Different Investment Modes of Islami Bank Bangladesh Limited

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Page 1
This report is prepared by collecting various data & information. From primary &
secondary sources. During one month I have prepared this report. For preparing this
report, I took help from the annual report !"1" of I##$ and %%%.islamibankbd.com. I
also made a &uestionnaire for collecting information on investment system of I##$.I also
visited at 'in(ira brance of I##$.
In this particular report, the author is the intern of the previously mentioned program and
the concerned organi(ation is Islamic #ank #angladesh $imited )I##$*, %hich is a
prominent private and the first #ank of #angladesh that based on Islamic +hariah.
.
In %ay of delegation, responsibility of carrying out the study has conferred upon the
concerned intern.
1.2 Background of the Report:
Practical orientation in different organi(ations is the final term re&uirement of ##,
program. I selected for the Islamic #ank #angladesh $imited )I##$*. ,s prepared my
master paper on -eneral #anking, Investment & Foreign ./change department. #ut
specially I emphasi(ed on investment.
1.3 Objectie of the Report:
The first ob0ective of %riting the report is fulfilling the partial re&uirements of the ##,
program. In this report, %e have attempted to give on overvie% of Islami #ank
#angladesh $imited in general. .specially I have emphasis on the different modes of
investment of I##$.
1.! "cope of "tud#:
The scope of the organi(ational part covers the organi(ational structure, background, and
ob0ectives, functional, departmentation and #usiness performance of I##$ as a %hole
and the part covers operational scenario of I##$.
Page !
1.$ %ethodo&og#:
The study is performed based on the information e/tracted from different sources
collected by using a specific methodology. This report is analytical in nature. The
methodology is mentioned bello%1
Popu&ation: ,ll the #ranches of I##$ located in every%here in #angladesh has been
taken into consideration as population.
"amp&e1 Islami #ank #angladesh $td. 'in(ira #a(ar #ranch, $ocal 2ffice is the vital
sample.
'ata co&&ection1 +ources of data of this report can be divided into t%o categories.
Primar# "ources:
Face to face conversation %ith the respective officers and staffs.
Intervie%ing officers and staffs.
3elevant file study on provided by the officers concerned.
In depth study of selected cases.
"econdar# "ources:
,nnual 3eport of #angladesh #ank.
,udit 3eports.
3elevant books, 4e%spapers and 5ournals.
Internet and various study report.

1.( )imitations:
From the beginning to end, the study has been conducted %ith the intention of making it6s
a complete and truthful one. 7o%ever, many problems appeared in the %ay of conducting
the study. During the study it is not possible to visit the %hole area covered by the banks
although the financial statements and other information regarding the study have been
considered. The study considers the follo%ing consideration:
$ack of e/perience.
,ll the concerned personnel of individual bank have not been intervie%ed.
$ack of indepth kno%ledge and analytical ability for %riting such report.
Page 8
*hapter +wo
*oncept, -istor# ./rowth
of 0s&amic Banking Around
+he 1or&d
Page 9
2.1 *O2*3P+ O4 0")A%0* BA2502/:
The concept of Islamic #anking represents a radical departure from traditional banking.
Islamic banking has to derive its inspiration from the religious edicts of Islam and has to
mould its operations %ithin the frame%ork of the teachings of Islam. The most distinctive
feature of Islamic #anking is its total abstinence from interest is observance of Islamic
#anking and prohibition of all interest based transactions. The Islamic #anks organi(e
their operations on the basis of profit:loss sharing and other modes %hich are permitted in
Islam.
The -eneral +ecretariat of 2rgani(ation of the Islamic ;onference defines an Islamic
#ank as <Islamic #ank is a financial institution %hose statutes, rules and procedures
e/pressly state its commitment to the principles of Islamic +hariah and to the banning of
the receipt and payment of interest on any of its operations.<
,ll 2I; countries including #angladesh have approved the above definition of Islamic
#ank. The Islamic Development #ank and other national and multinational Islamic #anks
have also adopted the above definition as their operating guide.
Islamic #anking ,ct 1=>8 of ?alaysia ),ct 4o 9.!@A* has given the follo%ing
definitions1
<Islamic #anking< means any company %hich carries on Islamic #anking business and
holds a valid license, and all the offices and branches in ?alaysia of such a bank shall be
deemed to be one bank.
The Islamic 3epublic of Iran has promulgated <The la% for usuryfree banking< on
,ugust 8", 1=>8 incorporating the detail ob0ectives and duties of the #anking +ystem in
Iran.
<Islamic #anking business< means banking business %hose aims and operations do not
involve any element, %hich is not approved by the 3eligion of Islam.
2.2 -0"+OR6 . /RO1+- O4 0")A%0* BA2502/:
The Islamic #anking movement as %e kno% it today is recent phenomenon. The history
of modern Islamic #anking dates back the 1=B"Cs %hen a small private Islamic #ank
appeared in Pakistan but subse&uently %ound up. In the decade of 1=B"Cs the concept of
Islamic #anking %as a matter of thanking & research and the result %as preserved in the
Page B
papers of different scholars of the ?uslim Dorld. The 1=A" %as the decade for practical
e/periment and 1=@"Cs 1=>"Cs and 1=="Cs %ere the decade for establishment. The current
millennium is e/pected to be the decade of success and e/pansion at a faster rate.
During 1=A"Cs it %as observed that the ?uslims of ?alaysia used to save primarily for
performing 7a00 and such savings %ere mostly kept idle in pillo%s, under mattresses and
floors for avoiding interest %hich %as unproductive & damaging for the gro%th
&development free financial institution kno%n as <pilgrims savings corporation<. Though
it %as not a full fledged bank, even %e can say that it %as the beginning of an institution
free of interest %hich is unconditionally prohibited in Islam.
<?itghamr #ank< is the pioneer of modern Islamic #anking, %hich %as established by
Dr. ,hmed.l4aggar in 1=A8 by his Personal endeavor at ?itghamr in .gypt %ith a
vie% to bringing operation successfully in the light of Islamic +hariah for about five
years. 4o% the Islamic #ankers of the %orld have treated the short life of ?itghamr #ank
as the first model of Islamic #anking , survey report by the 4ational Institute for
?anagement Development, ;airo, .gypt, sho%s that the ?itghamr #ank %as
tremendously successful in achieving its ob0ectives and the tremendous success of the
#ank %as the cause of its closure by the vested interest in 1=A@.
Islamic Development #ank %as established in 1=@B and during the follo%ing three years
@)+even* Islami #anks & financial institutions namely
i* Dubai Islami #ank
ii* Eu%ait Finance 7ouse
iii* Faisal Islami #ank, +udan
iv* 5ordan Islami #ank for Finance and Investment
v* Islamic #ank +ystem International 7olding +.,. $u/embourg
vi* Faisal Islami #ank of .gypt
vii* Islamic Investment ;o. $td. %as established.
In 1=@> Islamic Foreign ?inisters ;onference in their Dakar )+enegal* meet
recommended to the members of 2I; to make systematic efforts to establish Islamic
#anks gradually and during the ne/t three years of their recommendation !" Islamic #ank
and financial institution came into e/istence.
The statistical information in a consolidated form about the share capital and gro%th in
the deposits & investment of some of the ma0or Islamic #anks are stated belo%.
Page A
0s&amic 'ee&opment Bank:
The Islamic Development #ank is an international financial institution, %hich %as set up
in 5eddah 2ctober, 1=@B )18=A7* by the member states of the 2rgani(ation of Islamic
;onference. Its purpose is to foster economic development and social progress of member
countries and ?uslim communities throughout the %orld. It started %ith !! member
countries but over the years its membership has gone up to 98 countries. The authori(ed
capital of the #ank is !""" million Islamic Dinars )e&uivalent to ! billion +pecial
Dra%ing 3ights of the International ?onetary fund*. The subscribed capital stands no% at
1>!!.A@ million Islamic Dinars.
The bank has assisted in the establishment and gro%th of Islamic #ank in a number of
member countries. It has set up a 3esearch and training Institute to conduct and promote
research and impart training in the field of Islamic economics, banking and finance.
The ID# introduced and Investment Deposit +cheme to%ards the end of 19""7 to accept
deposits from Islamic banks in order to absorb their surplus li&uidity. These deposits %ere
utili(ed in the foreign trade financing operations by ID#. 7o%ever, ID# has found it
difficult to deploy all these funds and has there for, recently been refusing large deposits
from the Islamic #anks.
'ar7a&7maa& a&70s&ami
Daral?aal alIslami )D?I* has played a vital role in the gro%th and development of the
Islamic finance movement.
It is designed as a holding company and established as a legal entity in the form of a
authori(ed capital of F 1 billion.
The D?I has absorbed in itself the Islamic Investment company and its t%o affiliates vi(,
the +hariah Investment +ervices, -eneva and the Islamic Investment ;ompany, +har0ah,
%hich had already been operating for a number of years.
Page @
D?I, %hich started operations in 5anuary, 1=>! %ith a paid up capital of F 81" million
has given utmost attention to setting up of a nit %ork of Islamic financial institutions
%hich include Islamic #anks, investment companies and Takaful )Islamic insurance*.
+he 'ubai 0s&amic Bank:
The Dubai Islamic #ank, established in 1=@B, is one of the pioneers in pioneers in Islamic
#anking. The ranges of its investment avenues includes housing, industrial pro0ects and
commercial activities. The bank has sho%n good profit in most of the years and in certain
years the retune given to depositors has been %e above that given by the conventional
banks. Dubai Islamic #ank has invested substantial amounts in Eu%ait Finance 7ouse,
the #ahrain Islamic #ank and the Faisal Islamic #ank of .gypt and +udan.
+he 5uwait 4inance -ouse
The Eu%ait Finance 7ouse %as established in 1=@@ to conduct banking business in
accordance %ith the principles of +hariah <%ithout practicing usury in the form
%hatsoever<. It has 9= percent participation in its share capital by -overnment and
private individuals have subscribed the rest of the capital. The bank has eight branches in
Eu%ait and transacts all kinds of banking business %ithin the frame%ork of Islamic
+hariah.
4aisa& 0s&amic Bank "udan
The Faisal Islamic #ank of +udan %as established in 1=@>. It has succeeded in rapidly
e/panding its operations.
4aisa& 0s&amic Bank of 3g#pt
Faisal Islamic #ank of .gypt is the foremost interestfree banking of the country. It
started its operations in 5anuary, 1=@>. It has an impressive record of performance.
+he Bank 0s&am %a&a#sia
The #ank Islam ?alaysia, %hich %as established in 5uly 1=>8, is the second Islamic
#ank in +outh .ast ,sia. Thirty percent of its e&uity has been taken up by the Federal
-overnment, %hich has assured strong support to the #ank. .stablished %ith a paid up
capital of 1"" million 3inggit )98 million dollar* the bank is third largest in ?alaysia.
Page >
The bank at present has only one office in the capital of the country but it has an
ambitious program of opening branches in all the constituent states.
0s&ami Bank Bang&adesh )imited
Islami #ank #angladesh $imited %as incorporated on 18"81=>8 and received its
#anking license on !>"81=>8. The authori(ed capital of the #ank is Tk. 1""."" crores
and paid up capital is Tk. A9."" crores.
Inspired by the success of Islami #ank #angladesh $imited B other Islamic #anks
namely, ,l#araka #ank, +ocial Investment #ank, ,l,rafa Islami #ank, +ha0alal #ank
and +hamil #ank of #harain have been established in #angladesh. Prime #ank and Dhaka
#ank have established Islamic #ranches.
