncertainties# a!olition of
)uota regime of readymade garments industries# a!normal price&hike of imported
commodities including oil posed great challenges for the economies +ide !y side# the
inflationary trend across the glo!al economy together %ith the apprehension of sluggish
gro%th further deepened the challenge
#asic In!ormation4
Currency 4 'aka 0'k2
7D3 at Current 3rice 4 'k FG?F3? !illion 0,+L GC4D !illion2
nnual per capital 7D3 4 ,+L FC5
7D3 gro(th rate at ;)>>1@>2< constant price 4 GD6 percent
gricultural gro(th rate at constant price 4 53D percent
Industrial@M!g gro(th rate ;A o! 7D3< 4 6663 percent
%arge / Medium scale Industry 4 66DG percent
Small scale Industry 4 645C percent
Service sector gro(th4
rate o! 7D3 at current price 4 65FD percent
In!lation rate ;)* month average< 4 CGD percent
Domestic savings rate o! 7D34 54FG percent
=ational savings rate o! 7D34 536D percent
Investment rate o! 7D34 5F-- percent
Exports ;*??2"?5<4 ,+L 656??CG mn
Imports ;*??2"?5<4 ,+L 6?6DGC4 mn
Trade De!icit 4 ,+L F3?C34 mn
Foreign Exchange -eserve 4 ,+L DD6FG4 mn
-emittances 4 ,+L -FF?-5 mn
Foreign Investment4
Direct4 ,+L 5G-mn
3ort!olio4 ,+L FC mn
#an$ rate4 D4 per cent
#road Money ;M*<4 5554F5G4 crores
Total =o& o! %imited Co&
3u0lic %imited Co4 -D#444
3rivate %imited Co&4 5-#444
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3rinciple Industries 4
=arments# .harmaceuticals# 'extiles# .aper# $anufacturing# /e%sprint#
Fertili(er# Leather and Leather goods# +ugar# Cement# Fish processing# +teel 9
Chemical industries etc
Ma6or export items4
=arments# 'ea# 7ute# Fro(en shrimps# Leather products# /e%sprint# paper#
/aphtha# ,rea# etc
3rinciple imports4
Fuel# Rice# @heat# Cotton 9 'extile# .etroleum products# Fertili(er# +taple
fi!ers# yarn etc
,&*&) #an$ing Sector
'he commercial !anking system dominates Bangladesh's financial sector %ith limited role of
/on&Bank Financial Institutions and the capital market 'he Banking sector alone accounts
for a su!stantial share of assets of the financial system 'he !anking system is dominated !y
the F /ationali(ed Commercial Banks# %hich together controlled more than DFH of deposits
and operated --CC !ranches 0DFH of the total2 as of *ecem!er -6# 544F Out of the D
speciali(ed !anks# t%o 0Bangladesh Erishi Bank and Ra8shahi Erishi ,nnayan Bank2 %ere
created to meet the credit needs of the agricultural sector %hile the other t%o 0Bangladesh
+hilpa Bank 0#S#2 9 Bangladesh +hilpa Rin +angtha 0#S-S2 2 are for extending term
loans to the industrial sector '%enty&eight financial institutions are no% operating in
Bangladesh Of these institutions# 60one2 is govt o%ned# 6D 0fifteen2 are local 0private2 and
the other 650t%elve2 are esta!lished under 8oint venture %ith foreign participation
,&*&* Import Situation o! #angladesh over the year
,&*&, Export 3er!ormance o! #angladesh over the year
Bear Total Export 7ro(th
633?&633C 6CC6-4F 444H
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633C&6333 5-F6G-C 5FF?H
6333&5444 5DF3664 CCGH
5444&5446 5CC6CD5 6-4DH
5446&5445 -FCDC?F 543GH
5445&544- -F-GG6F &6F6H
544-&544F -?36DFD 64--H
544F&544D FFC5?55 6C5-H
544D&544G D-5--3? 6C?DH
544G&544? ?4?FG-D -534H

,&*&. Export 3olicy o! #angladesh
Export 3olicy +06ectives4
'he principal o!8ectives of the export policy are as follo%s N
'o achieve optimum national gro%th through increase of exports to
regional and international markets
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'o narro% do%n the gap !et%een the country:s export earning and
import payment through achievement of the export targets
'o undertake timely steps for production of exporta!le goods at a
competitive price %ith a vie% to expand the existing market#
'o take the highest advantage of entering into the post ,ruguay
li!erali(ed and glo!ali(es international market
'o make our exporta!le items more attractive to the market through
product diversification and )uality improvement
'o esta!lish !ack%ard linkage industries
'o simplify export procedures
'o develop an export infrastructure
'o develop trained human resources in the export sector
Export 3olicy Strategies4
.rovide assistance through developing necessary num!ers of product
development councils for increased product of export itemsI
.rovide market intelligence to producers and exporters on product demands
and prices in markets a!roadI
Offer increased institutional facilities through trading and export houses to
encourage exportI
Offer assistance in esta!lishing seal of )uality organi(ation or similar
organi(ations to ensure )uality of export items in re)uired casesI
Offer assistance in esta!lishing JBangladesh International Ar!itration CentreK
or similar organi(ations for prompt settlement and disposal of 'rade disputesI
Offer assistance to producers for development of product designs and use of
modern technologyI
Offer assistance to ena!le exporters getting ac)uainted %ith the strategies and
methods of countries %hich attained remarka!le success in export trading and
highlight the exportersI and
Organi(e single country export fair for Bangladeshi products a!road and offer
assistance to exporters in participating trade fairs in different countries
Export Incentives4
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Income tax exemption for export earning> ,nder the income tax la% other than
the o%ners of factories not registered in Bangladeshi# all exporters %ill get
D4H exemptions in their income taxes
"xemption in insurance premium
Bond facilities for export oriented industries
Facilities for duty free import of capital machineries for export & oriented
industries
'he export&oriented industries %ill get the advantage of importing 64 percent
spare parts of their capital machineries %ithout duty in every t%o years
.roviding alternative facilities to export&oriented local textiles and R$= other
than duty&!ond or duty&dra%&!ack
'ax holiday 9 *uty&dra%&!ack scheme
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Chapter Four
Foreign "xchange *ivision of AIBL
.&) Foreign Exchange +perations
Foreign exchange is the means and methods !y %hich rights to %ealth in a country's currency
are converted into rights to %ealth in another country's currency In !anks %hen %e talk of
foreign exchange# %e refer to the general mechanism !y %hich a !ank converts currency of
one country into that of another Foreign "xchange *epartment 0F"*2 is the international
department Bangladesh Bank issues license to scheduled !anks to deal %ith foreign
exchange 'hese !anks are kno%n as Authori(ed *ealers If the !ranch is authori(ed dealer in
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foreign exchange market# it can remit foreign exchange from local country to foreign
countries +o AL&ARAFA<&I+LA$I Bank# .rincipal !ranch is an authori(ed dealer
'here are three kinds of foreign exchange transaction>
A2 Import
B2 "xport
C2 Remittance
.&* Import
'o import# a person should !e competent to !e and importer According to Import and "xport
Control Act# 63D4# the Office of Chief Controller of Import and "xport provides the
registration 0IRC2 to the importer In an international !usiness environment# !uyers and
sellers are generally unkno%n to each other +o seller of goods al%ays seeks security for the
payment of his exported goods Bank gives export guarantee that it %ill pay for the goods on
!ehalf of the !uyer if the !uyer does not pay 'his guarantee is called Letter of Credit 'hus
the contract !et%een importer and exporter is given a legal shape !y the !anker !y 'Letter of
Credit
.&*&) Import -egistration Certi!icate ;I-C<
'he first thing one need to carry on a !usiness of import is called Import Registration
Certificate But registration is not re)uired for import goods# %hich do not involved
remittance of foreign exchange like medicineI reading materials etc can !e imported %ithout
registration !y the users %ithin monetary limit *ocuments to !e re)uired for Import
Registration Certificate are as follo%s O
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Income Registration Certificate
/ationality Certificate
Certificate from Cham!ers of Commerce and Industry Registered
'rade
Association
Bank +olvency Certificate
Copy of 'rade License
Re)uisite fees
.&*&* Functions o! Import Section
'he form I$. contains the follo%ingsO
/ame and address of the Authori(ed dealers
Amount of remittance to !e permitted 0ie;C amount2
LCA form no *ate and value in 'aka
*escription of goods
Invoice value in foreign currency# 0ie;C amount2
Country of origin
.ort of shipment
/ame of steamer ; Airline
.ort of importation
Indenter:s name and address
Indenter's registration num!er %ith CCI 9 " and Bangladesh Bank
Full name and address of the applicant
.&*&, %etter o! Credit
De!inition4
A letter of credit is a letter issued !y a !ank 0kno%n as the opening or the issuing !ank2 at the
instance of its customer 0kno%n as the opener2 addressed to a person 0!eneficiary2
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undertaking that the !ills dra%n !y the !eneficiary %ill !e duly honored !y it 0opening !ank2
provided certain conditions mentioned in the letter gave !een complied %ith
.&*&,&) 3arties to the %@C
Importer Who applies !or %@C
Issuing #an$ It is the !ank %hich opens;issues a L;C on !ehalf of the importer
Con!irming #an$ It is the !ank# %hich adds its confirmation to the credit and it# is
done at the re)uest of issuing !ank Confirming !ank may or may
not !e advising !ank
dvising or
=oti!ying #an$
It is the !ank through %hich the L;C is advised to the exporters
'his !ank is actually situated in exporter's country It may also
assume the role of confirming and ; or negotiating !ank depending
upon the condition of the credit
=egotiating #an$ It is the !ank# %hich negotiates the !ill and pays the amount of the
!eneficiary& 'he advising !ank and the negotiating !ank may or
may not !e the same +ometimes it can also !e confirming !ank
ccepting #an$ It is the !ank on %hich the !ill %ill !e dra%n 0as per condition of
the credit2 ,sually it is the issuing !ank
-eim0ursing #an$ It is the !ank# %hich %ould reim!urse the negotiating !ank after
getting payment & instructions from issuing !ank
.&*&,&* Mechanism o! %@C operation
Indente
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Indente
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Steps !or import %@C +peration
Step ) " -egistration (ith CCI/E4
P For engaging in international trade# even trader must !e first registered %ith the Chief
Controller of Import and "xport
Ex$orter <%eller=
Ex$orter <%eller=
Im$orter <B!'er=
Im$orter <B!'er=
Iss!ing Bank
Iss!ing Bank
Advising
3ankC:on4rming
BankC)egotiating
3ank
Advising
3ankC:on4rming
BankC)egotiating
3ank
Pa'ing 3ank
Pa'ing 3ank
P a '
m e
n t
P r e
s e
n t
d o
c !
m e
n t s
P a
'
m
e n
t
:ontract
:
o
n
4 r
m
a t
i o
n
o f
L C
:
%!
3m
it
doc
!m
ent
s
A $
$ l i
c a
t i o
n
Iss!e of LC:
For6ard doc!ments
akes $a'ment
a k
e s
$ a '
m e n
t
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P By paying specified registration fees to the CCI9"& the trader %ill get IRC;"RC
0Import;"xport Registration Certificate2# to open L;C %ith !ank# this IRC is must
Step * " Determination terms o! credit4
P 'he terms of the letter of credit are depending upon the contract !et%een the importer and
exporter 'he terms of the credit specify the amount of credit# name and address of the
!eneficiary and opener# tenor of the !ill of exchange&period and mode of shipment and of
destination# nature of credit# expiry date name and num!er of sets of shipping documents
etc
Step , " 3roposal !or +pening o! %@C4
'o have an import LC limit an importer su!mits an application to department to AL&
ARAFA<&I+LA$I Bank 'he proposal contains the follo%ing particulars>
Full particulars of the !ank account
/ature of !usiness
Re)uired amount of limit
.ayment terms and conditions
=oods to !e imported
Offered security
Repayment schedule
Step . " pplication 0y importer to the 0an$er to open letter o! credit4
P For opening L;C# the importer is re)uired to fill up a prescri!ed application form
provided !y the !anker along %ith the follo%ing documents>
6 L;C Application form ? Authority to de!it account
5 Filled up LCA form C Filled up amendment re)uest Form
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- *emand .romissory /ote 3 I$. form
F pro&forma invoice 64 Insurance cover note and money receipt
D 'ax Identification num!er 66 $em!ership certificate
G Import registration certificate 65 Rate fluctuation undertaking
Step 1 " +pening o! %@C 0y the 0an$ !or the opener4
P 'aking filled up application form from the importer
P Collects credit report of exporter from exporter's country through his foreign
correspondence there
P Opening !ank then issues credit !y air mail;'"L"Q;+@IF' follo%ed !y L;C advice
as asked !y the opener through his foreign correspondent or !ranch as the case may
!e# at the place of !eneficiary 'he advising !ank advises the L;C to the !eneficiary on
his o%n form %here it is addressed to him or merely hand over the original L;C to the
!eneficiary if it is so addressed
Step 2 " Shipment o! goods and lodgment o! documents 0y exporter4
'hen exporter ships the goods to the destination of the importer country and sends the documents to
the L;C opening !ank through his negotiating !ank =enerally the follo%ing documents are sent to the
Opening Banker %ith L;C>
6 Bill of "xchange G .acking List
5 Bill of Lading ? Advice *etails of +hipment
- Commercial Invoice C .re&shipment Inspection Certificate
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F Certificate of Origin 3 1essel .articular
D A certificate stating that each packet
contains the description of goods over the
packet
64+hipment Certificate
Step 5 " %odgment o! Documents 0y the opening #an$ !rom the negotiating 0an$4
After receiving the documents# the opening !anker scrutini(es the documents If any
discrepancy found# it informs the importer If importer accepts the fault# then opening !ankers
call importer retiring the document At this time many thing can happen 'hese are indicated
in the follo%ing>
C Discrepancy !ound 0ut the importer accepts & /o pro!lem occurs in lodgment

C Discrepancy !ound and importer not agreed to accept " In this case# importer protest and
send !ack all the documents to the exporter and re)uest his to make in the specified manner
<ere !anker is not !ound to pay !ecause the documents send !y exporter is not in accordance
%ith the terms of L;C
C Documents are +D 0ut importer is (illing to retire the documents & In this case !ank is
o!ligated to pay the price of exported goods +ince importer did not pay for !ill of exchange#
this payment !y !ank is one kind of credit to the importer and this credit in !anking is kno%n
as .A*
C Everything is +&D& 0ut importer !ails to clear goods !rom the port and reEuest 0an$ to
clear& In this case !anks clear the goods and takes delivery of the same !y paying customs
duty and sales tax etc +o# this expenditure is de!ited to the importer's account and in !anking
it is called LI$
Step 8 F -etirement4
'he importer receives the intimation and gives necessary instruction to the !ank for
retirement of the import !ills or for the disposal of the shipping document to clear the
imported goods from the customs authority 'he importer may instruct the !ank to retire the
documents !y de!iting his account %ith the !ank or may ask for L'R 0Loan against 'rust
Receipt2
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ccounting 3rocedure in case o! %@C +pening
@hen the officer thinks fit the application to open a L;C# giving the follo%ing entries&creates
the follo%ing charges&
.articulars *e!it;Credit Charges in 'aka
Customer's A;C *e!it
L;C $argin A;C Credit
Commission A;C on L;C Credit D4H
1A' Credit 6DH on commission
+@IF' Charge Credit -444;M
*atamax Credit 6444;M
+tamp Credit 6D4;M
.ostage Credit -44;M
*<L;Courier Credit 6D44;M
.&*&,&, mendment o! %@C4
After opening of L;C some time's alteration to the original terms and conditions !ecome
necessary 'hese amendments involve changes in>
a ,nit price
! "xtension of validity o the L;C
c *ocumentary re)uirements etc
+uch amendments can !e affected only if all the concerned parties agree ie the !eneficiary#
the importer# the issuing !ank and the advising !ank
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For any amendment the importer must re)uest the issuing !ank in %riting duly supported !y
revised indent;proforma invoice 'he issuing !ank then advises the re)uired amendment to
the advising !ank L;C amendment commission including postage is charged to the clients
A;C
%oan against Trust -eceipts ;%T-<
Advance against a 'rust Receipt o!tained from the Customers are allo%ed to only
first class tested parties %hen the documents covering an import shipment or other
goods pledged to the Bank as security are given
@ithout payment <o%ever# for such advances prior permission;sanction from <ead
Office must !e o!tained
'he customer holds the goods or their sale&proceeds in trust for the Bank# till such
time# the loan allo%ed against the 'rust Receipts is fully paid off
'he 'rust Receipt is a document that creates the Banker's <en on the goods and
practically amounts to hypothecation of the proceeds of sale in discharge of the lien
%oan against Imported Merchandise ;%IM<
Advance 0Loan2 against the security of merchandise imported through the Bank may !e
allo%ed either on pledge or hypothecation# of goods# retaining margin prescri!ed or their
Landed Cost# depending on their categories and Credit Restriction imposed !y the
Bangladesh Bank Bank shall also o!tain a letter of undertaking and indemnity from the
parties# !efore getting the goods cleared through LI$ Account
.&*&. 3ayment 3rocedure o! Import Documents
'his is the most sensitive task of the Import *epartment the officials have to !e very much
careful %hile making payment 'his task constitutes the follo%ing>
Date o! 3ayment
,sually payment is made %ithin seven days after the documents have !een received If the
payment is !ecome deferred# the negotiating !ank may claim interest for making delay
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3reparing Sale Memo
A sale memo is made at BC rate to the customer As the '' 9 O* rate is paid to the I*# the
difference !et%een these t%o rates is exchange trading Finally# an Inter Branch "xchange
'rading Credit Advice is sent to I*
-eEuisition !or the Foreign Currency
For arranging necessary fund for payment a re)uisition is sent to the International
*epartment
Transmission o! Message
$essage is transmitted to the correspondent !ank ensuring that payment is !eing made
.&, Export
Gnderstanding
'he goods and services sold !y Bangladesh to foreign households# !usinessmen and
=overnment are called export 'he export trade of the country is regulated !y the Imports and
"xports 0control2 Act# 63D4 'here are a num!er of formalities# %hich an exporter has to
fulfill !efore and after shipment of goods 'he exports from Bangladesh are su!8ect to export
trade control exercised !y the $inistry Of Commerce through Chief Controller of Imports
and "xports 0CC 9 "2 /o exporter is allo%ed to export any commodity permissi!le for
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export from Bangladesh unless he is registered %ith CCR 9 " and holds valid "xport
Registration Certificate 0"RC2 'he "RC is re)uired to !e rene%ed every year 'he "RC
num!er is to !e incorporated on "Q. forms and other documents connected %ith exports 'he
formalities and procedure are enumerated as follo%s>
)& +0taining exports %C4 'o get export LC form exporter issued !y the importer
*& Su0mission o! export documents4 "xporter has to su!mit all necessary documents to the
collecting !ank after shipping of goods
,& Chec$ing o! export documents4 After getting the documents !anker used to check the
documents as per LC terms
.& =egotiation o! export documents4 If the !ank accepts the document and pays the value
draft to the exporter and for%ard the document to issuing !ank that is called a negotiating
!ank If the !ank does !uy the LC then the !ank normally acts as collecting !ank
1& -ealiHation o! proceeds4 'his is the period %hen the issuing !ank has reali(ed the
payment
2& -eporting to the #angladesh 0an$4 As per instruction !y Bangladesh !ank the !ank has
to report to respective department of Bangladesh !ank !y mentioning latest payment
5& Issue to proceeds realiHation certi!icate ;3-C<4 Bank has to issue proceeds reali(ation
certificate of export LC to the supplier ; exporter for getting cash assistance
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.&,&) Export operation
Bangladesh exports a large )uantity of goods and services to foreign households Readymade
textile garments 0!oth knitted and %oven2# 7ute# 7ute&made products# fro(en shrimps# tea are
the main goods that Bangladeshi exporters exports to foreign countries =arments sector is
the largest sector that exports the lion share of the country's exportI Bangladesh exports most
of its readymade garments products to ,+A and "uropean Community 0"C2 countries#
Bangladesh exports a!out F4H of its readymade garments products to ,+A $ost of the
exporters %ho export through AL&ARAFA<&I+LA$I BA/E are readymade garment
exporters 'hey open export L;Cs here to export their goods# %hich they open against the
import L;Cs opened !y their foreign importers
"xport L;C operation is 8ust reverse of the import L;C operation For exporting goods !y the
local exporter# !ank may act as advising !anks and collecting !ank 0negotia!le !ank2 for the
exporter