Page =
*hapter +hree
Objecties of 0s&amic
3conomics and Banking
Page 1"
3.1 +he Objecties of "hariah
The very ob0ective of the +hariah is to promote the %elfare of the people %hich lies in
safeguarding their faith, life, their intellect, their posterity, their %ealth. Dhatever ensures
the safeguarding of these five severs public interest and is desirable. ),l-ha(ali*
The basis of the +hariah is %isdom and %elfare of the people in this %orld and the here
after. This %elfare lies in complete 0ustice, mercy, %ell being and %isdom. ,nything that
depart from 0ustice to oppression, form mercy to harshness, form %elfare to misery and
form %isdom to folly, has nothing to do %ith +hariah )Ibn ,lGayyim*
3.2 'efinition of 3conomics:
Prof. $. 3obbins <.conomics is a science %hich studies human behavior as a
relationship bet%een ends scarce means %hich have alternative uses.<
3.3 'efinition of 0s&amic 3conomics:
1. Islamic .conomics is that branch of kno%ledge %hich helps reali(e human %ell being
through an allocation and distribution of scarce resource that is in conformity %ith
Islamic teachings %ithout unduly curbing individual freedom or creating continued
macroeconomic and ecological imbalances )2mar ;hapra*
!. Islamic .conomics aims at the study of human falah achieved by organi(ing the
resources of the earth on the basis of cooperation and participants )?uhammad ,kram
Ehan*
8. Islamic .conomic is the ?uslin thinkerCs response to the economic challenges of their
times. In this endeavor they are aided by the Guran and the +unnah as %ell as by reason
and e/perience )?. 4egatullah +iddi&*
9. Islamic .conomic is the science of ho% man uses resources and means of production to
study his %orldly needs according to a predetermined code given by ,llah )+DT* in order
to achieve the greatest e&uity )Princes ?uhammad ,lFaisal +aud*
B. Islamic .conomics is a social science %hich studies the economic problem of the
people imbued %ith the values of Islam. It is a composite social science %hich studies the
problem of production, distribution and consumption through integrative system of
e/change and transfer overtime and their and moral conse&uences in the light of Islamic
rationalism. It assumes the presence of Islamic man )?. ,. ?annan*.
Page 11
3.! Objecties of 0s&amic 3conomics:
1. To establish 0ustice in the .conomy )B1B>*)1A1="*, 4ahal, 4isa.
- +urely ,llah en0oins 0ustice and the doing good)to others* )1A1=" ,l 4ahal*
- Dhenever you 0udge bet%een people, you 0udge %ith 0ustice B1B> ),l4isa*
!. To protect the interest of the deprived and the oppressed.)!>1B*)Eisas*
,nd %e desired to besto% a favor upon those %ho %ere deemed %eak in the land,
and to make them the leaders, and to make them the 7eirs !>1B ),lGasas*
8. To establish good practices and institutions in the economy and to eliminate bad
practice and bad institutions from .conomy )!!191*
HDell a%are ofI those %ho, if %e firmly establish them in the band )on earyh* %ill
keep up prayer )remain constant prayer* and give in charity and en0oin good and
forbid bad !!191 ),l7a00*.
9. To make life easy and bearable )@11B@*
B. To ensure full utili(ation of resources.
A. Proper of distribution of %ealth and resources.
@. ?a/imum production of useful production.
>. #ring stability in the value of money and e/change rates
=. .nsure economic efficiency and accelerated rate of gro%th
1". .nsure broad based economic %ellbeing, balanced monetary e/pansion and full
employment.
3.$ Princip&es of 0s&amic 3conomics "#stems:
1* +ole purpose is to obey and please ,llah.
!* The %ealth and asset in all their forms given under trust by ,llah.
8* ?oral values and guiding factors for al .conomic activities.
9* ?a/imum e&uitable utili(ation of human and material resources given by ,llah.
B* 7uman dignity and respect of $abor.
A* ?a/imum freedom for economic activity %ithin a 0ust frame%ork.
@* .&uitable distribution of %ealth and income and disciplined private o%nership.
>* +implicity economy and austerity in e/penditure
=* ,dal and Ihsan )5ustice and Eindness*
1"* +trict prohibition of 3iba, Interest and Jsury in all forms.
Page 1!
*hapter 4our
0s&amic Bank
Bang&adesh )td.
Page 18
!.1 0ntroduction:
#angladesh is one of the largest ?uslim countries in the %orld. The people of this
country are deeply committed to Islamic %ay of life as enshrined in the holy Guran and
the +unnah. 4aturally, it remains a deep cru in their hearts to fashion and design their
economic lives in accordance %ith the precepts of Islam. The establishment of Islami
#ank #angladesh $imited on ?arch 18, 1=>8, is the true reflection of this inner urge of
its people, %hich started functioning %ith erect from ?arch 8", 1=>8. This bank is the
first of its kind in +outh.ast ,sia. It is committed to conduct all banking and investment
activities on the basis of interest fee profitloss sharing system. In doing so, it has
unveiled a ne% hori(on and ushered in a ne% silver lining of hope to%ards materiali(ing a
long cherished dream of the people of #angladesh for doing their banking transactions in
line %ith %hat is prescribed by Islam. Dith the active cooperation and participation of
Islamic Development #ank )ID#* and some other Islamic banks, financial institutions,
government bodies and eminent personalities of the ?iddle .ast and the gulf countries,
Islami #ank #angladesh $imited has by no% earned the uni&ue position of a leading
private commercial bank in #angladesh.
#anking plays an important role in the economy of any country. In #angladesh ?uslim
constituted more than >"K of its population. These people possess strong faith on ,llah
and they %ant to lead their lives as per the constructions given in the holy Guran and the
%ay sho%n by the prophet 7a(rat ?uhammad )+m*. #ut no Islamic banking system %as
developed here up to 1=>8. The Traditional banking is fully based on interest or <3iba<.
#ut interest is absolutely prohibited by Islam. ,s a result the people of #angladesh have
been e/periencing such a nonIslamic prohibited banking system against their normal
values and faith.
The present %orld especially the third %orld is affected by unemployment socio economic
in0ustice inflation, ine&uitable distribution of income and %ealth etc. The main aim of
traditional banking is to earn profit by borro%ing and lending money in e/change of
interest. ,s a result there is an unfair competition among the bankers and among the
customers.
Page 19
Jnder conventional frame%ork a bank borro%s to lend and it mobili(es savings:deposits
by borro%ing from savers and loans those deposits to productive interest on deposits and
advances respectively. The banks generally maintain a difference is kno%n as interest
spread, %hich is the main income of an interestbased bank. There is no interest received
by the Islami #ank. In this case I# receives its entire deposits from the investment of the
clients on the basis of profit sharing place it to the actual entrepreneurs on the basis of
the profit sharing. +o, it is clear that in case of the traditional banking systems, a fi/ed
percentage of interest, irrespective of income earned is paid to the depositors. The
depositors of I# are never deprived of e/cess income, %hich the bank may make at the
end of year, 4ot only this traditional bank give fi/ed interest rate even %hen they incur
operational loss. The critics of Islamic banking system are of the opinion that both are
found same in terms of deposits mobili(ation and advances investment.
#anking functions of I##$ is an important aspect in our economy as it has broken the
line of interest based traditional banking system through the introduction Islamic +hariah
based banking. +ince its commencement in 1=>8, it has already gained a good reputation
in customers as %ell as the masses of people of #angladesh. Islamic #anking is especially
important in the %orld countries, %hich are characteri(e by unemployment, ine&uitable
distribution of income and %ealth, etc. #ut there are so many constraints in our country in
functioning the Islamic #ank #angladesh $td. )I##$*. The paper is an attempted to
evaluate the modes of I##$ in terms of productivity and effectiveness. +ince it is difficult
to measure the productivity of a bank, especially the interestfree I##$, as it does not any
visible product. +ome specific indicators have been selected for the purpose of
measurement of productivity.
!.2 -istorica& Background of 0BB):
In ,ugust 1=@9, #angladesh signed the ;harter of Islamic Development #ank and
committed itself to reorgani(e its economic and financial system as per Islamic +hariah.
In 5anuary 1=>1, $ate President 'iaur 3ahman %hile addressing the 8
rd
Islamic +ummit
;onference held at ?acca and Taif suggested. <The Islamic countries should develop a
separate banking system of their o%n in order to facilitate their trade and commerce<.
Page 1B
This statement of $ate President 'iaur 3ahman indicated favorable attitude of the
-overnment of the PeopleCs 3epublic of #angladesh to%ards establishing Islamic banks
and financial institutions in the country. .arlier in 4ovember 1=>!, #angladesh #ank, the
countryCs ;entral #ank, sent a representative to study the %orking of several Islamic
#anks abroad.
In 4ovember 1=>!, a delegation of ID# visited #angladesh and sho%ed keen interest to
participate in establishing a 0oint venture Islamic #ank in the private sector. They found a
lot of %ork had already been done and Islamic banking %as in a ready form for immediate
introduction. T%o professional bodies Islamic .conomics 3esearch #ureau )I.3#* and
#angladesh Islamic #ankerCs ,ssociation )#I#,* mode significant contributions to%ards
introduction of Islamic #ank in the country.
They came for%ard to provide training on Islami #anking to top bankers and economists
to fill up the vacuum of leadership for the future Islamic banks in #angladesh. They also
help seminars, symposia and %orkshops on Islamic economics and banking throughout
the country to mobili(e public opinion in favor of Islamic banking.
Their professional activities %ere reinforced by a number of ?uslim entrepreneurs
%orking under the aegis to the then ?uslim #usinessmen society )no% reorgani(ed as
industrialist & #usinessmen ,ssociation*. The body concentrated mainly in mobili(ing
e&uity capital for the emerging Islamic #ank.
,t last, the long dra%n struggle to establish an Islamic bank in #angladesh becomes a
reality. Islamic #ank #angladesh $imited %as established in ?arch 1=>8. In %hich 1=
#angladeshi nationals, 9 #angladeshi institutions, and 11 banks, financial institutions and
government bodies of the ?iddle .ast and .urope Including ID# and t%o eminent
personalities of the kingdom of +audi ,rabia 5oined hands to make the dream a reality.
Page 1A
!.3 Business Phi&osoph# of 0BB):
The philosophy of I##$ is to the principles of Islamic +hariah. The organi(ation of
Islamic conference )2I;* defines an Islamic #ank as <a financial institution %hose
status, rules and procedures e/pressly state its commitment to the principles of
Islamic +hariah and to the banking of the receipt and payment of interest on any of
its operations. The sponsor, perception is that I##$ should be &uite different from
other privately o%ned and managed commercial bank operating in #angladesh, I##$
to gro% as a leader in the industry rather than a follo%er. The leadership %ill be in the
area of service, constant effort being made to add ne% dimensions so that clients can
get <,dditional< in the matter of services commensurate %ith the needs and
re&uirement of the country gro%ing society and developing economy.
!.! %ission and objectie:
To conduct interest free banking.
To establish participatory banking instead of banking on debtor creditor
relationship.
To invest through different modes permitted under Islamic +hariah.
To accept deposits on profitloss sharing basis.
To establish a %elfareoriented banking system.
To e/tend cooperation to the poor, the helpless and the lo%income group for
economic uplift.
To pay a vital role in human development and employment generation.
To contribute to%ards balanced gro%th and development of the country through
investment operations particularly in the less developed area.
To contribute in achieving the ultimate goal of Islamic economic system.