s an advising 0an$
It receives documents from the foreign importer and hands it over to the exporter +ometimes
it adds confirmation on the L;C on re)uest from the Opening Bank By adding confirmation#
it assumes the responsi!ility to make payment to the exporter
s =egotiating #an$
It negotiates the !ills and other shipping documents in favor of the exporter 'hat is
S
it
collects the proceeds of the export&!ill from the dra%er and credits the exporter's account for
the same Collection proceed from the export !ill is deposited in the !ank's /O+'RO account
in the importer's country +ometimes the !ank purchases the !ills at discount and %aits till
maturity of the !ill @hen the !ill matures# !ank presents it to the dra%er to encase it
In our country "xport and Import operation of !ank is very much related %ith one another
!ecause of use of Back to Back and maturity of payment for Back&to&Back L;C is set in such
that it can !e paid out of export proceeds
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.&,&* #ac$"To"#ac$ %@C
It is simply issued to the clients against an import L;C Back&to&Back mechanism involves
t%o separate L;C One is master "xport L;C and another is Back&to&Back L;C On the
strength of $aster "xport L;C !ank issues !ank to Back L;C Back&to&Back L;C is commonly
kno%n as Buying L;C On the contrary# $aster "xport L;C is kno%n as +elling L;C
Features o! #ac$ to #ac$ %@C4
An Import L;C to procure goods ;ra% materials for further processing
It is opened !ased on "xport L;C#
It is a kind of "xport Finance
"xport L;C is at +ight !ut !ack to Back L;C is at usage
/o margin is re)uired to open Back to !ack L;C
Application is registered %ith CCI9"
Applicant has !onded %arehouse license
L;C value shall not exceed the admissi!le percentage of net FOB value of relative
$aster L;C
,sage period %ill !e up to 6C4 days
'he import L;C is opened for ?DH of the value of "xport L;C
<ere L;C issued against the lien of export L;C
Arrangements are such that export L;C matures first then out of this export profit#
import L;C is paid out
Documents -eEuired !or +pening a #ac$"to"0ac$ %@C4
In AL&ARAFA<&I+LA$I Bank .rincipal Branch# follo%ing papers; documents are re)uired
for opening a !ack&to&!ack L/C-
6 $aster L;C
5 1alid Import Registration Certificate 0IRC2 and "xport Registration Certificate 0"RC2
- L;C Application and LCAF duly filled in and signed
F .roforma Invoice or Indent
D Insurance Cover /ote %ith money receipt
G I$. Form duly signed
In addition to the a!ove documents# the follo%ings are also re)uired to export oriented
garment industries %hile re)uesting for opening a !ack&to&!ack L;C &
6 'extile .ermission
5 1alid Bonded @arehouse License
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- Auota Allocation Letter issued !y the "xport .romotion Bureau 0".B2 in favor of the
applicant for )uota items
Chec$ list o! export %@C
Follo%ing defective points are usually found in the $aster L;C +o# these points are so much
carefully checked !y the !ank officials 'hese are>
6 /ame of the Advising Bank
2. /ame of 'ransferring Bank
- Form of *oc credit>
P /ame of Issuing Bank
P *ocumentary Credit /o And issuing date
P *ate of shipment
P "xpiry date and place
F Applicant; for order of; On Account
D Beneficiary; Favoring
G Amount
? Availa!ility of Credit
C .artial shipment; 'ransshipment
3 .ayment condition ;*raft +ight
64 Category
66 *escription of goods>
P Item
P 'otal Aty
P ,nit price
65 B;L Clause
6- Reim!ursement clause
6F ,C.*C Clause
6D /et FOB value
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3ayment o! 0ac$ to 0ac$ %@C4
In case !ack to !ack as G4&34&654&6C4 days of maturity period# deferred payment is made
.ayment is given after reali(ing export proceeds from the L;C issuing !ank
%@C under E+F4
P "xporter development Fund is created !y Bangladesh Bank to give encourages to
the exporter in Bangladesh
P =enerally Back&to&Back L;C is ,sance L;C that is here !ill of exchange is paya!le
after some maturity date say 34 or 654 days after the date of acceptance;negotiation But
some foreign seller may re)uire sight payment <ere import L;C matures first In that case
Bangladesh Bank gives the fund to the !ank to pay the price of imported goods in favor of the
local purchaser of ra% materials @hen export proceeds come# first Bangladesh Bank loan to
the importer is ad8usted and remaining part goes to the importer of ra% materials
.&,&, =egotiation o! Export Documents4
'he most common method of financing exporters is negotiation of documents under L;C It is
a post&shipment credit <ere the !ank acts as a negotiating !ank After the shipment of the
goods# the exporter su!mits the relative documents to the !ranch for negotiation 'he
documents are to su!mit %ithin the period mentioned in the L;C after approval of negotiation
of the !ill the full particulars of the documents are !ranch %ith a for%arding letter 'he
!ranch claim reim!ursement from the issuing !ank or from the reim!ursing !ank# giving
clear instructions to credit the proceeds of the !ill to the AL&ARAFA<&I+LA$I Bank head
office /O+'RO A;C maintained %ith the named correspondent !ank a!road under telex
intimation to the .rincipal !ranch and <ead Office 0International *ivision2
/egotiation stands for payment of value to the exporter against Tthe documents stipulated in
the LAC If documents are in order# AL&ARFA<&I+LA$I Bank purchases 0negotiates2 the
same on the !asis of !anker& customer relationship 'his is kno%n as Foreign *ocumentary
Bill .urchase 0F*B.2
If the !ank is not satisfied %ith the documents su!mitted to AL&ARAFA<&I+LA$I Bank
gives the exporter reasona!le time to remove the discrepancies or sends the documents to L;C
opening !ank for collection 'his is kno%n as Foreign *ocumentary Bill for Collection
0F*BC2 entered into the foreign# !ill .urchased 0FB.2 register 'he documents are sent to
the L;C opening
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3resentation o! export documents !or negotiation@ 3urchase4
After shipment exporter su!mits the follo%ing documents to AL&ARAFA<&I+LA$I
Bank for negotiation
P Bill of exchange
P Bill of Lading
P Invoice
P Insurance .olicy;Certificate
P Certificate of Origin
P Inspection Certificate
P Consular Invoice
P .acking List
P Auality Control Certificate
P =+. certificate
Foreign documentary 0ills !or collection ;F3#C<4
Al&Arafah Islami Bank for%ards the documents for collection due to the follo%ing reasons#
U If the documents have discrepancies
U If the exporter is a ne% client
F*BC signifies that the exporter %ill receive payment only %hen the issuing !ank
gives payment AL&ARAFA<&I+LA$I Bank make regular follo%&up %ith the L;C
opening Bank in case of any delay in getting payment
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Settlement o! %ocal #ills4
6 'he settlement of local !ills is done in the follo%ing %ays &
5 'he customer su!mits the L;C to AL&ARAFA<&I+LA$I Bank along %ith the documents
to negotiate
- AL&ARAF<&I+LA$I Bank official scrutini(es the documents to ensure the conformity
VVith the terms and conditions
F 'he documents are then for%arded to the L;C opening !ank
D 'he L;C issuing !ank gives the acceptance and for%ards an acceptance letter
G .ayment is given to the customer on either !y collection !asis or !y purchasing the
document
Mode o! payment o! export 0ill under %@C4
As per ,C.*C D44# 633- revision there are four types of credit 'hese are as follo%sI
U Sight 3ayment Credit4 In a +ight .ayment Credit the !ank pays the stipulated sum
immediately against the exporter's presentation of the documents
I De!erred payment Credit4 In deferred payment# the !ank agrees to pay on a specified
future date or event# after presentation of the export documents /o !ill of exchange is
involved .ayment is given to the party at the rate of * A G4&34&654&6C4 as the case may !e
But the <ead office is paid at '' clean rate 'he difference !et%een the t%o rates us the
exchange trading for the !ranch
U cceptance credit4 In acceptance credit# the exporter presents a !ill of exchange paya!le to
him and dra%n at the agreed tenor 0that is# on a specified future date or event2 on the !ank
that is to accept it 'he !ank signs its acceptance on the !ill and returns it to the exporter 'he
exporter can then represent it for payment on maturity Alternatively he can discount it in
order to o!tain immediate payment
I =egotiation Credit4 In /egotiation credit# the exporter has to present a !ill of exchange
paya!le to him in addition to other documents that the !ank negotiates
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.&. Foreign -emittance
'his !ank is authori(ed dealer to deal in foreign exchange !usiness As an authori(ed dealer#
a !ank must provide some services to the clients regarding foreign exchange and this
department provides these services
'he !asic function of this department are out%ard and in%ard remittance of foreign exchange
from one country to another country In the process of providing this remittance service# it
sells and !uys foreign currency 'he conversion of one currency into another takes place an
agreed rate of exchange# %hich the !anker )uotes# one for !uying and another for selling In
such transactions the foreign currencies are like am other commodities offered for sales and
purchase# the cost 0convention value2 !eing paid !y the !uyer in home currency# the legal
tender
.&.&) -emittance procedures o! !oreign currency
'here are t%o types of remittance>
6 In%ard remittance
5 Out%ard remittance
In(ard Foreign -emittance4
In%ard remittance covers purchase of foreign currency in the form of foreign ''# **# and
!ills# 'C etc sent from a!road favoring a !eneficiary in Bangladesh .urchase of foreign
exchange is to !e reported to "xchange control *epartment of Bangladesh !ank on Form&C
+ut(ard Foreign -emittance4
Out%ard remittance covers sales of foreign currency through issuing foreign '' *rafts#
'ravelers Check etc as %ell as sell of foreign exchange under L;C and against import !ills
retired
Wor$ing o! this department
6 Issuance of 'C# Cash *ollar ;.ound
5 Issuance of F**# F'' 9 purchasing# .ayment of the same
- .assport endorsement
F "ncashment certificate&
D F;C Account opening 9filing
G Opening of "xport FC retention Auota A;C9 maintain
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? $aintenance of ledger of Cash *ollar# FC *eposit A;C 9 'C
C $aintain FBC register 9follo% up FBC
3 Opening of +tudent file 9$aintain
64 .reparation of all related statement# 1oucher 9 posting
66 .reparation of @eekly# $onthly Bearly +tatement for Bangladesh Bank return
timely
65 Attending all related correspondence to other Bank or Institutions
Modes4
'he remittance process involves the follo%ing four modes
Cash
Remittance
*ollar;
.ound
+ell Bank sells *ollar ; .ound for using in a!road !y the purchaser 'he
maximum amount of such sell is mentioned in the Bangladesh Bank
pu!lication of 'Converti!ility of 'aka for Currency 'ransactions in
Bangladesh:
.urchase Bank can purchase dollar from resident and non & resident Bangladeshi
and Foreigner $ost dollars purchased comes from reali(ation of "xport
Bill of "xchange
'raveler's
Che)ue
Issue of 'C 'C is useful to traveler a!road Customers can encase the 'C in a!road
from the dra%ee !ank 'C is alternative to holding cash and it provides
!etter security than holding cash in hand
Buying of
'C
If any unused leaf of 'C is surrendered !ank !uys it from the customer
All payments are made in local currency Banks generally
!uy only those 'C
'elex
'ransfer
Out%ard
''
It remits fund !y tested '' via its foreign correspondence !ank in %hich
it is maintaining its /O+'RO Account
It also makes payment according to telegraphic message of its Incoming foreign
correspondence !ank from the corresponding 1O+'RO Account
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Foreign
*emand
*raft
Bank issue *emand *raft in favor of purchaser or any other according to# instruction
of purchaser 'he payee can collect it for the dra%er !ank in %hich the Issuing !ank of
*emand *raft holds its /O+'RO Account Bank also makes payment on ** dra%n
on this !ank !y its foreign correspondence !ank through the 1O+'RO Account
In these processes of remittance# !ank must have to make profit as a !usiness institution
.rofit is made in t%o %ays>
6 Commission charged
5 *ifference in the !uying and selling rate
.&.&* Miscellaneous Services 0y This Department
Student File4 +tudents %ho are desirous to study a!road can open file in the Bank By
opening this file# !ank assures the remittance of funds in a!road for study
F&C ccounts> Foreign Currency Accounts opened in the names of Bangladeshi nationals or
persons of Bangladeshi origin %orking or self &employed a!road can no% are maintained as
long as the account holders desires
-FCD4 +tands for Resident Foreign Currency Accounts .ersonsT ordinary resident in
Bangladesh may maintain foreign currency accounts %ith foreign exchange !rought in at
a!road Balance of such accounts is freely remitta!le a!road
Formalities !or opening !oreign currency ;FC< ccount4
'he A* may %ithout prior approval of the Bangladesh Bank open Foreign Currency 0FC2
account in the name of>
6 Bangladesh national residing a!road
5 Foreign nationals residing a!road; in Bangladesh and also foreign firms
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- Registered a!road and operating in Bangladesh and a!stract foreign missions and
their expatriate employees
F Resident of Bangladesh nationals %orking %ith the foreign ; international
organi(ation operating in Bangladesh provided their salary in paid in foreign currency
Foreign exchange earned through !usiness doves or service rendered in Bangladesh cannot !e
put into these accounts
/o payment in foreign currency 0FC2 may !e made to any resident in Bangladesh out of the
foreign currency 0FC2 account
All citi(ens of Bangladesh and other persons are residing to Bangladesh %ho !ecame the
o%ner of any foreign currency 0FC2
3apers reEuired4
Application duly !illed in and signed
.hotograph 0t%o copies2
.assport photocopy
@ork permit from !oard investment 0In case of foreign nationals2
.&2 -is$s in Foreign Exchange #usiness
Foreign "xchange Business involves the follo%ing risks>
62 -is$ o! non"delivery o! goods4 $ay not !e delivered to the !uyer due to some
mishaps frauds or any other reason
52 -is$ o! receiving su0"standard goods4 'ill the time the goods are received under a
shipment none can !e sure of the )uality of the goods involved
-2 -is$ o! nonpayment4 Buyer may fail to honor his commitments
F2 -is$ o! !rauds in goods4 Contracted to !uy cement !ut got sand 'he a!ove risks
trade common to inland trade as also the foreign trade 'here are some risks %hich are
peculiar to foreign exchange !usiness
D2 Exchange ris$4 "xchange of currencies can cause loss to some parties N seller or
!uyer due to the inherent risk of exchange rate fluctuation
G2 Failure o! !oreign 0an$s4 It may !e possi!le that the foreign !ank may not !e a!le to
pay the e)uivalent due to !ank failures
?2 Sudden changes in policies4 'his is referred to as political risk "xchange control
regulation# import export policies and trade regulation are changed overnight %hich
%ill put the parties in difficulties
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Chapter Five
Foreign "xchange .erformance Analysis
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1&) :istorical per!ormance o! I#%
<ere is a sum of historical performance of AIBL>
Figure in Million T$&
Sl& =o& 3articulars *??. *??1 *??2 *??5
46 Authori(ed Capital 644444 644444 5D4444 5D4444
45 .aid&up Capital DCG3G G??3F CDF54 66D-6C
4- Reserve Fund FCC3G DF555 C-D3C 64363D
4F *eposits 6464C5C 66GF-GG 6G??D-- 5-4436-
4D Investment C6D46G 66F?FF6 6?F5-63 5534G-?
4G Import 3--?F3 65G-6G4 6CC56F4 5?4F5?5
4? "xport -G-3-F F3-534 36F5?4 65?6F36
4C .rofit !efore 'ax and .rovision -FCC3 DFC54 3G3?? ?DG6C
43 .rofit after 'ax and .rovision 6DF?G 5G534 F?445 -F?-6
64 'otal Assets 65C?FG6 6D--GC3 56-GC6G -46C5-5
64 "arnings per +hare 5G-G -C?C DD45 -465
66 *ividend Bonus
6DD4H
Bonus
5GH
Bonus
-DH
Bonus
54H
65 /um!er of "mployees C4- ??6 365 64--
6- /um!er of Branches F4 F6 FG FG
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.erformance in security market
3revious ) year price graph4
<ighest value DG?D
Lo%est value -FG
+ther In!ormation o! the Company4
Listing Bear 633C

$arket Category A

"lectronic +hare B

+hare .ercentage>
+ponsor;*irector
F366
=ovt4 Institute 4 Foreign 4 .u!lic D4C3
Remark ".+ 9 /A1 of 544G is derived from company's ne%ly ad8usted Face 1alue
ddress o! the Company4
Address> Rahman $ansion# 6G6# $oti8heel# C;A# *haka & 6444

Contact .hone> 0CC452 ?65-5DD&?

Fax> CC & 45 & 3DG3-D6

"mail;@e! Address> %%%al&arafahcom
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1&* Foreign exchange per!ormance over time
'o analy(e the performance of AIBL in foreign exchange !usiness I have esta!lished some
assumptions&
1&*&) ssumptions to the analysis
It is assumed that the reported financial data are free from error 9 !ias !ecause there
%ere no scopes of the study is to verify the data
All the analysis 9 findings are valid up to %une &''( !ecause the other data are not
availa!le
'he data sho%n of 544C are estimated figures
I have selected !anks %ith the follo%ing classification criterion
o Local commercial !anks 0.CB2
o Foreign !anks 0FB2
o =ovt:s speciali(ed !anks
'he !anks selected are assumed to !e the representatives of !anking sector of our
country
1&*&* %ist o! 0an$s selected !or comparison
.rivate commercial !anks> *haka Bank Ltd
/ational Bank Ltd
AB Bank Ltd
Foreign Banks> +tandard Chartered Bank
<+BC
Citi Bank / A
=ovt speciali(ed !anks> +onali Bank Ltd
Basic Bank Ltd
<o%ever# the %hole analysis is !ased on comparison 9 relationships !et%een these !anks 9
Al&Arafah Islami Bank Ltd 'he derived comparative results may vary if other !anks are
selected
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1&*&, 7ro(th statistics in Foreign exchange 0usiness
<ere is the gro%th statistics of the !anking sector 0selected !anks2 'he figures of 544C are
estimated !y the individual !anks
7ro(th statistics in Foreign exchange 0usiness
*??, *??. *??1 *??2 *??5 *??8
I#% "xport 6C-4H &FF34H -DG46H -34GH &6GCH
Import 6CG3H &FF?5H 5?5G5H F-GCH &6GC4H
Remittance &--6H &D444H D6?65H 64FDDH &5F4FH
ll
#an$s
"xport -D66H &D-?FH 5-G4CH 54--H &-F5?H
Import -C46H &F-F?H 6F645H ---?H &5CG3H
Remittance 6C?3H &F33?H 566??H 5--4H &-3C4H
Comments4
In the a!ove ta!le %e see that the gro%th in foreign exchange sector is negative !oth in the
selective !anks 9 AIBL at *??1 / *??8 +o %e can say that the macroeconomic varia!les
like political turmoil# glo!al economic situations are responsi!le factors for the do%nturn
1&*&. ggregate per!ormance o! the selected 0an$s
Comments4
<ere %e see that a deep do%nturn in the year 544D 9 544C 'his is !ecause of political 9
other macroeconomic varia!les
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1&*&1 Sector (ise comparison 0et(een selected 0an$s / I#%
'he sector %ise comparison reveals that
Al&Arafah Islami Bank is lagging !ehind compared to the other !anks in !oreign
exchange 0usiness& But the !ank has a consistent performance %ith the trend of
industry:s performance
'he remittance !usiness for Al&Arafah Islami Bank is significantly lo%er than the
other local competitors
'his can !e a cause of customer focus ;market segment of the !ank
'he !ank has a huge amount of loan incentives for export 9 import !usiness
compared to other performances in foreign exchange activities
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Comments4
"xport operation of AIBL is significantly lo%er than other counterparts !ut consistent %ith
the ups 9 do%ns
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Comments4
Import operation of AIBL is also significantly lo%er than other counterparts !ut consistent
%ith the ups 9 do%ns
Comments4
Remittance operation of AIBL is significantly lo%er than other counterparts and inconsistent
%ith the ups 9 do%ns 'hey are much %eaker in the remittance !usiness
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=ote4 Comparison !et%een AIBL 9 individual category %ise !anks are given in appendix
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1&*&2 -egression analysis o! I#%s pro!itJ Export and Import
*??. *??1 *??2 *??5
Import 3--? 65G-5 6CC56 5?4F-
Export -G-3 F3-- 36F- 65?6D
3ro!it a!ter Tax and
3rovision
6DD 5G- F?4 -F?
%inear regression model !or Import / 3ro!it4
Model Summary
Model - - SEuare d6usted - SEuare Std& Error o! the Estimate
6
GG60a2 F-? 6DD 655F6GFC
A2 .redictors> 0Constant2# Import
nova ;0<
Model Sum o! SEuares d! Mean SEuare F Sig&
6 Regression
5-55D6G6 6 5-55D6G6 6DD4 --30a2
Residual
533?6DC3 5 6F3CD?3F
'otal
D-63G?D4 -
a2 .redictors> 0Constant2# Import
!2 *ependent 1aria!le> .rofit
Coe!!icients ;a<
$odel ,nstandardi(ed Coefficients
+tandardi(ed
Coefficients t +ig
B +td "rror Beta
6 0Constant2
66?6GG 6GDG63 ?4? DD-
Import
466 443 GG6 65FD --3
a2 *ependent 1aria!le> .rofit
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Interpretation4
By coefficient of correlation 0R2# %e can measure association !et%een export and profit after
tax or import and profit after tax Basically it provides the direction either positive or negative
of the correlation 'he advantage of the coefficient of correlation is that it provides a measure
of the strength of the correlation 9 it gives the true direction of the correlation 0W or &2 !ut
only the s)uare root of the strength of the correlation
As %e kno%# the value ") represents a perfect negative correlation that means %hen one
increases# the other decreases in exactly the same proportion 'he value K) represents %hen
one increases# the other increases in exactly the same proportion 'he value ? represents a
lack of correlation <ere correlation coefficient (R) of import & profit is '.))*
'his clearly indicated the movement direction of the t%o varia!les R of import is ?&22)
%hich is moderately positively correlated says that
If import !usiness increases T$& ) then profit after tax %ill !e increased !y T$& ?&22
R
5
value of 4F-? indicates that a!out F-?H of variations in the AIBL:s profits can !e
explained !y its import operations
Finally the results are significant at --3 H significance level
%inear regression model !or Export / 3ro!it4
Model Summary
$odel R R +)uare
Ad8usted R
+)uare
+td "rror of
the "stimate
6 ?660a2 D4G 5D3 66FGF-C-
a2 .redictors> 0Constant2# "xport
nova ;0<
$odel
+um of
+)uares df $ean +)uare F +ig
6 Regression 5G364--F 6 5G364--F 54F? 5C30a2
Residual
5G5CGF6G 5 6-6F-54C
'otal
D-63G?D4 -
a2 .redictors> 0Constant2# "xport
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Coe!!icients ;a<
$odel
,nstandardi(ed
Coefficients
+tandardi(ed
Coefficients t +ig
B +td "rror Beta
6 0Constant2 6-FD36 6-FD-G 6444 F55
"xport
45- 46G ?66 6F-6 5C3
Interpretation4
R of export is ?&5)) %hich is moderately positively correlated says that
If import !usiness increases T$& ) then profit after tax %ill !e increased !y T$& ?&5)
R
5
value of 4D4G indicates that a!out D4GH of variations in the AIBL:s profits can !e
explained !y its export operations
Finally the results are significant at 5C3 H significance level
%inear regression model !or ExportJ Import / 3ro!it4
Model Summary
$odel R R +)uare
Ad8usted R
+)uare
+td "rror of
the "stimate
6 CDF0a2 ?53 6CC 65446346
a2 .redictors> 0Constant2# Import# "xport
nova ;0<
$odel
+um of
+)uares df $ean +)uare F +ig
6 Regression -C?356CC 5 63-3G43F 6-F? D540a2
Residual
6FF4FDG5 6 6FF4FDG5
'otal
D-63G?D4 -
a2 .redictors> 0Constant2# Import# "xport
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Coe!!icients ;a<
$odel
,nstandardi(ed
Coefficients
+tandardi(ed
Coefficients t +ig
B +td "rror Beta
6 0Constant2 -DF?-5 5C4--G 65GD F5G
"xport
6?D 6G3 DFF- 64F4 FCC
Import
&4C6 434 &F?DD &34C D-6
Interpretation4
R of export is ?&81. %hich is moderately positively correlated says that
If import 9 export !usiness increases T$& ) then profit after tax %ill !e increased !y
T$& ?&81
R
5
value of ?&5*> indicates that a!out 5*&>A of variations in the AIBL:s profits can !e
explained !y its com!ined operations of import 9 export
Finally the results are significant at 1* A significance level
1&*&5 Sta0ility o! Export and Import #usiness o! I#%
*??. *??1 *??2 *??5 SD C9
Import 3--? 65G-5 6CC56 5?4F- ??CC64D FD3H
Export -G-3 F3-- 36F- 65?6D F6-G36? DFFH
3ro!it a!ter Tax
and 3rovision
6DD 5G- F?4 -F?
0Amount in Crore2
Correlation;ImportJ 3ro!it< ?&22)8?*5
Correlation;ExportJ 3ro!it< 4?656GD?
verage;Import< 6G3DC
verage;Export< ?G4?
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Interpretation4
+ta!ility in foreign exchange !usiness is influenced !y several international and domestic
factors Factors that influenced in foreign exchange !usinesses are N exchange rate#
!argaining po%er of exporter and importer# country:s political distur!ance# competitiveness
of !anking sector and other macro economic factors For measuring sta!ility of export and
import !usiness of "QI$ Bank# %e have calculated +tandard deviation 0+*2 and Coefficient
of variation 0C12 %hich is relative measures of standard deviation
<ere %e see#
+tandard deviation in import !usiness of AIBL is 'k ??CC64D millions and
Coefficient of 1ariation is FD3H
On the other hand export !usiness standard deviation is 'k F6-G36? millions
%ith C1 of DFFH
+o %e can say that the export import operation is not sta!le for the !ank at a
satisfactory level
1&, Future 3rospects o! the #an$
Islami !anking system is lagging !ehind in foreign exchange !usiness !ecause of the market
segment they are considering But in spite of present limitations in the field of foreign
exchange Islami !anks like AIBL has significant potential&
Bangladesh is a $uslim dense region .eople of our country have a significant soft
corner in any matter regarding Islam +o the Islamic Banking also got a tremendous
support from the people especially from religious considerations
'here are huge local people especially from the lo%er class families are a!road most
in the middle east as la!orers
$ost of these people are illiterate 9 they can:t operate !anking activities in high end
!anks like Standard CharteredJ *haka Bank# Citi /A @ith this market segment in
hand the Islami Banks like AIBL is gro%ing rapidly
$oreover# they pay a lo%er rate of returns on deposits compared to conventional
!anks
As AIBL is doing !usiness as profit and loss share !asis# its interest is not fixed like
conventional !anking system %here interest is fixed Clients have to pay the interest
on the amount he or she !orro%ed at a fixed rate %hether they earn any profit or not
utili(ing that loan
.eople are !ecoming used to a!out Islamic Banking operation
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1&. 3ro0lems in Foreign Exchange #usiness !or I#%4
Lack of latest or improved technologies and skilled manpo%er for operating foreign
exchange !usiness
Lack of sophisticated soft%are for Islamic !anking solution is a great pro!lem in
modern !anking era
Lack of legal Islamic frame%ork for conducting foreign exchange !usiness In
conventional !anking system foreign currency is considered as goods not as currency
and its value fluctuate continuously %hich is not in accordance %ith Islami
frame%ork
*ue to a!sence of =overnment +hariah !oard# many aspect of Islamic financing
techni)ue remains unsolved such as in case of delay of payment of post import
Banks deal %ith documents not %ith goods But according to Islam# !ank should deal
%ith goods +o# today:s !anking system is contradictory to Islami +hariah
AIBL cannot sho% the interest as income received from /ostro A;C %hich means
Local Bank:s account %ith a Foreign Bank For reserving funds at /ostro A;C#
foreign !anks give - to DH interest for using this currency Because interest is strictly
prohi!ited in Islam# AIBL don:t take it rather it is contri!uted to the Ban !oundation
Back%ard linkage is a pro!lem for foreign exchange !usiness %hich is related to !ack
to !ack L;C Back%ard linkage refers to those small industries that support the large
industry
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1&1 Critics o! Islami #an$ing4
'here are some critics regarding most of these saying that it:s not !ut a flattery <ere %e can
see some critics of Islamic Banking system>
'hough the popularity not%ithstanding# critics of Islamic economics have not !een
sparing It has !een attacked for its alleged Tincoherence# incompleteness#
impracticality# and irrelevanceIK driven !y Tcultural identityT rather than pro!lem
solving