Objecties of 0s&ami Bank
It is a golden desire of every ?uslim that his social and political lives should be in
accordance %ith the divine guides prescribed in the holy Guran and the +unnah. In the
same tune of aspiration as above, he desires to follo% a unified life in financial and
business life. +o, the ob0ectives of the Islamic #anking may be derived from the broader
Page 1@
ob0ectives of the Islamic economy. T%o &uotations may help us understand our
ob0ectives.
Ibn al Gayyim says. The basis of the +hariah is the %isdom and %elfare of the people in
this %orld as %ell as the hereafter. This %elfare lies in complete 0ustice, mercy, %ellbeing
and %isdom. ,nything that departs from 0ustice to oppression, from mercy to harshness,
from %elfare to misery and from %isdom to folly, has nothing to do %ith the +hariah ,l
-ha(ali says, <The very ob0ective of the shariah is to promote the %elfare of the people
%hich lies in safeguarding their faith, their life, their intellect, their posterity and their
property. Dhatever ensures the safeguard of these five serves public interest and is
desirable.<
7o%ever ?. Jmer ;hapra, in his book <To%ards a 0ust ?onetary +ystem discussed some
of the most fundamental characteristics of Islamic money and banking system. Those are
as follo%s1
1. #roadbased economic %ellbeing %ith full employment and optimum rate for
economic groundL
!. +ocioeconomic 0ustice and e&uitable distribution of income and %ealthL
8. +tability in the value of money to enable the medium of e/change to be a reliable unit
of account, a 0ust standard of deferred payments, and a stable store or value.
9. ?obili(ation and investment of savings for economic development in an e&uitable
manner such that a 0ust return is ensured to all parties concerned, and
B. .ffective rendering of all services normally e/pected from the banking system.
Islamic economy including Islamic banking is no% entering a ne% phase, %hich calls fore
more integrative as %ell as a more critical approach to meet the present day comple/
financial needs. 4o%, the economists are faced %ith the challenging task of revie%ing the
%hole situation emerging at least in three areas.
Firstly, to bring together the %orks done by different economists into a comprehensive
vie% of the monetary system of Islam in its fullness, as against concentrating on specific,
sometimes even dis0ointed, elements of money and banking.
Page 1>
+econdly, to revie% critically the different models of Islamic banking presented over the
years in the conte/t of the practice of Islamic banking %ith a vie% to refining the theory
as %ell as improving the practice.
Thirdly, it is essential to put the %hole theory and practice of Islamic banking in the
perspective of an Islamic economy and the Islamic moral and social order. ,ny element
of the Islamic system, ho%ever important, cannot produce the desired results, if it is
allo%ed to operate in isolation. It must lead to other complementary changes to complete
the process.
!.$ Ro&e of contribution of 0BB) to Bang&adesh 3conom#:
Islami #ank #angladesh $imited has many success stories of achievements.
It has !A8 brances across the country.#y providing #anking services among clients.
These are summari(ed belo%1
I##$ is the pioneer institution of Islamic #anking in #angladesh.
The success of I##$ has imbibed other sponsors at home and abroad to establish
Islamic #anking in #angladesh. Four national, one international Islamic #anks
have since been established in the country. , private sector traditional bank has
also established t%o fullfledged Islamic #anking branches. +everal other e/isting
and proposed traditional banks have also e/pressed their intention to introduce
Islamic #anking.
I##$ has successfully mobili(ed deposits from a section of people %ho hitherto
before did not make any deposit %ith interest based banks.
The Islamic #anking products %hich are offered by I##$ through its 11> branches
located at important centers all over the country and spontaneous acceptance of
those products by the people proves the superiority of Islamic by the people
proves the superiority of Islamic banking.
I##$6s market share of deposit investment and ancillary business is steadily
increasing
I##$, through still a tiny bank, handless more than 1"K of country6s e/port and
import trade.
,mong the contemporary commercial #anks I##$6s position is first in respect of
mobili(ation of deposit, deployment of found and earning profit.
Page 1=
Investment in industrial sector occupies nearly 88K of I##$6s investment
portfolio. This is a uni&ue e/ample of industrial finance by a commercial #ank.
?ore than 1.1B,""" %orkers are employed in the industrial pro0ects financed
by I##$. I##$ has thus made significant contribution to solving unemployment
problem of the country.
Dhakathe capital of #angladesh being a ?ega city has acute transport
problem. I##$ has 0oined hands %ith an enterprising group to introduce afleet of
Premium #us service, %hich has attracted the attention of all section of the people
and mitigated transportation problem of the city to some e/tent.
I##$ invested tk.!A8!!Bmillion in !"1"
Depositors and entrepreneurs under their fold and coverage. These depositors and
entrepreneurs so long avoided interestbased banking on grounds of religious in0unctions.
The gradual and successful globali(ation of Islamic banking coupled %ith gro%ing
a%areness of the people about its financial and social benefits makes it clear that the ne/t
century is going to be the century of Islamic banking.
"pecia& features of the 0BB):
Islami #ank #angladesh $imited )I##$* %as incorporated on18."8.1=>8 as a public
company %ith limited liability under the companies act, 1=18. The bank started
functioning %ith effect from 8"."8.1=>8 as the first +hariah based interestfree bank in
+outh.ast ,sia.
The bank is committed to run all its activities as per Islamic +hariah. I##$ through its
steady progress and continuous success has, by no%, earned the reputation of being one of
the leading private sector banks of the country. The distinguishing features of I##$ are as
under1
,ll itCs activities are conducted on interestfree system according to Islamic +hariah.
Investment is made through different modes permitted under Islamic +hariah.
Investment income of the bank is shared %ith the ?udaraba depositors according to
a ratio to ensure a reasonably fair rate of return on their deposits.
Its aims are to introduce a %elfareoriented banking system and also to establish
e&uity and 0ustice in the field of all economic activities.
Page !"
It e/tends +ocioeconomic and financial services to the poor, helpless and lo%
income group of the people for their economic upliftment particularly in the rural
areas.
It plays a vital role in human resource development and employment generation
particularly for the unemployed youths.
Its aim is to achieve balance gro%th & e&uitable development of the country
through diversified investment operations particularly in the priority sectors and in
the less developed areas.
Page !1
*hapter 4ie
'ifferent 0nestment
%odes of 0BB)
Page !!
$.1 0nestment:
The special feature of the investment policy of the #ank is to invest on the basis of profit
loss sharing system in accordance %ith the tenets and principles of Islamic +hariah.
.arning of profit is not the only motive and ob0ective of the #ank6s investment policy
rather emphasis is given in attaining social good and in creating employment
opportunities.
Pursuant to the Investment policy adopted by the #ank a @year perspective Investment
plan has been dra%n up and put into implementation. The plan aims at diversification of
the investment portfolio by si(e sector geographical area, economic purpose and
securities to bring in phases all sectors of the economy and all types of economic groups
of the society %ithin the fold of #ank6s investment operations.
,ccordingly the plan envisages composition of the investment portfolio %ith !.B"K for
agriculture and rural investment, 1>K for industrial term investment, 18Kfor industrial
%orking capital, 1"K for housing and real estate, 9K for transport and communication,
".B"K for electricity, gas %ater and sanitation services, !K for storage, 98K for import,
e/port and local trade and trade related activities, 1K for poultry and dairy, !K for 3ural
Development +cheme, !.B"K for other special +chemes, ".B"K for microindustry and
1.""K for other productive purposes by the end of the plan period i.e. the year !""!.
$.2 /rowth of 0nestment
The investment of the #ank demonstrated steady gro%th over the years. The total
investment of the #ank stood at Taka 1>@98@.8! million in !"">. It %as Taka !19A1B.>
million in !""=. Total investment stood at Taka !A8!!B.1 million as on 8"."A.!"1". #y
December 81, !"1" number of investment clients stood at 1,8=,@8>.
Page !8
+ab&e: /rowth of 0nestment
6ear 0nestment8 mi&&ion9
!""9 8B,B8=.8B
!""B A@,"=B.81
!""A 1"",9BB.@9
!""@ 1!",B>9.A>
!""> 1>@,98@.8!
!""= !19A1B.>
!"1" !A8!!B.1
2b0ectives and principles
The ob0ectives and principles of investment operations of the #ank are1
To invest fund strictly in accordance %ith the principles of Islamic +hariah.
To diversify its investment portfolio by si(e of investment, by sectors )Public &
Private*, by economic purpose, by securities and by geographical area including
industrial, commercial & agricultural.
To ensure mutual benefit both for the #ank and the investment client by
professional appraisal of investment proposals, 0udicious sanction of investment,
close and constant supervision and monitoring there of
To make investment keeping the socio economic re&uirement of the country in
vie%.
To increase the number of potential investors by making participatory and
productive investment.
Page !9
To finance various development schemes for poverty alleviation, income and
employment generation %ith a vie% to accelerate sustainable socioeconomic
gro%th and upliftment of the society.
To invest in the form of goods and commodities rather than give out cash money to
the investment clients.
To encourage social upliftment enterprises.
To shun even highly profitable investment in fields for bidden under Islamic
+hariah and are harmful for the society.
The bank e/tends investments under the principles of #ai?urabaha, #ai?ua((al,
7ire Purchase under +hirkatul ?elk and ?usharaka. The #ank is making sincere
efforts to go for investment under ?udaraba principle in near future.
$.2 0nestment po&ic# . "trateg#:
Investment Policy 1
+trict observance of Islamic +hariah principles.
Investment to national priority sectors.
Diversified investment portfolio 1 Diversification by +i(e, +ector, -eographical
,rea, .conomic Purpose, +ecurities and ?ode of Investments.
Preference to shortterm investments.
Preference to investment of +mall +i(e.
To ensure safety & security of investments.
To look to profitability of investments.
To give support to denationali(ation industrial program of the -overnment.
Investment to Trade and ;ommerce +ector )%holesale, retail and service*.
Investment to Foreign Trade )import & e/port*.
Investment to Industrial +ectors.
./ploration of the possibility of investment in the e/isting ?oney & capital ?arket
and help organi(ation of Islamic ?oney & ;apital ?arket.
Page !B
0nestment "trateg#1
To check e/odus of investment clients.
To induct ne% investment clients.
To induct good investment clients of other #anks.
To enhance e/isting limits of good investment clients, %here found necessary and
0ustified.
./tension of investment to transport sector.
./tension of investment to back%ard as %ell as for%ard linkage industries.
./tension of investment to 3eal .state +ector.
./tension of investment to 5ute +ectorL particularly for trading and e/port purposes.
+trengthening supervision, control and monitoring mechanism.
Training and motivation of manpo%er to handle increased and diverse volume of
investments.
To give due consideration to high risk, high return and lo% risk, lo% return
investment proposals.
,daptation of modern technology.
19 Bai %echanism 8+rading mode9:
a9 Bai7%urabaha: #ai?urabaha may be defined as a contract bet%een a buyer and a
seller under %hich the seller sells certain specific goods )permissible under Islamic
shariah and the $a% of the land* to the buyer at a cost plus agreed profit payable in cash
or on any fi/ed future date in lump sum or by installments. The profit marked up may be
fi/ed in lump sum or in percentage of the cost price of the goods.
0mportant 4eatures:
i. It is permissible for the ;lient to offer an order to purchase by the #ank particular
goods deciding its specification and committing himself to buy same from the #ank
on ?urabaha, i.e. cost plus agreed upon profit.