Others have dismissed it as Ta hodgepodge of populist and socialist ideas#T in theory

and Tnothing more than inefficient state control of the economy and some almost
e)ually ineffective redistri!ution policies#T in practice
In a political and regional context %here Islamist and ulema claim to have an opinion
a!out everything# it is striking ho% little they have to say a!out this most central of
human activities# !eyond repetitious pieties a!out ho% their model is neither capitalist
nor socialist
+o far %ithstanding critic of the Islamic financial practice pertains to its product:s
structure Interest&!earing 0Ri!a2 and speculation&involving 0=harar2 trading are
clearly prohi!ited !y explicit canonical texts
.resuma!ly all the financial structures of all the Islamic products should !e interest
and speculation free /evertheless# some ne% empirical studies hypothesi(e that
JIslamic finance products: structure is !ased on the Islamic prohi!itionsI ho%ever#
these products: risk management is still !ased on revoking the underlying
prohi!itionsK
'he most prominent case here is Islamic financial market products such as# inter alia#
+alam and Istisna: these products are used are hedging methods for the Islamic !onds
+ukuk
'here have !een some innovations that try to avoid falling in interest&!ased and;or
speculation !ased transactions .arallel +alam and synthetics are the most recent
In Bangladesh# many allegations have !een dra%n on Islami +haraih !ased !anks:
activities like funds
'here are several foundations like JIslami #an$ FoundationK has severe allegations
of exploiting money in political purposes in the name of "elfare pro#ects or corporate
social responsi$ilit%.
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1&2 Su06ective Ludgments4
'he study of Al&Arafah Islami Bank Ltd:s foreign exchange activities has revealed the
follo%ing a!out the !ank&
'he !ank is performing in the !ottom&line compared to its competitors
'hey haven:t developed any A'$ 9 Online services %hich is the main
reason for customers: dissatisfaction to the !ank
Foreign remittance inflo%s 9 outflo%s are very poor compared to other
selected !anks
'he !ank has a !iasness in <R* %hich un%elcome female %orkforce in the
!ank
'he employees of the !ank lack of skills 9 excellence !ecause of recruiting
system:s insta!ility 9 lack of transparency
'he soft%are that the !ank is using is very unsophisticated 9 hampers operations very
often
'he !ank normally target the lo%er segment of the market 9 those %ho are not used
to sophisticated !anking service !ecause of illiteracy
'he !ank is heavily depended on deposit schemes for doing !usiness
'he I' infrastructure is not satisfactoryI they don:t have a usa!le %e!site
In foreign exchange department it is re)uired to communicate %ith foreign
!anks fre)uently and )uickly 'o make the process easy modem communication
media for example e&mail# Fax and %in fax# Internet etc should !e used more
fre)uently But the !ank doesn't have mass use of this medium of communication
In some cases the num!er of employee engaged in rendering specific services is
insufficient
"mployees are exposed to customer excessively %hich is an o!stacle in systematic
and prompt service
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1&5 3er!ormance in +ther Sectors4
Although the deposit 9 investment sectors are !eyond the scope of our analysis# I further
revie%ed the performances in these sectors !riefly 'he study revealed that
'he !ank is heavily concentrating on various deposit schemes as they have a strategic
advantage over the conventional commercial !anks !ecause of Islami +hariah
#ased #an,in-.
@ith the deposit scheme !usiness the !ank can invest the funds at a higher rate
%hereas they pay a lo%er percentage of return compared to the conventional !anks
'he religious aspects of our local customers are also helpful to the !ank to accumulate
a huge amount of funds as $uslims are religiously avoiding to take interest rather
profit sharing to their vie%
'heir market segment is also an important factor %hich covers the lo%&end customers
%ho are not usual in other conventional !anks
Deposit4
'he total deposit of AIBL is increasing sharply 'he total deposit of !ank %as 'k 5-4436-
million at -6
st
*ecem!er 544? as against 'k 6G??D-- million at -6
st
*ecem!er 544G
recording gro%th of -?6GH of %hich 'k GCDD4 million %as !ank deposit and general
deposit %as 55-5-G- million 'k 'he graph sho%s that the deposit collection rate is
dramatically increasing year to year>
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Investment
'he investment of the Bank stood at 'k 5534G-? $illion as on -6
st
*ecem!er 544? as
against 'k 6?F5-63 $illion in the previous year sho%ing an increase !y -6F?H 'he
gro%th of Investment from 544F to 544? sho%n graphically# graph sho%s that every year the
!ank earns a huge amount of income from Investment account
+perating 3ro!it
'he Bank earned operating profit of 'k ?DG6C million during this year 544? !efore the pre&
tax profit of the !ank during the year 544G %as 'k 3G3?? million and thus the !ank attained
negative gro%th of 5545H in respect of operating profit 'he gro%th of operating profit for
the year 544F to 544? is graphically given !elo% .olitical unrest# economic recession and
many other factors !adly affected they total !anking sector# so that it earn lo%er profit than
the previous year
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1&8 7eneral 0an$ing / investing !unctions
7eneral 0an$ing operations
'he starting point of all the !anking operations is =eneral Banking It is an important
department for all !anks !ecause it provides services to the customers day&to&day Front *esk
is the important for general !anking Customers give their deposits and meet their demand for
cash !y honoring Che)ues 'he customer opens ne% accounts# remit funds# issues !ank drafts
and pay orders etc 'here are various sections in this department# %hich are as follo%s> &
62 Cash +ection
52 Accounts Opening +ection
-2 Che)ue Clearing +ection
F2 Remittance +ection
A detailed operation of general !anking division is given in the appendix
5
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1&> 3er!ormances o! I#% ;=ayapalton ;9I3< -oad #ranch<
;Three Bears DepositJ InvestmentJ ExportJ Import / 3ro!it<
T,. In /rore
Bear :ead o! ccounts
Deposit Target Deposit chieved chieved in 3ercentage
544? 6D4 645FC GC-5H
544G 644 G?F G?F4H
544D G4 G4C3 646D4H
Investment Target Investment chieved chieved in 3ercentage
544? D4 5666 F555H
544G F4 6??3 FF55H
544D 6G 6??4 664GDH
Export Target Export chieved chieved in 3ercentage
544? 54 53 6FCD-H
544G & & &
544D & & &
Import Target Import chieved chieved in 3ercentage
544? 54 544G 644-6H
544G -4 65D F6?H
544D 6D 6F63 3FGFH
3ro!it Target 3ro!it Earned Earned in 3ercentage
544? 64 663 663GH
544G -D -G 64-6FH
544D 5 5445 64464H

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Chapter +ix
.erformance of AIBL
2&) Financial :ighlights o! I#%
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#alance Sheet ;*??2"*??5<
3roperty / ssets *??5 *??2
Cash
In hand 0including foreign currency2 ,8)J522J.,1 *,*J?88J28*
Balance %ith central !ank 9 other !anks 6#G-?#FF-#5FF 6#D5-#-G-#3DG
*J?)>J*?>J25> )J511J.1*J2,8
#alance (ith other 0an$s and !inancial
institution
In Bangladesh 5#F-?#CF6#6F3 6#446#C53#CG?
Outside Bangladesh 5FD#6F5#FCD 5F#G6G#343
*J28*J>8,J2,. )J?*2J..2J552
Money at call / short notice &&&&&& &&&&&&
Investment in share and +ecurities 828J18,J,82 *J???J???
=ovt C44#444#444 &&&&&&
Others GC#DC-#-CG 5#444#444
Investments
=eneral Investment etc 56#66G#-3F#3GG 6D#D?6#?GG#-D4
Bills .urchased 9 *iscount 6#?C3#3?5#3GF 6#CD6#F5-#F66
**J>?2J,25J>,? )5J.*,J)8>J52)
3remises / !ixed assets --F#F?G#FG4 56D#64D#GD6
Others assets 6#-?4#?45#-6? D445F-D--
/on Banking Asset &&&&&& &&&&&&
Total assets ,?J)8*J,*,J.?2 *)J,28J)28J).*
%ia0ilities / Capital *??5 *??2
%ia0ilities4
#orro(ing !rom other 0an$s !inancial
Institutions / agents
)J,*?J???J??? &&&&&&
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Deposits / other ccounts
Al&@adia Current Account -#43?#34G#3D- 5#FF-#63C#FCG
$udara!a +aving deposit -#3-5#55?#6?4 -#-3-#CC3#545
$udara!a +hort notice deposits ?G6#?GG#?C6 FC3#FD-#6-F
$udara!a 'erm deposit 66#5--#D36#65? ?#C?F#35?#C55
$udara!a +pecial deposits -#G53#D-3#5G- 5#-??#5-D#533
Bills .aya!le -DF#43G#33- 63G#GF3#-4D
*,J??>J)*8J*85 )2J551J,,1J*.8
Others Lia!ilities -#C6D#G3G#GF3 5#345#GFC#D36
'otal Lia!ilities *8J)..J8*.J>,2 )>J255J>8,J8,>
Capital shareholders eEuity>
.aid up capital 6#6D-#6?D#F44 CDF#54F#444
Asset Revaluation Reserve GF#G4-#5FC GF#G4-#5FC
+tatutory reserves DCG#CCG#D3? F?4#-6?#CGD
"xchange ")uali(ation 5#4D?#63C 5#4D?#63C
Retain "arning 5-4#??G#45? 533#446#335
Total share holder eEuity *J?,5J.>8J.5? )J2>?J).8J,?,
Total lia0ilities / shareholder eEuity ,?J)8*J,*,J.?2 *)J,28J)28J).*
3ro!it / %oss ccount !or the Bear Ended o! *??2"*??5
Income *??5 *??2
Investment income 5#5F-#6F?#CD? 6#?46#-3?#6F4
Less> profit paid on deposits 06#G5C#G5C#C??2 0C63#?6F#FFC2
=et Interest Income 2).J1)8J>8? 88)J28*J2>*
Commission# exchange 9 !rokerage DGG#F?4#3C? -DF#--4#-6F
Income from Investment in +hare ;+ecurities 5#G46#G6D &&&&&
Other operating Income 6F-#-CC#3CD 66G#?DF#3D6
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5)*J.2)J185 .5)J?81J*21
Total operating Income )J,*2J>8?J125 )J,1*J525J>15
+alaries 9 allo%ances F44#F63#4D5 5D-#4GF#FDD
*irectors and +haria Council fees and expenses D#-G-#G65 -#C?3#C4F
Rent# taxes# insurance# lighting 9 traveling GG#-C3#FG4 F4#-D5#64D
Legal expenses D#654#35D 5#?66#G33
.ostage# stamp# telegram 9 telephone 6D#34F#-F6 6-#D3?#564
Auditors: fee 544444 644#444
*epreciation and Repairs 63#G??#4GD 6D#C4G#G5C
+alary 9 Allo%ance to the $anaging *irector F#-44#444 5#G44#444
+tationery# printing 9 advertisement 6-#65?#4DF 3#DD3#C?D
Other expense F4#53C#?GD F6#-5G#F3D
Total +perating Expenses 15?J8??J*5, ,8*J>>8J*5)
3ro!it 0e!ore Tax and provision 512J)8?J*>. >2>J52>J282
.rovision against Investment and Contingent
Lia!ilities
6?-#--G#G-G 66F#-44#444
Other .rovision &&&&& &&&&&
Total provision )5,J,,2J2,2 )).J,??J???
.rofit;Loss !efore tax 18*J8.,J218 811J.2>J282
Current tax -DF#FCF#5FF -CF#45-#354
*eferred 'ax 066C#3DF#?D52 6#F5?#-G4
3rovision !or Taxation *,1J1*>J.>* ,81J.1)J*8?
=et 3ro!it@%oss a!ter tax ,.5J,).J)22 .5?J?)8J.?5
Retained .rofit !rought for%ard -4#D3- ??#D5-
,.5J,..J51> .5?J?>1J>,?
Appropriation

+tatutory Reserve 66G#DGC#?-5 6?6#43-#3-?
))2J128J5,* )5)J?>,J>,5
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-etained Earnings *,?J552J?*5 *>>J??)>>*
Earning per +rdinary Share ,?&)* 11&?*
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2&* 7ro(th o! I#%
+verall 3er!ormance o! I#%4
3articulars *??8 *??5 *??2 *??1 *??.
Authori(ed Capital 6#G444 6#4444 6#444#4 5444 5444
.aid up Capital ?3CG -33- 633? 33C 33C
/et .rofit After tax 6#6-C F43D 5FCC 6F5G 644G
+hareholders: e)uity -#GCCC 5#FD-D 54CDF 6#CGD4 6#?F5F
*eposits D4#C6? F-#DCGF -3#-G45 -G#C363 -F#G6D5
Investments 66#6CC- 6F#FDDC 3#DGFD 64#4G56 65#?3F4
Fixed Assets 6#4GD? 6#46F4 3F56 ??G5 ?C5C
'otal Assets DC#FFF- D5#CG4- FD#56?4 F5#4G55 -3#?443
'otal Off Balance +heet
"xposure
C#C4G3 C#C-4D ?#F5CD C#D-CC ?#CC-G
"arnings .er +hare 0".+2 6F5DG 645DG 65FD3 6F5C- 644?-
$arket 1alue .er +hare -#-3-?D F#CDF?D 5#-655D 5#C6644 5#-?-?D
.rice "arnings Ratio 5-C6 F?-F 6CDG 63GC 5-D?
Book 1alue .er +hare F-?CC D?-?- 3D?GG 6#G3FDF 6#D?6?6
Return On Asset 0ROA2 63DH 4??H 4DDH 4-FH 45DH
Return On ")uity 0RO"2 -4CGH 6GG3H 663-H ?GDH D?CH
Return On Investment 0ROI2 ?FCH G-?H DC-H & &
Ta0le *&. +verall per!ormance o! G#% !or last !ive years
2%i&ure in mi++ion :#ere
a11+i(ab+e4
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2&*&) Share In!ormation4
Earnings per share ;*??8< M/o of ordinary shares outstanding ; /et profit after tax
0F43#D-D#DD? ; -#33-#53G2 M 6F5DG 'aka
Figure *&1 Earning 3er Share ;E3S<
"arnings per share has !een calculated in accordance %ith BA+&--> J"arning per +hare
0".+2K
Mar$et 9alue per share ;*??8< M -#-3-?D 'aka
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Figure*&2 Mar$et 9alue per Share
#oo$ 9alue per Share ;*??8< M F-?CC 'aka
Figure*&5 #oo$ 9alue per Share
3rice Earnings -atio ;*??8< M 0.rice of +tock ; ".+2 M 0FCDF?D;645DG2
M 5-C6
Figure*&8 3rice Earnings -atio
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2&*&* +perating 3er!ormance -atio4
-+ ;*??8< M 0/et .rofit; 'otal Asset2 M 0F43#D-D#DD?;D5#CG4#--5#?-42 M 63DH

Figure*&> -eturn on sset
-eturn on EEuity ;*??8< M 0/et profit; 'otal +hare <olders ")uity2
M 0F43#D-D#DD?;5#FD-#DD?#6DG2 M -4CGH

Figure*&)? -eturn on EEuity ;-+E<
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-eturn on Investment ;*??8< M 0Income from Investment;'otal Investment2
M 0354# C--63F- ; 6F# FDD# ?C46-F2 M ?FCH

Figure*&)) -eturn on Investment
2&*&, In!ormation -egarding Income Statement
=et 3ro!it a!ter tax 4
Figure*&)* =et 3ro!it
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2&*&. #alance Sheet In!ormation4
Share :olders EEuity4

Figure *&), Share holders eEuity
Total ssets4
Figure*&). Total sset
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Deposits4
Figure *&)1 Deposits
Investments4
Figure*&)2 Investments
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2&, 3er!ormance o! I#% ;=ayapalton ;9I3< -oad #ranch<
;Three Bears DepositJ InvestmentJ ExportJ Import / 3ro!it<
T$& In Crore
Bear :ead o! ccount
Deposit Target Deposit chieved chieved in 3ercentage
544? 6D4 645FC GC-5H
544G 644 G?F G?F4H
544D G4 G4C3 646D4H
Investment Target Investment chieved chieved in 3ercentage
544? D4 5666 F555H
544G F4 6??3 FF55H
544D 6G 6??4 664GDH
Export Target Export chieved chieved in 3ercentage
544? 54 53 6FCD-H
544G & & &
544D & & &
Import Target Import chieved chieved in 3ercentage
544? 54 544G 644-6H
544G -4 65D F6?H
544D 6D 6F63 3FGFH
3ro!it Target 3ro!it Earned Earned in 3ercentage
544? 64 663 663GH
544G -D -G 64-6FH
544D 5 5445 64464H