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ii. It is permissible to make the promise binding upon the ;lient to purchase from the
#ank, that is, he is to either satisfy the promise or to indemnify the damages caused
by breaking the promise %ithout e/cuse.
iii. It is permissible to take cash:collateral security to guarantee the implementation of
the promise or to indemnify the damages.
iv. It is also permissible to document the debt resulting from #ai?urabaha by a
-uarantor, or a mortgage, or both like any other debt, ?ortgage:-uarantee:;ash
+ecurity may be obtained prior to the signing of the ,greement or at the time of
signing the ,greement.
v. +tock and availability of goods is a basic condition for signing a #ai?urabaha
,greement. Therefore, the #ank must purchase the goods as per specification of the
;lient to ac&uire o%nership of the same before signing the #ai?urabaha
agreement %ith the ;lient.
vi. ,fter purchase of goods the #ank must bear the risk of goods until those are
actually sold and delivered to the ;lient, i.,e., after purchase of the goods by the
#ank and before selling of those on #ai?urabaha to the ;lient buyer, the #ank
shall bear the conse&uences of any damages or defects, unless there is an agreement
%ith the ;lient releasing the #ank of the defects, that means, if the goods are
damaged, #ank is liable, if the goods are defective,)a defect that is not included in
the release* the #ank bears the responsibility.
vii. The #ank must deliver the specified -oods to the ;lient on specified date and at
specified place of delivery as per ;ontract.
viii. The #ank shall sell the goods at a higher price );ost MProfit* to earn profit. The cost
of goods sold and profit markup there%ith shall separately and clearly be
mentioned in the #ai?urabaha ,greement. The profit ?arkup may be mentioned
in lump sum or in percentage of the purchase:cost price of the goods. #ut, under no
circumstances, the percentage of the profit shall have any relation %ith time or
e/pressed in relation %ith time, such as per month, per annum etc.
i/. The price once fi/ed as per agreement and deferred cannot be further increased.
/. It is permissible for the #ank to authori(e any third party to buy and receive the
goods on #ank6s behalf. The authori(ation must be in a separate contract.
b9Bai7%uajja& : #ui?ua00al may be defined as a contract bet%een a buyer and seller
under %hich the seller sells certain specific goods permissible under Islamic +hariah and
Page !@
the $a% of the country to the buyer at an agreed fi/ed price payable at a certain fi/ed
future date in lump sum or %ithin a fi/ed period by fi/ed instalments. The seller may also
sell the goods purchased by him as per order and specification of the buyer.
0mportant features:
i* #ank is not bound to declare cost of goods and profit markup separately to the
client.
ii* +pot delivery of the item and payment is deferred.
iii* 2%nership and possession of the goods is transferred by the #ank to the client
before receipt of sale price.
iv* ;lient may offer an order to purchase by the #ank any specified goods and
committing himself to buy the same from the #ank on #ai?ua00al ?ode.
v* It is permissible to make the promise binding upon the client to purchase from the
#ank. That is, he is to either satisfy the promise or to indemnify the damages caused
by breaking the promise.
vi* ;ash:;ollateral +ecurity should be obtained to guarantee the implementation of the
promise or to indemnify the damages.
vii* ?ortgage :-uarantee: ;ash +ecurity may be obtained before :at the time of signing
the agreement.
viii* +tock and availability of goods is a precondition for #ai?ua00al agreement. The
responsibility of the bank is to purchase the desired goods at the disposal of the
client to ac&uire o%nership of the same before singing the #ai?ua00al ,greement
%ith the client.
i/* The #ank after purchase of goods must bear the risk of goods until those are
actually delivered to the client.
/* The #ank must deliver the specified goods to the client on specified date and at
specified place of delivery as per contract.
/i* The #ank may sell the goods at one agreed price, %hich %ill include both the cost
price and the profit.
/ii* The price once fi/ed as per agreement and deferred cannot be further increased.

*9 Bai7"a&am: #ai +alam maybe defined as a contract bet%een a #uyer and a +eller
under %hich the +eller sells in advance in the certain commodity )ies*: products )s*
permissible under Islamic +hariah and the la% of the land to the #uyer at an agreed price
Page !>
payable on e/ecution of the said contract and the commodity )ies*:product)s* to the buyer
at a future time in e/change of an advanced price fully paid on the spot.
0mportant features:
i. #ai+alam is mode of investment allo%ed by Islamic +hariah in %hich commodity
)ies*: Products)s* can be sold %ithout having the said commodity )ies*:products)s*
either in e/istence or physical: constructive possession of the seller. If the
commodity )ies*:product)s* are ready for sale, #ai+alam is not allo%ed in
+hariah. Then the sale may be done either in #ai?urabaha or #ai?ua00al mode
of investment.
ii. -enerally, Industrial and ,gricultural products are purchased:sold in advance
under #ai+alam mode of investment to infuse finance so that product is not
hindered due to shortage of fund:cash.
iii. It is permissible to obtain collateral security from the seller client to secure the
investment from any ha(ards vi(. nonsupply:partial supply of commodity
)ies*:product)s*, supply of lo% &uality commodity )ies*:product)s* etc.
iv. It is also permissible to obtain ?ortgage and :or personal -uarantee from a third
party as security before the signing of the ,greement or at the time of signing the
,greement.
v. #ai+alam on a particular commodity )ies*:product)s* or on a product of a
particular field or farm cannot be effected Hfor ,gricultural product)s* onlyI.
vi. The seller )manufacturer*;lient may be made agent of the #ank to sell the goods
delivered to the #ank by him provided a separate agency agreement is e/ecuted
bet%een the #ank and the ;lient ),gent*.
d9 0stishna:a : Istishna6a is a contract bet%een a manufacturer:seller and a buyer under
%hich the ?anufacturer:seller sells specific product)s* after having manufactured,
permissible under Islamic +hariah and $a% of the ;ountry after having manufactured at
an agreed price payable in advance or by installments %ithin a fi/ed period or on:%ithin a
fi/ed future date on the basis of the order placed by the buyer.
0mportant feature:
i. Istisna6a is an e/ceptional mode of investment allo%ed by Islamic +hariah in
%hich product)s* can be sold %ithout having the same in e/istence. If the
Page !=
product)s* are ready for sale. Istishna6a is not allo%ed in +hariah. Then the sale
may be done either in #ai?urabaha or #ai?ua00al mode of investment. In this
mode, deliveries of goods are deferred and payment of price may also be deferred.
ii. It facilitates the manufacturer sometimes to get the price of the goods in advance,
%hich he may use as capital for producing the goods.
iii. It gives the buyer opportunity to pay the price in some future dates or by
installments.
iv. It is a binding contract and no party is allo%ed to cancel the Istishna6a contract the
price is paid and received in full or in part or the manufacturer starts the %ork.
v. Istishna6a is specially practiced in ?anufacturing and industrial sectors. 7o%ever,
it can be practiced in agricultural and constructions sectors also.
2. "hare %echanism :
a. %udaraba : It is a from partnership %here one party provides the funds %hile the
other provides the e/pertise, labour and necessary business activities. The first party is
called the +ahibal ?all and the letter referred to at the ?udarib. ,ny profits accrued are
shared bet%een the t%o parties on a preagreed basis, %hile capital loss in e/clusively
born by the partner providing the capital.
0mportant features:
i. #ank supplies capital as +ahib,l?all and the client invest if in the business %ith
his e/perience.
ii. ,dministration and management is maintained by the client.
iii. Profit is divided as per agreement.
iv. #ank bears the actual loss alone.
v. ;lient can not take another investment for that specific business %ithout the
permission of the #ank.
b. %usharakah : The terma N+hirkatO and ?usharakaO have been derived from ,rabic
%orids N+hairkahO and N+harikaO The %ord shirkah means a partnership bet%een more
than one partner. Thus the %ord N?usharakaO and N+hirkatO means a partnership
established bet%een t%o or more partners for purpose of a commercial venture
participated both in the capital and management %here the profit may be shared bet%een
Page 8"
the partners as per agreed upon ratio and the loss. If any incurred, is to be borne by the
partners at per capital:e&uity ratio.
In this case of Investment, N?usharakaO meaning a partnership bet%een the #ank and the
;lient for a particular business in %hich both the #ank and the ;lient provide capital at an
agreed upon ratio and manage the business 0ointly. +hare the rent as per agreed upon ratio
and bear the loss, if any in proportion to their respective e&uity.
#ank may move itself %ith the selected ;lient for conducting any +hariah permissible
business under ?usharaka mode.
0mportant features:
i. The investment client %ill normally run and manage the business.
ii. The #ank shall take part in the policy and decision making as %ell as overseeing
)supervision and monitoring* the operations of the business of the ;lient. The #ank may
appoint suitable personal)s* to run the manage the business and to maintain books of
accounts of the business property.
iii. ,s the investment client shall manage the enterprise, the #ank may pay more
share of profit to him than that of his proportionate capital contribution.
iv. $oss, if any, shall be shared on the basis of capital ratio.
3. )easing %ode 80jara %echanism9:
A9 -ire purchase; 0jarah : The term I0arah has been derived from the ,rabic %orks
,0r and J0rat %hich means consideration, return, %ages or rent. This is really the
e/change value or consideration, return, %ages, rent of service of an ,sset. I0arah has
been defined as a contract bet%een t%o parties, the 7iree and 7irer %here the 7irer
en0oys or reaps a specific service or benefit against a specified consideration or rent from
the asset o%ned by the 7iree. It is a hire agreement under %hich a certain asset is hired
out by the 7iree to a 7irer against fi/ed rent or rentals for a specified period.
B9 -ire Purchase under "hirkatu& %e&k:
%eaning and 'efinition:
Page 81
7ire Purchase under +hirkatul ?elk is a +pecial type of contract, %hich has been
developed through practice. ,ctually, it is a synthesis of three contacts1
)i* +hirkat
)ii* I0arah and
)iii* +ale
These may be defined as follo%s1
i9 "hirkatu& %e&k
+hirkat means partnership. +hirkatul ?elk means share in o%nership. Dhen t%o or more
persons supply e&uity, purchase an asset, o%n the same 0ointly, and share the benefit as
per agreement and bear the loss in proportion to their respective e&uity, the contract is
called +harkatul ?elk contract.
ii9 0jarah
The term Iiarah has been derived from the ,rabic %orks ),ir* and
)Jirat* %hich means consideration, return, %ages or rent. This is really the e/change
value or consideration, return, %ages, rent of service of an asset. I0arah has been defined
as a contract bet%een t%o parties, the 7iree and 7irer %here the 7irer en0oys or reaps a
specific service or benefit against a specified consideration or rent from the asset o%ned
by the 7iree. It is a hire agreement under %hich a certain asset is hired out by the 7iree to
a 7irer against fi/ed rent or rentals for a specified period.
iii9 "a&e
This is a sale contract bet%een a buyer and a seller under %hich the o%nership of certain
goods or asset is transferred by seller to the buyer against agreed upon price paid : to be
paid by the buyer.
Thus, in 7ire Purchase under +hirkatul ?elk mode both the #ank and the ;lient supply
e&uity in e&ual or une&ual proportion for purchase of an asset like land, building,
machinery, transports etc. Purchase the asset %ith that &uit money, o%n the same 0ointly,
share the benefit as per agreement and bear the loss in proportion the their respective
e&uity. The share, part of portion of the asset o%ned by the #ank is hired out to the ;lient
partner for a fi/ed rent per unit of time for a fi/ed period. $astly the #ank sells and
transfers the o%nership of itCs share:part:portion to the client against payment of price
Page 8!
fi/ed for the part either gradually part by part or in lump sum %ithin the hire period or
after the e/piry of the hire agreement.