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2&. nalysis o! Data4
From the a!ove it is seen /ayapalton 01I.2 Road !ranch of AIBL is running %ell to the goals
of the AIBL 'hough it has sho%n some cyclical variation in various years !ut its deposit
collection# investment# export 9 import activities and a!ove all the ultimate target is sho%ing
that /ayapalton 01I.2 Road !ranch of AIBL perform its management expectation
satisfactorily
2&.&) Deposit4
'he Bank:s deposit collection rate is )uite %ell such as in 544D and 544? It collected 'k
645FC# G?F and G4C3 cores respectively although management targeted 'k6D4# 644 and G4
cores respectively But it could not achieve its target in 544G and 544? !ecause "conomic
recession# political and for many other reasons But in 544D it achieve 646D4H of its target
'he collection of deposit is gradually increasing 'hat is sho%n !y the graphically
representation
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2&.&* Investment4
'he Branch made more investment than its target in 544DIn 544D its investment target %as
6G Crore %hereas its achievement %as 6??4 In 544G its target %as F4 Crore# !ut
achievement %as 6??3 In 544? it has achieved F555H of its total target 'he investment is
gradually increasing 'hat is sho%n !y the graphically representation
2&.&, Export4
AIBL /ayapalton 01I.2 Road !ranch is less export oriented in 544? it has an export target of
54 lac only %hereas it has achieved 53 lac export %hich is 6FCD-H of target
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2&.&.Import4
In 544D the AIBL /ayapalton 01I.2 Road Brach has achieved 3FGC Hof its import target Its
target %as 6D crore %here its achievement %as 6F63 crore In 544G and 544? Its import
target %as -4 and 54 crore respectively %here its achievement %as 65D6 and 544G crore
respectively Achievement percentage in 544G and 544? %as F6?H and 644-6H
respectively
2&.&1 3ro!it4
'he profit earning capacity of the !ranch is not good 'his !ranch is failed to fulfill the
targeted profit in 544? Its target %as 64 crore %here it achieved only 663 crore# %hich is
663GH of its target 'he !ranch achieved 64464H and 64-6FH of its target 544D 9 544G
respectively <igh operating expense is the %orst condition of profit 'he graph sho%s ho%
year to year the !ranch earned its profit
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2&1 SW+T nalysis4
/ot surprisingly# in the competitive arena of marketing era +@O' analysis is a must !ased on
.roduct# .rice# .lace and .romotion of a financial institute like private !ank From the
+@O' analysis %e can figure out ongoing scenario of the !ank +o to have a !etter vie% of
the present !anking practices of Al&Arafah Islami Bank Ltd
SW+T nalysis
In +@O' analysis t%o factors act as prime movers
Internal factors %hich are prevailing inside the concern %hich include +trength and
%eakness
On the other hand another factor is external factors %hich act as opportunity and
threat
2&1&) Strength4
,sage of faster .C Bank soft%are
$em!ership %ith +@IF'
=ood !anker&customer relationship
Online !anking system
Islami +hariah !ased Banking system
"nergetic as %ell as smart %ork force
Competitive .rofit provider comparing %ith other Islamic Bank
+trong Financial .osition
"fficient administration
Internal
Factors
Internal
Factors
External
Factors
External
Factors
%trength
%trength
Leakness
Leakness O$$ort!nit'
O$$ort!nit' 9hreats
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2&1&* Wea$ness4
Reluctance to ad campaign
"xisting manual vouchers
Lack of consumer credit scheme
$anpo%er is not sufficient
$arketing policy is not %ell setup
Limited num!er of !ranches in its net%ork
Officers have limited experience and not enough trained
$any inexpert and laggard assistant officers
'he !ank has no A'$ service
Insufficient num!er of deposit +cheme and loan
2&1&, +pportunity4
<uge !usiness area
Introducing consumer credit scheme
=ro%th of sales volume
Introducing !ranch !anking through online
*evelop relations and correspondence %ith foreign !anks
$ore concentrated Banking !ased on Islamic +hariah
Fe% Competitors practicing Islamic Banking
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2&1&. Threats4
Competitors have more attractive deposit schemes
Bangladesh Bank has no %ell esta!lished Islami Banking Rules
*ifferent classic services of other !anks
"ntrance of ne% private commercial !anks
Boung# energetic# dynamic# talent and smart %ork force of competitors
=ovt imposes high rate of taxes and 1A'
.olitical unrest and "conomic recession
Illegal !usiness operation !y the some clients
2&2 Findings and nalysis4
P AIBL profit earning capacity is not satisfactory
P Its marketing strategy is not %ell designed
P "xisting <uman Resources are not sufficient for AIBL 'hey have to recruit more
skilled employees
P /um!er of Branches are not satisfactory# AIBL have to give more emphasi(e on
increasing num!er of Branches
P Recruitment and selection process is a time consuming and lengthy process and
irregular
P 'he %hole activities of AIBL is not computeri(ed# still there exist manual record
keeping system
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P +ometimes Islami +hariah is not properly follo%ed
P 7o! security is lo%er in AIBL
P Insufficient training program for the employees
P +lo%er in moderni(ation comparing %ith its competitors
P 'he %orking environment in any !ranch is not congenial 9 appropriate 'he %orking
desk provides sound pollution It looks like a hall room
P 'he modern technology is not used in the recruitment and selection process 'he
!ackdated methods are using for selection till today
P +alary structure of AIBL is satisfactory comparing %ith other Islamic Banks# the
pension policy and the payment of pension to the employees are very fair and
transparent
P 'he transfer and promotion process is fair !ut the promotion is not faster
P Loan facilities are very attractive to the employees of AIBL
P $ost of the policies are !ackdated Only the authority amends the policy !ut preserve
the old policy
P 'here is no policy to !uild up harmonious relationship among the employees 'he
employees cannot protest the in8ustice of the authority !ecause the pure trade union is
a!sent there
P 'he record keeping system is also !ackdated# not follo%ed computeri(ed system
properly
P +ecurity system of many !ranches is not sufficient
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Chapter +even
Recommendation 9 Conclusion
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5&) 3roposals
'he overall analysis revealed that Al&Arafah Islami Bank Ltd is not so much sophisticated in
!orei&n E'c(an&e Business. 'o overcome the pro!lems in the foreign exchange activities I
%ould like to offer fe% proposals &
Concentrate on the high&end customers %ith a ne% advertising 9 marketing effort
Increase the skilled employees !y revising the recruitment process
"liminate the !ias against female %orkforce
"sta!lish corporate !ehavior 9 maintain chain of protocol in every section of the
!anks activities
"sta!lish a sophisticated I'&division !y revising current pro!lems
"sta!lish A'$ net%ork immediately !ecause %ithout A'$ net%ork the !ank can:t
retain customers in near future
One of the !usiness strategies is promotion +uccessful !usiness depends ho%
they can promote their products or services to the customer In this
connection to improve the !usiness status !ank should introduce more
promotional programs
Female %orkforce could !e e)ually treated to gro% up a descent corporate culture
Foreign exchange department should !e fully computeri(ed that the exchange
process %ould !e convenient for !oth the !ankers and the clients
*elegation of authority should !e made enough to make the speed of providing
service fast
'he !ank should consider the customer complaint For providing that service# !ank
can launch Customer )er*ice Department %hich is a!sent in the !ank
'he Bank should reexamine the salary structure of the employees %hich may attract
fresher and help to improve the productivity of existing employees
'he !ank has to increase the num!er of Authori(ation *ealership 0A*2 license in
order to give more services to the clients
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5&* -ecommendations4
P AIBL should concentrate in increasing its profit earning capacity
P It should develop effective marketing strategy to attract ne% customers
P Raising the capital# statutory reserve and increase the investment
P 'he num!er of !ranches should !e increased
P "xpand and diversify customer !ase
P ,pgrade Online Banking
P Recruit more skilled employees regularly
P Bank should introduce independent X$arketing *epartment:
P P .ersonal relationship should !e !uild %ith the customers .ersonal relationship should !e !uild %ith the customers
P P Customers are the heart of the organi(ation 'hey should provide more space in the Customers are the heart of the organi(ation 'hey should provide more space in the
office and if possi!le they should have some entertainment facility office and if possi!le they should have some entertainment facility
P P 'he employee of the !ranch should !e trained continuously 'he employee of the !ranch should !e trained continuously
P Fe% !ranches are not under online !anking system# so all the !ranches should confirm
on line !anking system
P $ore meetings# seminars# symposiums and get&together should !e organi(ed !y the
Branches to develop the a%areness among the clients of the Bank a!out Islamic
Banking and its advantages
P "nsure sta!le dividend
P "nsure high level customer service
P 'he Bank should follo% Islami +haria strictly in every of its operation
P Bank should introduce A'$ system
P +hould introduce one&stop service centre
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P Bank should keep their annual report# !rochure# !ulletin etc availa!le to provide their
customer
P Bank should introduce consumer credit scheme
P Bank should increase their office space and take more care in interior decoration
P Bank should introduce independent X$arketing *epartment:
P +ome ne% investment schemes are to !e introduced for socio&economic development
and %elfare of the distressed humanity
P Finally the Bank should has the vision to automate its all operations and
functionalities and should !e committed to achieve the goal to !e a lead Bank in the
country !oth in service and in technical aspect and to fulfill the re)uirements of mass
people
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5&, Conclusion4
'he financial sector of our country is largely depended on !anking sector Over the decade
the !anking !usiness has !een rising to the top of all In this competitive !anking !usiness
environment# only excellent services are expected to sustain in the industry
Although the gro%th of the !ank %as satisfactory over previous years# the gro%th in foreign
exchange !usiness is not satisfactory "specially in remittance !usiness# the !ank is lagging
!ehind %ith other !anks 'he target customers of the !anks are lo%&end segment of the
market 9 the I' sector of the !ank is very poor
'o retain customers 9 attract ne% customers# the !ank has to esta!lish A'$ net%ork
immediately !ecause people no% %ant to !ank even at midnight
'he study of the foreign exchange activities of Al&Arafah Islami Bank Ltd has facilitated me
%ith experiencing a vast practical kno%ledge of !anking operation 9 corporate %ork
environment
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#i0liography / ppendix
#i0liography
I Annual report 6333&544?
II Bangladesh economic revie%# vol&544?
III Bangladesh economic revie%# vol&544G
I1 Bangladesh economic revie%# vol&544D
1 Bangladesh economic revie%# vol&544F
1I Bangladesh economic revie%# vol&544-
1II Banking sector overvie%# 544-&544?I pu!lished !y Bangladesh Bank
1III *haka +tock "xchange 0*+"2 li!rary
IQ $anuals 9 circulars of Al&Arafah Islami Bank
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ppendix
)& #an$ing sector (ise comparison4