Page 88
0mportant 4eatures:
1. In case of 7ire Purchase under +hirkatul ?elk transaction the asset: property
involved is 0ointly purchased by the 7iree )#ank* and the 7irer );lient* %ith
specified e&uity participation under a +hirkatul ?elk ;ontract in %hich the
amount of e&uity and share in o%nership of the asset of each partner )7iree #ank
& 7irer ;lient* are clearly mentioned. Jnder this agreement, the 7iree and the
7irer become coo%ner of the asset under transaction in proportion of their
respective e&uity participation.
!. In 7ire Purchase under +hirkatul ?elk ,greement, the e/act o%nership of both
the 7iree )#ank* and 7irer );lient* must be recognised. 7o%ever, if the partners
agree and %ish that the asset purchased may be registered in the name of any one
of them or in the name of any third party, clearly mentioning the same in the 7ire
Purchase +hirkatul ?elk ,greement. 7o%ever, in I##$, no third party
registration shall be allo%ed.
8. The share: part of the purchased asset o%ned by the 7iree )#ank* is put at the
disposal: possession of the 7irer );lient* keeping the o%nership %ith him )#ank*
for a fi/ed period under a hire agreement in %hich the amount of rent per unit of
time and the benefit for %hich rent to be paid along %ith all other agreed upon
stipulation are also to be clearly stated. Jnder this agreement, the 7irer );lient*
becomes the o%ner of the benefit of the asset but not of the asset itself, in
accordance %ith the specific provisions of the contract %hich entitles the 7iree
)#ank* is entitled for the rentals.
9. ,s the o%nership of hired portion of the asset lies %ith the 7iree )#ank* and rent
is paid by the 7irer );lient* against the specific benefit, the rent is not considered
as price or part of price of the asset.
B. In the 7ire Purchase under +hirkatul ?elk ,greement the 7iree )#ank* does not
sell or the 7irer );lient* does not purchase the asset but the 7iree )#ank* premise
to sell the asset to the 7irer );lient* part by part only, if the 7irer );lient* pays the
cost price:e&uity:agreed price as fi/ed for the asset as per stipulation %ithin agreed
upon period on %hich the 7irer also gives undertakings.
A. The promise to transfer legal title by the 7iree and undertakings given by the
7irer to purchase o%nership of the hired asset upon payment part by part as per
stipulations are effected only %hen it is actually done by a separate sale contract.
Page 89
@. ,s soon as any part of 7ireeCs )#ankCs* o%nership of the asset is transferred to the
7irer );lient* that becomes the property of the 7irer and hire contract for that
share:part and entitlement for rent thereof lapses.
>. In 7ire Purchase under +hirkatul ?elk ,greement, the +hirkatul ?elk contract is
effected from the day the e&uity of both parties deposited and the asset is
purchased and continues up to the day on %hich the full title of 7iree )#ank* is
transferred to the 7irer );lient*.
=. 7ire Purchased under +hirkatul ?elk transaction facilitates the ;lient )7irer* to
get benefit from the hired asset in e/change of rental and also to become full
o%ner of the asset by purchasing it part by part.
1". If, for any reason, the hire contract is revoked prior to the transfer for full title of
the asset to the 7irer, then the title of the asset %ill be shared by both 7iree and
7irer the 7irer %ill share that part of title %hich has been transferred to him
against payment and the 7iree %ill share the remaining part.
11. The 7irer to secure the #ank )the 7iree* %ill pledge: hypothecate : mortgage his
portion : part : share in the asset )ac&uired : to be ac&uired* and or any other asset:
property of his o%n : third party guarantor to the #ank to fulfill his all liabilities:
commitments including the accrued rental, if any.
Ru&es for -ire Purchase under "hirkatu& %e&k
It is a condition that the sub0ect )benefit:service* of the contract and the asset
)ob0ect* should be kno%n comprehensively.
It is a condition that the asset)s* to be hired must not be a fungible one )Perishable
or consumable* %ith can not be used more than once or in other %ords, the
asset)s* must be a nonfungible one %hich can be utili(ed more than once or the
use:benefit:service of %hich can be separated from the asset)s* itself.
It is a condition that the sub0ect )benefit:service* of the contract must actually and
legally be attainable:derivable. It is not permissible to hire something, the
handingover of the possession of %hich is impossible. If the asset is a 0ointly
o%ned property, any partner, according to the ma0ority of the 0urists, may let his
portion of the asset)s* to coo%ner)s* or the persons)s* other than the coo%ner)s*.
7o%ever, it is also permissible for a partner to hire his share to the other
partner)s*.
Page 8B
It is a condition that the 7irer shall ensure that he %ill make use of the asset)s* as
per provisions of the ,greement or as per customs:norms:practice, if there is no
e/pressed provision.
The hire contract is permissible only %hen the asset)s* and he benefit:service
derived from it is %ithin the category of C7alaC or at least C?obahC as per Islamic
+hariah.
The 7iree is under obligation to enable the 7irer to the benefit from the asset)s*
by putting the possession of the asset)s* at his disposal in useable condition at the
commencement of the hire period.
In a hire contract, the period of hire and the rental to be paid per unit of time be
clearly stated.
.verything that is suitable to be considered a price, in a sale, can be suitable to
considered as rental in a hire contract.
It is a condition that the rental falls due from the date of handingover of the asset
to 7irer and not from the date of contract or use of the asset.
It is permissible to advance, defer or install the rental in accordance %ith the
,greement.
It is permissible to revie% the hire period or the rental or the both, if the 7iree and
the 7irer mutually agree to do so.
The hired asset is a trust in the hands of the 7irer. 7e %ill maintain the asset)s*
%ith due produce and shall not be held responsible for the damage or destruction
of the asset %ithout transgression, default or negligence, other%ise he must be
responsible for the same.
The 7iree:o%ner bears all the costs of legally binding basic repairs & maintenance
including the cost of replacement of durable parts on %hich the permanence and
suitability of the hired asset)s* depend or as per ;ontract.
It is permissible to make the 7irer to bear the cost of ordinary routine
maintenance, because this cost is normally kno%n and can be considered as part of
the rental.
It is permissible for the 7irer to let the asset to a third party during the hire period
%hether for the same rental or more or less as long as the asset is not affected by
Page 8A
the change of user and not barred:restricted by the hire agreement:customs to do
so.
It is permissible to purchase an asset bearing a hire contract. The hire contract may
continue since the purchaser agrees to its continuity up to the end of the hire term.
,ll rights and liabilities emanating from the hire contract %ill transfer to the ne%
o%ner. #ut if the salecontract is dra%n and the purchaser is oblivious of the hire
contract, he has the right to rescind the purchase contract and the hire continues.
,s soon as the hire period terminates, the 7irer is under obligation to return the
asset to the o%ner or if the 7iree agree he may enter a fresh hire contract or
purchase it from the 7iree on payment of agreed upon price as per market rate.
The hire contract is binding and no one party shall unilaterally rescind e/cept
reasons that abrogate binding contract such as damage or destruction.
If the hired asset is damaged or destructed by the act of ,llah and if the 7iree
offers a substitute %ith the same specifications agreed upon in the hire contract the
contract does not terminate.
It is also permissible to sell the hired asset by the 7iree to the 7irer during the
tenure of the hire period either part by part or in full at a time. ,s soon as any part
or in full the asset is sold during the tenure of the hire agreement the hire contract
for that part of for the full asset as the case may be, be lapsed and the rental ceased
to apply accordingly.
It is permissible for the 7irer to promise or to give undertaking to purchase the
hired asset during the tenure of the hire period, either part by part or in full or at
the end of the hire period in full. It is also permissible for the 7iree to give similar
promise to sell the asset.
The hire %ith promise to purchase and sale is different from the memorandum of
sale. The rent paid by the 7irer cannot, in any %ay, be considered as part of the
price of the asset, rather it is the price of the service of that asset.
In a 7ire Purchase under +hirkatul ?elk contract, it is permissible to divide the
sale:cost price of the asset or o%nership of the 7iree to the asset into several part
of the price of the assetL rather it is price of the service of the asset.
In a 7ire Purchase under +hirkatul ?elk contract, it is permissible to divide the
sale:cost price of the asset or o%nership of the 7iree to the asset into several parts
Page 8@
and to sell each part of o%nership on payment of proportionate sale:cost price of
the 7iree.
Jnder 7ire Purchase under +hirkatul ?elk ,greement, both the 7iree and the
7irer must pay their respective e&uity as agreed upon to purchase the demised
asset under 0oint o%nership.
2%nership of the asset of both the 7iree and the 7irer should be recogni(ed as per
la% of the land.
$.3. Operationa& Procedure in 0BB):
?odus 2perandi1 The ?odus 2perandi of 7ire Purchase under +hirkatul ?elk %ill be as
follo%s1
Induction of client1
7ole preliminary discussion %ith the prospective ;lient regarding his Investment
needs, business e/perience, viability of the pro0ect and +hariah permissibility of
the asset, the business and the uses of the asset.
#rief him on the salient features of 7ire Purchase under +hirkatul ?elk mode of
Investment. ,pprise, in particular, the usual terms and conditions under %hich the
#ank makes such investment. Discuss about ;lientsC e&uity participation and its
immediate availability.
$ook to the past performance of the ;lient, ;heckup 7ead 2ffice ;urrent
Investment Policy and #ranchCs track record of 7ire purchase under +hirkatul
?elk Investment of the item)s*.
If the Proposal is found permissible under Islamic principles and suitable, advise
the ;lient to submit formal ,pplication. If not found suitable, regret politely.
3e&uest potential ;lient to open an ,lDadia ;urrent ,ccount. $et him maintain
the ;urrent ,ccount. $et him maintain the ;urrent ,ccount satisfactorily for a
reasonable period. )This %ill generally mean si/ month*.
App&ication
2btain application in triplicate from the ;lient of F1A@, and record the same in
the Investment Proposal 3eceived and Disposal 3egister )#B8*.
Page 8>
2btain and affi/ attested photograph)s* of the Proprietor : Partner: Directors : Trustee :
,dministrator on the top right hand corner of the application.
+crutini(e the application of the ;lient to see that
a. ,ll columns are properly filled inL
b. Particulars and information given therein are complete and correct in all
respectsL
c. ,ll re&uired Documents:Papers as listed in the footnote for the
applications are submitted.
d. It is signed by the ;lient as per specimen signature %ith the #ank and
duly verified by the authori(ed official of the #ank.
*ategori<ation
;ategories the proposal as under1
o 7ire Purchase under +hirkatul Eelk ;ommercial1
o Investment on 7ire Purchase under +hirkatul ?elk mode to
Individual:Firm:;ompany:+ociety for ;ommercial purpose)s* shall be termed as
7ire Purchase under +hirgatul ?elk ;ommercial.
o 7ire Purchase under +hirkatul ?elk Industrial
o 7ire Purchase under +hirkatul ?elk Investment to Industrial undertakings in the
Form of $and, #uildings, ?achineries, .&uipments, Transport, etc. shall be
termed as 7ire Purchase under +hirkatul ?elk Industrial.
o 7ire Purchase under +hirkatul ?elk ,griculture
o 7ire purchase under +harkatul ?elk Investment to agriculture sector in the form
of ,gricultural .&uipments, ?achineries, +hallo% TubeDell, Deep TubeDell,
Tractor, Trailers, Transport etc. shall be termed as 7ire Purchase under +hirkatul
?elk ,griculture.
o 7ire Purchase under +hirkatul ?elk Transport
o 7ire Purchase under +hirkatul ?elk Industrial in the form of Transport#us,
Truck, ;ar, Ta/i, $aunch, +teamer, ;argo Pessel, ,ir Transport etc. shall be
termed as 7ire Purchase under +hirkatual ?elk Transport.
o 7ire Purchase under +hirkatul ?elk 3eal .state
Page 8=
o 7ire Purchase under +hirkatul ?elk Industrial in the form of $and #uilding,
?arket, ,partments, for use:rental shall be termed as 7ire Purchase under
+hirkatul ?elk 3eal .state.
$.! Processing and Appraisa&:
o ;heckup ;redit 3estriction schedule of #angladesh #ank and 7ead 2ffice current
Investment Policy -uidelines. 3e0ect the proposal, if it conflicts %ith the e/isting
;redit 3estrictions of #angladesh #ank and 7ead 2ffice Policy -uidelines.
o Pisit the #usiness .stablishment of the ;lient. Tally:verify the securities,
particulars, information and figures given in the ,pplication Form %ith the
original Documents:Papers and be sanguine about its genuineness and correctness.
2btain additional information, particulars, facts and figures, if re&uired.
o Talk to the business and important personalities of the locality to ascertain the
honesty, integrity and business dealings of the ;lient.
o 3e&uest for ;onfidential 3eport of the ;lient from local #ank #ranches. Do not
finali(e the proposal until the ;onfidential 3eport from all #ank #ranches are
received.
o ;onfidential 3eports should also be obtained from local Financial, ;redit and
$easing Institutions, if felt necessary.
o 2btain 3eport from ;redit information #ureau );I#* of #angladesh #ank through
7ead 2ffice Investment Division as per ;ircular issued by 7.2. from time to time
in this regard.
o 2btain declaration of the ;lient about his liability )both contingent and real* %ith
other #anks:Financial Institutions:$easing ;ompanies etc. including any other
branches of I##$.
o 2btain Financial +tatement:#alance +heet of the concerned application)s* for last
three consecutive accounting years for investment proposals of Tk. B"."" lac and
above or as per 7ead 2ffice Instruction. This is to be furnished by all ;lients
irrespective of their status i.e. Individual, Proprietorship, Partnership,
Private:Public $imited ;ompany, Trust #ody etc. engaged in business.
o Inspect $and #uilding)s*, other assets and Properties proposed to be mortgaged or
hypothecated as collaterals. ,scertain primafacie genuineness and correctness of
Page 9"
those collaterals in crossreferences to Documents, Title Deeds and other relevant
Papers. ,scertain primarily the market value and the forced sale value of the
proposed collaterals.
o For%ard the Documents, Title Deeds and other relevant papers to the approved
$a%yer of the #ank for e/amination and furnishing his opinion. )$a%yerCs
opinion should be clean and %ithout ambiguity*.
o 2btain $a%yerCs opinion as per clause 4o. @.1>.!)i*
o Please study the follo%ing carefully and note do%n the actual findings in the
,ppraisal Form against each item.
o Dhether the asset, %hich the ;lient intends to hire and purchase, is readily useable
and have constant and effective demand in the market.
o Dhether the price of the asset is sub0ect to fre&uent and violent changes.
o Dhether the asset is nonfungible or has flo% of services.
o Dhether the &uality and other specifications of the asset as desired by the ;lient can
be ensured.
o Dhether the assets are available in the market and it is possible to
purchase:construct:manufacture:make the asset in time and a the negotiable
price:cost.
o Dhether rental and sale price of the assets are payable by the ;lient at the agreed
specified future date)s* is lump sum or by instilments as per proposal.
o Dhether ;lient & #ankCs e&uity ration is fi/ed to cover the price:cost of the asset.
o Dhether the pro0ect:deal is profitable to generate sufficient fund to pay the rent:sale
price by the ;lient %ithin the deal period.
o Market price and cost price shoud be care!uy studied by the In"estment
Committee o! the branch and propery recorded# "eri!ied and si$ned.
o For 7ire Purchase under +hirkatul ?elk Investment )other than the +chemes*,
prepare ,ppraisal 3eport on F1A@#.
o For ,ppraisal of 7ire Purchase under +hirkatul ?elk Industrial :
,griculture : .......... +cheme, use specific ,ppraisal Form devised for each of
those, if any, other%ise F1A@:#, providing the available:re&uired supplementary
information. In course of preparation of the ,ppraisal 3eport please ensure
incorporation of all information, particulars, figures and statistics in ,ppraisal
Form correctly %ith special attention to the follo%ing1
Page 91
o ;omposition of assets of the ;lient vi(. ;ash, +ecurities, Investments, #uilding,
$anded Prosperity, +tock in Trade, +tores, Dorkinprocess etc.
o ./tent and nature of liabilities )institutional:market* of the ;lient i.e. %hether the
volume is %ithin the manageable capacity of the ;lient. 2pinion in this regard and
0ustification thereof must be clearly mentioned.
o The value of li&uid asset vi(. ;ash and #ook Debts of the ;lient to ensure
re&uired cash flo%.
o 3espectability and business reputation of the ;lient in the market.
o ./perience of the ;lient in the business, management capability etc.
o Dhere the asset %ill be kept:run:established: constructed: installed and ho% the
same %ill be used. Dhether the arrangement is satisfactory and #ankCs interest
%ill be protected properly.
o ;ontact primarily %ith the Producers:+ellers:+uppliers of the asset in the market,
study the market price and %orkout the purchase and sale prices and rental of the
asset as per follo%ing guidelines, and ascertain and not %hether the purchase of
the asset by the ;lient from the #ank %ill be profitable to him and %hether the
;lient shall be able to pay the rental and price of the asset to the #ank %ithin the
stipulated period.
o It is permissible for the #ank to authori(e the ;lient partner to buy and receive the
asset on behalf of the #ank and the ;lient.
o -uideline for %orking out the cost price of the asset1
o Dorkout the cost price of the asset and other e/penses to be incurred to bring the
asset into useable condition as per follo%ing guidelines1
$.$ *ost price of the assets:
a. Purchase price of the asset P$J+
2ther e/penditures concerning the purchase i.e. Transportation, +torage, cost of
construction, cost of installation, making etc. before hire of the asset to the 7irer
partner.
b. ;onveyance T,:D, of #ank 2fficial or the ,gent, if any.
c. ;ommission paid to the ,gent, if any.
d. ;ost of remittance of fund.
e. Transportation cost up to #ankCs -odo%n:;lientCs Pro0ect +ite )if any*.
Page 9!
f. Transit Insurance and out of Pocket e/penses.
g. 2ther e/penses e/cept interest incurred, if any, Interest element, if any, is to be paid
by the 7irer partner.
h. -o do%n rent and -o do%n staff +alary, if any, incurred before delivery:handing
over the asset to the 7irer in good and usable condition.
i. Income loses sustained during the gestation period.
If for any reason the ;lient after handing over the asset to him in good and usable
condition uses #ankCs -o do%n, the -o do%n rent and -o do%n staff salary %ill be
borne by him )7irer partner*.
Fi/ation of 3ental and the sale price of the ,sset
The sale price of the asset )#ankCs share:portion* %ill be fi/ed normally on the cost price
of the assets as incurred a incurred:calculated on the basis of the guidelines given at para
@.1B.1 above taking into account the ./pected 3ate of 3eturn ).33* for the %hole period
of investment including the gestation period into consideration.
2n receiving the proposal and the ,ppraisal 3eport along %ith supporting
papers, 7ead 2ffice %ill either ,pprove or 3egret duly recorded in the
Investment proposal 3eceived & Disposal 3egister )#B8* & Investment :
Facility +anctioned 3egister. )#1=*
If the proposal is approved by the #ranch:the (onal office: 7ead office, the
branch %ill issue the +anction ,dvice %ith a copy to '2:72 duly recorded
in Investment:Facility +anctioned 3egister %ith authority %ise separate
openings )#ranch : '2.72* mentioning all the terms and conditions in
duplicate to the investment ;lient for the limit.
If the ;lient duly accepts the sanction terms and conditions, enter the
particulars of the sanctioned proposal in the limit register allotting a fi/ed
serial number for the each client as per limit register %hich shall remain
permanent irrespective of the mode )s* so long the ;lient continues %ith
the #ank )#ranch : 2ffice*.
2pen file client%ise, affi/ing the Fi/ed number allotted to him as per
limit register and clientCs name, address, )#usiness address, present
address, Permanent address, 3esidential address and
Page 98
telephone:Fa/:Tele/:cable numbers be recorded prominently in the inner
side of the Investment File for easy tracing in case of need.*
#ranch:'onal office: 7ead 2ffice shall maintain Investment:Facility
sanctioned register, ,uthority%ise separately for investment:facility
)general* and scheme%ise. They shall also maintain investment:facility
proposals received and disposal register & limit register.
$.( 'ocumentation
#efore purchasing the asset: property by the #ank, obtain sufficient collateral
securities as mentioned in the sanction advice along %ith the follo%ing charge
documents properly e/ecuted i.e. duly filled in, signed, stamped, verified and
%itnessed %here necessary1
a. 7ire Purchase under +hirkatul ?elk +anction ,dvice deal%ise duly accepted by
the client.
b. 7ire Purchase under +hirkatul ?elk ,greement )Deal%ise*.
c. $etter of Pledge )Deal%ise*:?ortgage Deed.
d. +ingle party D.P. 4ot, if there is no guarantor.
e. Double party D.P. 4ot, if there is guarantor )s* to be made by the ;lient in favor
of the guarantor and endorsed by the later to the #ank.
e. D.P. 4ot Delivery letter.
f. $etter of 7ypothecation for the asset)s* and ;lientCs stock in Trade:%orkin
process.
g. $etter of Disclaimer, if stored in ;lientCs : PartyCs o%n:hired godo%n.
h. Insurance policy )If stored in ;lientCs : PartyCs -odo%n : yard under #ankCs
effective control* duly recorded in insurance register.
i. $etter of guarantee.
0. #alance confirmation letter.
k. $etter of installments.
l. $etter of Disbursement.
If the investment is made collaterally secured by ?ortgage of property, obtain the
follo%ing documents1
Page 99
a. In case of .&uitable mortgage, ?emorandum of Deposit of Title Deep )?DTD*
signed by the o%ner of the property.
b. In case of $egal ?ortgage, 3egistered ?ortgage Deed should be obtained.
c. Personal -uarantee of the o%ners of the property on.
d. 2riginal Title Deeds %ith ;+, 3+, +,, ?utation Parcha, D;3 of the property and
?utation record.
e. Jptodate 3ent 3eceipt.
f. 4on encumbrance ;ertificate along %ith +earch Fee Paid 3eceipt of the concerned
3egistry: +ub3egistry office.
g. +ite plan )?ap:4aksha* of the ?ortgaged property.
h. Paluation ;ertificate )issued by a competent civil engineer and physically verified
by the #ranch 2fficials* countersigned by the ?anager certifying the ?arket value
and the Forced sale value. Palue of the land and value of the construction to be
sho%n separately taking the depreciated value of the construction:building into
consideration as per standard norms.
)The valuation ;ertificate should be self contained one giving full particulars of the
land, i.e. Deg 4umber, Ehatian 4umber, Plot 4umber, 7olding 4umber, ?ou(a
4umber and name of the ?ou(a, +chedule );ho%haddi*, mentioning the name of
the o%ners of the $and:#uilding along %ith a site plan duly signed by the o%ners of
the property, the ;lient and attested by a civil .ngineer and the #ranch ?anager*.
i. $a%yerCs certification about verification of the Title Deed %hich should be in clear
terms that the property covered by the Title Deeds is free from all encumbrances
and the mortgagor)s* have clear valued Title to the property and the same can be
accepted as collateral security against the Investment:Facility. $egal opinion should
be selfcontained, %ithout any ambiguity and clean in all respects.