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Exponential curve !it !or export / pro!it
2 00 .00 3 00 .00 4 00 .00 5 00 .00
0.0 0 3 00 0.0 0 60 00. 00 9 00 0.0 0 12 000 .0 0 15 000 .0 0 Ex p or t
Ob se rve d Ex po nen tia l Pr o fit
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Exponential curve !it !or import / pro!it
2 00 .00 3 00 .00 4 00 .00 5 00 .00
10 00 0.0 0 1 50 00 .00 20 00 0.0 0 25 00 0.0 0 Impo rt
Obse rv ed Ex po ne nti al Pr of it
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*& 7eneral 0an$ing terms4
7eneral 0an$ing operations4
'he starting point of all the !anking operations is =eneral Banking It is an important
department for all !anks !ecause it provides services to the customers day&to&day Front *esk
is the important for general !anking Customers give their deposits and meet their demand for
cash !y honoring Che)ues 'he customer opens ne% accounts# remit funds# issues !ank drafts
and pay orders etc 'here are various sections in this department# %hich are as follo%s> &
D2 Cash +ection
G2 Accounts Opening +ection
?2 Che)ue Clearing +ection
C2 Remittance +ection
)< Cash Section4
'he most vital and important section of the !ranch is Cash *epartment It deals %ith all kinds
of cash transactions 'his department starts the day %ith cash in vault "ach day some cash
that is opening cash !alance are transferred to the cash officers from the cash vault Opening
cash !alance is added !y cash receipts and payments 'he figure is called closing !alance
'his !alance is then added to the vault 'his is the final cash !alance figure for the !ank at the
end of any particular day
#++DS MI=TI=ED #B T:IS SECTI+=
1ault Register > It keeps account of cash !alance in vault in the !ank
Cash Receipt Register > Cash receipt in %hole of the day is recorded here
Cash .ayment Register > Cash payments are made in a day are entered here
Rough 1ault Register > Cash calculation for final entry in vault register is done
here as any error and correction here is not accepta!le #
Cash Balance Book > Balance here is compared %ith vault register If no
difference is found# indicates no error
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%ocal -emittance4
@hen money is sending from one place to another place for the customer is another
important service of !anks In addition# this service is an important part of country:s payment
system For this service# people# especially !usinesspersons can transfer funds from one place
to another place very )uickly 'here are five kinds of techni)ues for remitting money from
one place to another place 'hese are>
62 *emand *raft
52 'elegraphic 'ransfer
-2 'elephone 'ransfer
F2 .ay Order
+ele&rap(ic and +elep(one +ransfer (++) are almost the same# !oth are them are kno%n as
'' in short
3ay +rder4
.ay order gives the payee the right to claim payment from the issuing !ank It is payment
from issuing !ranch only @ithin the clearinghouse area of issuing !ranch# .ayment is made
through clearing
Demand Dra!t4
'his is an instrument through %hich customer:s money is remitted to another person;
firm;organi(ation in outstation 0Outside the clearing house area2 from a !ranch of one !ank to
an outstation !ranch of the same !ank or to a !ranch of another !ank 0%ith prior arrangement
!et%een that !ank %ith the issuing !ranch2
TT4
'his is a mode of transfer ; remittance of customer:s money from a !ranch of one !ank to
another !ranch of the sane !ank or to a !ranch of another !ank 0%ith prior arrangement
!et%een those !anks %ith the '' issuing !ranch2 through telephonic message 'he issuing
!ranch used to send the message of such remittance ;transfer to the dra%er;payee !ranch
through telephone adding certain code num!er or test num!er on the !asis of text key
apparatus developed !y the concerned !ank for its different !ranches
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9arious Types +! deposit account
AIBL Bank offers follo%ing types of deposit account>
I $udara!a Current *eposit Account 0C*2
II $udara!a +avings *eposit Account 0$+*2
III $udara!a 'erm *eposit Receipt Account 0$'*R2
I1 +hort /otice *eposit Account 0+/*2
1 Installment 'erm *eposit 0I'*2
1I $udara!a <a(( Account
1II $udara!a .ension +cheme
1III $udara!a Lakhpoti +cheme
IQ $udara!a milliner +cheme
Q $udara!a Eotipoti +cheme
QI $udara! *ou!le *eposit +cheme
$udara!a Eotipoti +cheme> 'his is the most popular 9 target oriented schemes One can
open for -#F#D#G#?#64#65#6D#6C#54 years and have to pay 0$onthly installment2 5#-3#D44;&
6#G3#D44;& 6#5?#D44;& 33#D44;& C4#444;& FG#444;& --#FD4;& 56#FCD;& 6F#--4;& 66#644;&
respectively and %ill get 6corror
$udara!a milliner +cheme> For $udara!a milliner +cheme -#F#D#G#?#64#65#6D#54 year:s
monthly installments are 5-#3D4;& 6G#3D4;& 65#?D4;& 3#3D4;& C#444;& F#G44;& -#-FD;& 5#6?4;&
6#6D4;& respectively and %ill get 64million
$udara!a Lakhpoti +cheme> For $udara!a Lakhpoti +cheme -#D#C#64#65 year:s monthly
installments are 5#-?D;& 6#5?D;& G?4;& FG4;& --D;&;& respectively and %ill get 6lak
Conditions of the +cheme
62 By filling up a form an account is opened
52 A non&transfera!le deposit receipt %ill provide to the customer after opening the account
-2 If the deposit is %ithdra%n !efore a D&year term# then saving interest rate %ill !e applica!le
and paid to the depositor <o%ever# no in profit paid if the deposit is %ithdra%n %ithin 6 year
of opening the account and $onthly Income paid to the customer %ill !e ad8usted from the
principal amount
F2 'his scheme %ill !e credited to the loan account until li)uidation of the loan amount
inclusive of profit A depositor can avail loan up to C4H of the deposit amount under this
scheme
1< Mudara0a Dou0le Deposit4 +avings %orks as the very foundation of development
+avings is the prime source of !usiness investment in a country +o it helps to !uild up
capital 'o create more a%areness and motivate people to save#
Al&Arafah Islami Bank offers $udara!a *ou!le *eposit <ere people put their money for
dou!le return after Gyears
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Conditions +! The Scheme4
'he deposit can !e made in multiplies of 'E 6444444
'his is G years period deposit 'he deposit cannot !e %ithdra%n at any time %ith in
the maturity date
Al&Arafah monthly deposited <a(( account>
.ension scheme
Clearing Department4
Che)ues clearing section of Al&Arafah Islami Bank Ltd receives che)ue# demand drafts and
pay orders of their clients ,pon the receipt of the instrument the che)ue clearing section
examines>
@hether the paying !ank %ithin *haka city
@hether the paying !ank outside *haka city
@hether the paying !ank of their o%n !ranch
The 3aying #an$ (ithin Dha$a City4
'he che)ues clearing section of Al&Arafah Islami Bank Ltd# /ayapalton 01I.2 Road Branch
sends Inter Branch *e!it Advice 0IB*A2 to the head office on the receiving day of the
instruments 'he main !ranch takes those instruments to the clearinghouse on the follo%ing
day If the instruments are dishonored# <ead Office of Al&Arafah Islami Bank Ltd sends
IB*A to the Al&Arafah Islami Bank Ltd# /ayapalton 01I.2 Road !ranch
The 3aying #an$ o! Their +(n #ranch4
'he che)ue clearing section of Al&Arafah Islami Bank Ltd# /ayapalton 01I.2 Road !ranch
sends out%ard !ills for collection 0OBC2 to the concerned paying !ranch to get Inter Branch
Credit Advice 0IBCA2 from the paying !ranch If the paying !ranch dishonors the instrument#
the paying !ranch returns it to the Al&Arafah Islami Bank Ltd# /ayapalton 01I.2 Road
!ranch descri!ing %hy the instrument is dishonored
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Financial :ighlights o! I#%
#alance Sheet ;*??2"*??5<
3roperty / ssets *??5 *??2
Cash
In hand 0including foreign currency2 ,8)J522J.,1 *,*J?88J28*
Balance %ith central !ank 9 other !anks 6#G-?#FF-#5FF 6#D5-#-G-#3DG
*J?)>J*?>J25> )J511J.1*J2,8
#alance (ith other 0an$s and !inancial
institution
In Bangladesh 5#F-?#CF6#6F3 6#446#C53#CG?
Outside Bangladesh 5FD#6F5#FCD 5F#G6G#343
*J28*J>8,J2,. )J?*2J..2J552
Money at call / short notice &&&&&& &&&&&&
Investment in share and +ecurities 828J18,J,82 *J???J???
=ovt C44#444#444 &&&&&&
Others GC#DC-#-CG 5#444#444
Investments
=eneral Investment etc 56#66G#-3F#3GG 6D#D?6#?GG#-D4
Bills .urchased 9 *iscount 6#?C3#3?5#3GF 6#CD6#F5-#F66
**J>?2J,25J>,? )5J.*,J)8>J52)
3remises / !ixed assets --F#F?G#FG4 56D#64D#GD6
Others assets 6#-?4#?45#-6? D445F-D--
/on Banking Asset &&&&&& &&&&&&
Total assets ,?J)8*J,*,J.?2 *)J,28J)28J).*
%ia0ilities / Capital *??5 *??2
%ia0ilities4
#orro(ing !rom other 0an$s !inancial )J,*?J???J??? &&&&&&
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Institutions / agents
Deposits / other ccounts
Al&@adia Current Account -#43?#34G#3D- 5#FF-#63C#FCG
$udara!a +aving deposit -#3-5#55?#6?4 -#-3-#CC3#545
$udara!a +hort notice deposits ?G6#?GG#?C6 FC3#FD-#6-F
$udara!a 'erm deposit 66#5--#D36#65? ?#C?F#35?#C55
$udara!a +pecial deposits -#G53#D-3#5G- 5#-??#5-D#533
Bills .aya!le -DF#43G#33- 63G#GF3#-4D
*,J??>J)*8J*85 )2J551J,,1J*.8
Others Lia!ilities -#C6D#G3G#GF3 5#345#GFC#D36
'otal Lia!ilities *8J)..J8*.J>,2 )>J255J>8,J8,>
Capital shareholders eEuity >
.aid up capital 6#6D-#6?D#F44 CDF#54F#444
Asset Revaluation Reserve GF#G4-#5FC GF#G4-#5FC
+tatutory reserves DCG#CCG#D3? F?4#-6?#CGD
"xchange ")uali(ation 5#4D?#63C 5#4D?#63C
Retain "arning 5-4#??G#45? 533#446#335
Total share holder eEuity *J?,5J.>8J.5? )J2>?J).8J,?,
Total lia0ilities / shareholder eEuity ,?J)8*J,*,J.?2 *)J,28J)28J).*
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3ro!it / %oss ccount !or the Bear Ended ;*??2"*??5<
Income *??5 *??2
Investment income 5#5F-#6F?#CD? 6#?46#-3?#6F4
Less> profit paid on deposits 06#G5C#G5C#C??2 0C63#?6F#FFC2
=et Interest Income 2).J1)8J>8? 88)J28*J2>*
Commission# exchange 9 !rokerage DGG#F?4#3C? -DF#--4#-6F
Income from Investment in +hare
;+ecurities
5#G46#G6D &&&&&
Other operating Income 6F-#-CC#3CD 66G#?DF#3D6
5)*J.2)J185 .5)J?81J*21
Total operating Income )J,*2J>8?J125 )J,1*J525J>15
+alaries 9 allo%ances F44#F63#4D5 5D-#4GF#FDD
*irectors and +haria Council fees and
expenses
D#-G-#G65 -#C?3#C4F
Rent# taxes# insurance# lighting 9
traveling
GG#-C3#FG4 F4#-D5#64D
Legal expenses D#654#35D 5#?66#G33
.ostage# stamp# telegram 9 telephone 6D#34F#-F6 6-#D3?#564
Auditors: fee 544444 644#444
*epreciation and Repairs 63#G??#4GD 6D#C4G#G5C
+alary 9 Allo%ance to the $anaging
*irector
F#-44#444 5#G44#444
+tationery# printing 9 advertisement 6-#65?#4DF 3#DD3#C?D
Other expense F4#53C#?GD F6#-5G#F3D
Total +perating Expenses 15?J8??J*5, ,8*J>>8J*5)
3ro!it 0e!ore Tax and provision 512J)8?J*>. >2>J52>J282
.rovision against Investment and
Contingent Lia!ilities
6?-#--G#G-G 66F#-44#444
Other .rovision &&&&& &&&&&
Total provision )5,J,,2J2,2 )).J,??J???
.rofit;Loss !efore tax 18*J8.,J218 811J.2>J282
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Current tax -DF#FCF#5FF -CF#45-#354
*eferred 'ax 066C#3DF#?D52 6#F5?#-G4
3rovision !or Taxation *,1J1*>J.>* ,81J.1)J*8?
=et 3ro!it@%oss a!ter tax ,.5J,).J)22 .5?J?)8J.?5
Retained .rofit !rought for%ard -4#D3- ??#D5-
,.5J,..J51> .5?J?>1J>,?
Appropriation

+tatutory Reserve 66G#DGC#?-5 6?6#43-#3-?
))2J128J5,* )5)J?>,J>,5
-etained Earnings *,?J552J?*5 *>>J??)>>*
Earning per +rdinary Share ,?&)* 11&?*

Foreign Exchange Activities of Al-Arafa Islami Bank Ltd.

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Foreign Exchange Activities of Al-Arafa Islami Bank Ltd.

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Others have dismissed it as Ta hodgepodge of populist and socialist ideas#T in theory

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