0. ,n ,ffidavit be s%orn in before a 1st ;lass ?agistrate by the o%ner of the property
to the effect that the property offered for mortgage as security is of his o%n and free
from all encumbrances and the o%ners is:are la%ful o%ners in possession and
he:they %ill not .ncumber:Transfer:sale and:or charge the property in any manner
%hatsoever to other during the continuance of #ankCs Investment %ithout prior
clearance of the #ank.
Dhere the Investment is secured by pledge: hypothecation of +tockinTrade,
?achineries etc., also obtain the follo%ing Document1
Page 9B
a. $etter of Pledge asset & goods security, for ;lientCs stocks in Trade: %orkin
Process etc. if any.
b. $etter of 7ypothecation for ;lientCs stocks, stores, DorkinProcess etc.
c. $egal ?ortgage of ?achineries %ith full details of each machinery.
In case the investment ;ollaterally : ,dditionally secured by Pledge of +hares of
reputed Public $imited company on #ankCs approved list and &uoted in the stock
./change, the follo%ing additional documents are to be obtained1
a. ,greement for Pledge of share along %ith original share certificates )4o share in
the name of minor shall be accepted as security*.
b. #lank +hare Transfer Deed in Duplicate on copy signed, dated and another copy
signed and undated.
c. +hare Delivery letter addressed to the #ank.
d. $etter to the concerned ;ompany to register $ine in #ankCs favour.
This notice shall be sent be registered ackno%ledgement Due post )registered ,:D
post* and confirmation of recording the $ien shall be obtained from the concerned
company.
e. $etter of authority in #ankCs favour duly signed by the share holder to collect
dividend : #onus on his behalf on the share pledged to the #ank. In case of
Investment to partnership Firms, obtain the follo%ing Document1
a. ;opy of partnership deed signed by all partners.
b. ;opy of partnership deed duly attested by a 1st ;lass -a(etted office %ith the
original copy and attested by the incumbentincharge of the #ranch.
In case of investment to Private or public $imited company, obtain the follo%ing
additional document1
a. 2btain certified copy of the ?emorandum and ,rticles of ,ssociation of the
company to ensure that the company has necessary po%er to borro%:avail
investment from any #ank.
b. 3esolution of the board of Directors of the ;ompany to avail Investment: Facility:
#orro%, do #usiness %ith I##$ and authori(ing the office bearers to ./ecute
necessary Documents.
c. Personal -uarantee of the Directors of the ;ompany.
Page 9A
d. If the investment is allo%ed on 7ypothecation of assets, in addition to other charge
documents, 1st charge under relevant section of the ;ompanyCs ,ct1==9 shall be
created in #ankCs favour in respect of ;ompanCs assets prescribed as security. This
charge shall be created %ith the registrar of 5oint +tock ;ompanies %ithin !1 days
from the date of e/ecution of relative ;harge Documents.
e. ;ertificate issued by the registrar of 5oint +tock ;ompanies under section 119 of the
companies act 1==9 in respect of creation of charges.
f. ;opies of ?emorandum and ,rticles of ,ssociation %ith the latest amendments, if
any, duly certified by the registrar of 0oint stock companies and attested by the
managing director on every page %ith official seal of the company and duly verified
by the incumbent In charge of the #ranch.
g. , copy of the ;ertificate of Incorporation duly attested by the Incumbent In
charge of the of the #ranch.
h. , copy of the certificate of commencement of #usiness )in case of publish $imited
company* duly attested by the incumbent In charge of the #ranch.
In case of investment to a trust organi(ation obtain the follo%ing Document in
addition to other charge Documents1
a. ;opy of trust deed duly attested by a 1st class -a(etted officer and verified by the
incumbentincharge of the branch %ith the original copy. The Trust Deed must
contain a clause authori(ing the Trustees to do business %ith banks and to avail
investment facilities:borro% from banks.
b. 3esolution of the #oard of Trustees to do business %ith I##$ and avail investment:
faculties: borro% from I##$.
c. The charge documents and all other agreements shall be signed : e/ecuted by persons
authori(ed by all the members of the board of Trustees, if Trustees are authori(ed to
delegate their po%ers by the trust Deed, other%ise all the Trustees must sign:e/ecute
the charge documents and all other agreements.
d. Personal guarantee of all the members of the board of trustees must be obtained.
In case of investment to cooperative security, obtain the follo%ing documents
also 1
a. ;learance from the register of cooperative societies for doing business and avail
faculties : Investment from I##$ %ithin the annual borro%ing limit of the society.
Page 9@
b. $etter to be issued to the concerned registrar of cooperative societies under
registered ,:D ?ail informing about allo%ing investment:facility to the concerned
society by the bank as per clearance accorded by him.
c. Personal guarantee of the office #earers of the society in their personal capacity.
d. , copy of the byela%s of the society duly certified by the registrar of the co
operation societies.
"ome genera& instruction
3ates stamp duty on various types of documents %ill be supplied by the concerned
department of 7ead office, )$a% department*, from time to time.
+ignature of the ;lient on Documents should be verified by the Incumbentin
charge: authori(ed official in pencil.
#efore preserving the documents in strong 3oom, the investment committee of the
branch should certify that all the formalities of documentation have been properly
done and completed strictly as per terms of the sanction advice ), format to be
developed for the certificate as per Performa*.
,fter completion of documentation, enter the documents in documents e/ecution
registerL put into an envelope:file cover duly inscribing the name of the client
deal%ise and preserve in the strong room in fire proof safe:,lmirh under 5oint
custody of the incumbentincharge of the branch and the officerincharge of the
investment department !nd officer of the #ranch.
$.= "pecia& 0nestment "chemes:
The #ank, since its inception, has been %orking for the upliftment and emancipation of
the underprivileged, do%ntrodden and neglected sections of the populace and has taken
up various schemes for their %ell being. The ob0ectives of these schemes are to raise the
standard of living of lo%income group, development of human resources and creation of
avenues for selfemployment. There are sho%n different types of investment under
different investment scheme. They are sho%n by a graph1
Page 9>
8+5. %i&&ion9
"eria& 2o 2ame of "cheme 2>1> 2>>? 2>>@
1 2 3 ! $
1 -ouseho&d 'urab&e
"cheme
?(1.(! (@(.!? (3@.!
2 -ousing 0nestment
"cheme
!1@.?2 !$2.(= !2?.2!
3 Rea& 3state
0nestment Program
1>1$!.?$ =?33.2> =1@3.2(
! +rasport 0nestment
"cheme
!=32.1$ 3(3>.!@ 3>@=.$$
$ *ar 0nestment
"cheme
13@.=? $3.@1 !1.1(
( 0nestment "cheme
4or 'octor
1$.2= 1=.>( 1$.3!
= "ma&& Business
0nestment "cheme
1=>3.!! 11$?.(3 11>!.($
@ Agicu&ture
0mp&ements
0nestment "cheme
12=.1$ =(.(! 2=.21
? %icro 0ndustries
0nestment "cheme
!=.!! $>.3? 31.$>
1> Rura& 'ee&opment
"cheme
$11>.>> 3=$2.2> 3>11.=2
"ub +ota& 23!1>.>> 1=@12.$= 1$$=>.>3
+ota& 2(322$.>> 21!(1(.>> 1@>$!.>>
A of +ota&
0nestment
@.@?A @.3>A @.($A
1. -ouseho&d 'urab&es "cheme
The ob0ective of the scheme is to increase standard of filing and &ualify of life of the
fi/ed income group by e/tending them investment facilities to purchase household
articles such as furniture like ,lmirah, sofa set, %ardrobeL electric and electronic
e&uipment like television, refrigerator, gas cookerL air conditioner, P;, %ashing machineL
electric generatorIP+, JP+L motor cycleL corrugated iron sheet, cement, rod, %ood etc,
for construction of d%elling houseL gold ornaments, tube%ell, mobile telephone set etcL
medical: engineering instruments:e&uipment, computer, books etc for students.I##$
invest this sector in !"1".
Page 9=
2. -ousing 0nestment "cheme
The #ank has introduced this scheme recently to ease the serious housing problem in the
urban areas and to make arrangement for comfortable accommodation of the fi/ed
income group.
Officia&s of the 'efense 4orces: Permanent 2fficials of -overnment, +emi-overnment
and ,utonomous 2rgani(ationsL Teachers of the established Jniversities, Jniversity
;olleges & ?edical ;ollege1 -raduate .ngineers, Doctors and .stablished professionalsL
#angladeshi 2fficials of reputed ?ultinational ;ompanies, International Financial
2rgani(ations, Donor ,gencies, Foreign .mbassies etc. 2fficials of local established &
reputed public $imited ;ompaniesL Dage .arner professionals like Doctors, .ngineers,
,ccountants, Teachers and other profession doing good 0ob abroad %ith handsome pay
package shall be eligible to apply for availing investment facilities under the +cheme.
3. Rea& 3state 0nestment Program
Professionals, +erviceholders, #usinessmen, 3eal .state Developer and other categories
of people %ho are not entitled for availing investment facilities under 7ousing investment
+cheme, shall be eligible under this program. Investment is to be e/tension: completion
of the house already constructed, commercial building. +hopping comple/, flat:
apartment etc.
!. +ransport 0nestment "cheme
To ease the e/isting transportation problem and ensure speedy economic gro%th and
development of the country particularly the e/pansion of trade, commerce and industry,
the #ank has taken up this +cheme. Jnder this +cheme investment is being allo%ed to the
e/isting successful businessmen and potential entrepreneurs in this sector for all types of
road and %ater transport like bus, minibus, truck, launch, cargovessel, transport for rent
acar serviceL and baby ta/i, tempo, pickup van for selfemploymentL and ambulance for
clinic & hospital. The #ank is also e/tending investment facilities to multinational
companies, established business houses and %ell to do officials and professionals for
ac&uisition of private cars, microbus and 0eeps.
$. *ar 0nestment "cheme
Page B"
;ar is considered as an essential mode of transport in the modern society, particularly by
a section of the officials, business houses and business e/ecutives and established
professionals for movement in discharging their duties and responsibilities punctually and
efficiently. To meet this need, Islami #ank has introduced the <;ar investment +cheme<
for the mid and high ranking officials of government and semigovernment organi(ations,
corporations, e/ecutives and directors of big business houses and companies and also for
persons of different professional groups on easy payment terms and conditions.

(. 0nestment "cheme for 'octors
The #ank has taken up this +cheme to help unemployed &ualified doctors to go for self
employment and to provide latest medical e&uipments to specialist doctors to e/tend
modern ?edicare facilities throughout the country.
=. "ma&& Business 0nestment "cheme
This +cheme has been taken up for selfemployment of educated unemployed youths of
rural and urban areas and to provide investment to small businessmen and entrepreneurs.
Investment is e/tended for about !"" economic activities in sectors as livestock, fishery,
agrotrading:shopkeeping, transportation, agricultural implements, forestry and service
vi(. laundry, signboard painting etc.
@. Agricu&ture 0mp&ements 0nestment "cheme
In keeping %ith vie% of the peopleoriented and %elfare ob0ectives of the #ank, this
scheme has been introduced to provide po%er tillers, po%er pumps, shallo% tube %ells,
thresher machines etc. on easy terms to unemployed rural youths for selfemployment and
to the farmers to help augment production in agricultural sector.
?. %icro70ndustries 0nestment "cheme
To create %ider base for industries as %ell as to encourage establishment of micro
industries in different areas of the country by the potential entrepreneurs and for
diversification of the #ankCs investment portfolio, the #ank introduced C?icro industries
Investment +chemeC. Different sectors including food and agriculture based industries,
plastic & rubber industries, forestry and forestry and furniture industries, engineering
industries, leather industries, chemical industries, te/tile industries, recycling industries,
Page B1
service industries, electrical accessories industries, computer technology industries, paper
products industries, handicrafts industries, fishery & live stock farming, hollo% bricks,
roof tiles and any other viable microindustries have been identified for financing under
the +cheme.
1>. Rura& 'ee&opment "cheme
#angladesh is predominantly an agricultural country %ith vast ma0ority living in rural
areas. 4ear than A"K of the people live belo% the poverty line. +easonal unemployment
and under idle and %ithout 0ob in most of the time of the year. ,s a result people in large
number are migrating to urban areas, particularly in metro polish in search of employment
thereby creating social and environment ha(ards. Islami #ank has, therefore, taken up a
+cheme to reactive the rural economy and develops model villages through integrated
rural development approach. The ob0ective of the +cheme is to create income generating
and productive selfemployment opportunities through e/tension of investment for the
development of rural areas and thereby contribute in alleviating rural poverty. Investment
%ill be allo%ed for the purpose of, amongst others, production of !1 types of main crops
vi(. food, cereals and cash crops, offfarm activities like dairy, beef fattening, goat
rearing, poultry, shop keeping, peddling etc, rural transport like ricksha%, ricksha%van,
cart etcL irrigation e&uipment, hand tube%ell, housing materials. in all covering about
898 types of economic activities, Islami #ank Foundation, a subsidiary of the #ank,
engaged in social %elfare activities shall, side by side, take care of the re&uirement of
sanitation, ?edicare and education of the villages through integrated area development
approach under Islamic model.
11. 5a&igonj /arments 1eaers 0nestment "cheme
The +cheme has been taken up to assist the -arments %eavers of Ealigon0 area
particularly in respect of re&uirement of %orking capital, #?3. of e/isting unit by
adding further machineries, to develop ne% entrepreneurs and to assist the %orkers for
getting further training for producing products of various modern design and for
moderni(ation of the -arments +ector.
12. "%3 0nestment:
Page B!
,like developing country of #angladesh +?. $one is very important for developing
economy. I##$ invest this types of loan in small and middle enterprise. The investment
of +?. are increasing day by day. Three years investment in +?. are sho%n belo%1
)Tk. ?illion*
Qear !""> !""= !"1"
+?. invest @>9BA B@1B= 8@1B9
Increasing !1!=@ !""""B 19B9"
3ate of Increasing 8@K B9K A9K
$.@ Opportunit# . +hreats of 0BB) in Bang&adesh.
Despite tremendous popular support spectacular success in terms of mobili(ation of
deposit and distribution of profit Islamic banking in #angladesh yet to achieve the
desired level of success due to the absence of appropriate legal frame%ork for
carrying out Islamic #anking operations in the country. ,ll the government
approved securities in #angladesh are interest bearing, #esides, Islamic ?oney
?arket in #angladesh is yet to develop. ,s a result the Islamic banks, %hich are
committed to avoid interest, cannot invest the permissible part of their +tatutory
$i&uidity 3eserve and short Term $i&uidity in those securities.
Inspire of the present limitations, Islamic banking system has tremendous potentiality
and prospect in #angladesh, Firstly, the successful launching and needs to an Islamic
?oney ?arket in the country. +econdly Islamic banks have brought together man
Page B8
*hapter "iB
Recommendations and
*onc&usion
Page B9
*onc&usion
Islami #ank #angladesh $imited has made an evaluation in the conventional banking
system. This bank is committed to run all itCs activities as per Islami +hriah of I##$
through its continued success and steady progress has, by ho%, earned the reputation of
being one of the leading probate sectors banks of the country. It has made revaluation
specially in the field of bank investment I##$ became successful in proving that bank
investment can be made properly, Profitably follo%ing profit and loss sharing concept
%ith abolishing interest, and %hich is also beneficial to human being and society. ,nd
these all characteristics of bank investment are absolutely absent in case of conventional
bank. Islami money market in #angladesh is yet to develop. ,s a result the Islamic #anks
%hich are committed to avoid interest can not invest the permissible part of their strategy
li&uidity reserve and short term li&uidity surplus in those securities.
In spite of the present limitation, Islami banking system has tremendous potentiality and
prospect in #angladesh. Firstly, the successful launching and operation of Islami bank in
#angladesh has established the fact that banking %ithout interest is feasible. +econdly, the
launching of Islami #ank has sho%n the needs of an Islamic money market in the country.
Thirdly, Islami #ank has brought together many depositors and entrepreneurs under their
fold and coverage. These depositors and entrepreneurs so long avoided interestbased
banking on ground of religious in0unctions.
Page BB
Recommendations
During the period of preparing my ?aster Paperabout different modes of investment of
Islami #ank #angladesh $imited, 'in(ira #rance, our recommendations about operation
of I##$ are as follo%s1
Islami #ank #angladesh $imited should establish ne%:updated financial products
to attract to potential depositors.
;ustomer6s credit scheme should ameliorate by various modern banking systems.
I##$ ought to also precede incorporate <2n $ine #anking< or N.lectronic
#anking< keeping in mind up coming competition of the challenging age.
;urrent portfolio should be e/aggerated. 4ot to give %eight only in %orking
capital financing.
Information technology of I##$ should be updated more over there is no Internet
connection available in the I##$. +o, I##$ should develop IT to ensure better
service to the customers and support communication %ith outside.
3egarding the investment modes, +hariah la% should be e/panded among the
potential investors.
+alary has been recently increased by I##$, %hich is very significant decision to
motivate among the employees, and this decision should be continued.
Dhen contact is made bet%een the I##$ and client then I##$ al%ays maintains the
+hariah la% but most of the client puts the signature %ithout %itting the +hariah la%,
%hich creates problem bet%een the I##$ and client in letter.
Page BA
B0B)0O/RAP-6
1* Islami #ank 1> Qears of Progress
!* ,nnual 3eport of Islami #ank #angladesh $imited !"1"
8* Parious types of publications of I##$
9* Islami #ank Porichety.
B* Islamic #ank Debsite )%%%.islamibankbd.com*
A* Personal intervie% at 'in(ira brance
Page B@
Appendix
+ome ,bbreviated %ords1
I##$1 Islami #ank #angladesh $td.
FT2D1 Foreign Trade 2peration Division
F3?D1 Foreign 3emittance ?anagement Division
TF?D1 Tresury and Fund ?anagement Division
,?D1 ,sset ?anagement Division
F3+D1 Foreign 3emittance +ervice Division
-ID1 -eneral Investment Division
3D21 3ural Development 2peration
PID1 Pro0ect Investment Division
F,D1 Financial ,dministration Division
ITD1 Information & Telecommunication Division
7P+?1 7ire Purchase Jnder +hirkatul ?elk
7D+1 3urla Development +cheme
Page B>
Guestionnaire )For $oan*
+ir:?adam
I am a student of #usiness Faculty of 5agannath Jniversity , conducting a survey on
C)oan Po&ic# of 0s&ami Bank Bang&adesh )tdD7 as re&uirement of my NRRRRRO
course. Eindly note that this is an academic study and the findings %ill be remain
confined %ithin academic interests. 4o part of this study %ill be printed or disclosed %ith
others. Qour cooperation and guidelines are important for the success of this study and
%ill be very much appreciated.
1. 2ame1RRRRRRRRRRRRRRRRRRRRRRRRRRR
2. Profession1
S +ervice )-overnment: 4on-overnment 2rgani(ation*
S Professionals )Doctor:.ngineer:$a%yer*
S #usiness Person
3. 'uration of the profession in the present organi<ation1
T $ess than 1 year T 8 years
T 1 year6s T 9 years
T ! years T B years or more
!. 3ducation1RRRRRRRRRRRRRRRRRRRRRRRRR
$. Age1
T $ess than !B years T 9"9B years
T !B8" years T9BB" years
T 8"8B years T B" or more years
T 8B9" years
(. %onth&# 0ncome1
T $ess than Tk. 1"""" T TE. !B"""8""""
T TE. 1""""1B""" T TE. 8""""8B"""
T TE. 1B"""!"""" T TE. 8B"""9""""
T TE. !""""!B""" T TE. 9"""" or more
=. %onth&# 3Bpenditure1
T $ess than Tk. 1"""" T TE. !B"""8""""
Page B=
T TE. 1""""1B""" T TE. 8""""8B"""
T TE. 1B"""!"""" T TE. 8B"""9""""
T TE. !""""!B""" T TE. 9"""" or more
@. %onth&# "aings1
T $ess then TE.9""" T TE. >"""1""""
T TE. 9"""A""" T TE. 1"""" or more
T TE. A""">"""
?. 2umber of 'ependent1
T 1 T ! T 8 T 9 T B or more
1>. 2umber of earning member1
T 1 T ! T 8 T 9 or more
11. 1ou&d #ou p&ease mention the principa& month&# eBpenditure purposeE
T Food T Jtility bill
T 7ealth T .ntertainment
T .ducation T 2thers )please specify*
T 7ouse 3ent
12. Are #ou aware of the consumer finance scheme of the 0BB)E
Qes 4o
13. 1hat t#pe of &oan faci&ities hae #ou taken from the 0BB)E
T +mall #usiness $oan +cheme
T 7ouse repairing:3enovation $oan +cheme
T Personal $oan +cheme for +alaried Person
1!. 1ou&d #ou p&ease mention the reason behind choosing 0BB) for taking &oanE
T Guick +ervice T $o%er interest rate
T Technology T #ank6s 3eputation
T ;ommunication system T ;ustomer 7andling
T $onger 3epayment Period T 3estricted 3ules and
3egulations
T ,vailability of desired banking products
1$. 'o #ou hae an# &oan from another bankE
Qes 4o
1(. 0f the answer of the Fuestion no. 1$ is 63", then mention the organi<ation:s
name:RRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRR
Page A"
1=. 0f the answer of the Fuestion no. 1$ is 63", then mention #our purpose:
T #uying of household goods T #usiness purpose
T 7ouse $oan T #uying ;ar
T others )Please specifyRRRRRRRRR*
1@. 1ou&d #ou p&ease mention the reason behind choosing another bank for taking
&oanE
T $onger 3epayment Period T 3estricted 3ules and
3egulations
1?. 'o #ou hae an# intention to take &oan from another BankE
Qes 4o
2>. 0f 1? is 63" then from which bankE
RRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRR
21. 0f 1? is 63", p&ease mention the reason1
T $onger 3epayment Period T 3estricted 3ules and 3egulations
Page A1
22. P&ease mention #our &ee& of satisfaction in terms of 0BB):s *onsumer *redit
"cheme:
3eason 7ighly
+atisfied
+atisfied ?oderate Dissatisfied 7ighly
Dissatisfied
Guick +ervice
,vailability of desired
banking products
$o%er interest rate
Technology
#ank6s 3eputation
;ommunication
system
3estricted 3ules and
3egulations
;ustomer 7andling
$onger 3epayment
Period
23. P&ease make a comment on *onsumer *redit "cheme b# 2**B):
RRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRR
RRRRRRRRRRRRRRRRRRRRRRR.
B#7
%d. Anisur Rahman
+hank 6ou
Page A!

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