Professional Documents
Culture Documents
to minimize the gap between theoretical and practical knowledge. During the internship
program the teachers of the department are attached to actively and constantly guide the
students. A student are required to work on a specific topic based on their theoretical and
practical knowledge acquired during the period of the internship program and then submits it
to the teacher. That is why I have prepared this report.
1.4 Methodology of the study
For carrying out this project paper I had to study the actual banking operations of AIBL.
In order to carry out this study, two sources of data and information have been used:
a) Primary data
I discussed with the executives & officials of the AIBL and found the approximate data,
which has been presented in the report. I also discussed with the officials of conventional
Banks regarding the issue and found necessary information, which has been presented in the
report.
b) Secondary data
Annual Reports of 2011 of Al-Arafah Islami Bank Ltd.
Desk report of the related department
Manuals of Al-Arafah Islami Bank Ltd (Bai-Murabaha, Bai-Muajjal, Bai-Salam,
Musharaka)
Training sheets which are provided by Islami Bank Training and Research Academy
(IBTRA).
1.5 Scope of the report
The scope of this paper is limited to the organizational structure, background, and objectives,
functions, and investment performance of AIBL as a whole. The scope is also limited to
different investment schemes, modes, mechanism, investment proposal appraisal procedures,
monitoring and documentation of AIBL.
1.6 Limitations of the study
There are some limitations in our study. We faced some problems during the study which we
are mentioning them as belowi) Lack of time
The time period of this study is very short. I had only 4 weeks in my hand to complete this
report, which was not enough. So I could not go in depth of the study. Most of the times the
officials were busy and were not able to give us much time.
ii) Insufficient data
Some desired information could not be collected due to confidentiality of business.
iii) Lack of monitory support
Few officers sometime felt disturbed, as they were busy in their job. Sometime they didnt
want to supervise us out of their official work.
1.7 What is Islamic Banking?
Islamic bank is a financial Institution that operates with the objective to implement and
materialize the economic and financial principles of Islam in the banking area. The
organization of Islamic conference (OIC) defines an Islamic bank as a financial institution
whose statutes, rules and procedures expressly state its commitment to the principals of
Islamic Shariah and to the banning of the receipt and payment of interest on any of its
operation.
According Islamic banking Act 1983 of Malaysia Islamic bank is a company, which carries
on Islamic banking business. Islamic banking business means banking business whose aims
and operations do not involve any element which is not approved by the religion of Islam.
It appears from the above definitions that Islamic banking is system of financial
intermediation that avoids receipt and payment of interest in its transactions and conducts its
operations in a way that it helps achieve the objectives of an Islamic economy. Alternatively,
this is a banking system whose operation is based on Islamic principles of transactions of
which profit and loss sharing (PLS) is a major feature, ensuring justice and equity in the
economy. That is why Islamic banks are often known as PLS-banks.
1
increase, instead of being prohibited (Haram), is approved (Halal) in Islam. Islam prohibits
only those increases that are charged on the loan with a prefixed rate.
Muslim scholars equate interest with Riba. In the Shariah, Riba technically refers to the
premium that must be paid by the borrower to the lender along with the principal amount as
a condition for the loan or for an extension in its maturity (Chapra 1985, p.64). In other
words, Riba is the predetermined return on the use of money. In the past there has been
dispute about whether Riba refers to interest or usury, but there is now consensus among
Muslim scholars that the term covers all forms of interest and not only excessive interest
(Khan 1985, p.52).
Imam al Rajhi describes, During the era of Jahiliah people invested their money and
charged Riba on a monthly basis, though the invested amount remained unchanged. Money
so invested was called back at the time of repayment. In case of the borrower being unable to
pay back, the lender extended the period of repayment enhancing the amount to be paid on
and above the principal amount. Abu Bakr al Jasas writes, During the period of Ignorance
the lender and borrower came to an agreement that the borrower would pay back within a
specified period the principal amount along with the agreed upon excess. Ibne Hajar
Askalani says, Excess goods or money charged on and above principal amount is Riba.
Riba is related with time and become double and redouble and multiple with passage
time
Riba is not related with the result of business.
1.10 RIBA and Profit
Most of the persons are trying to connect Riba with profit. In effect, they are fundamentally
different from each other. These misunderstanding will be removed if we look at the
differences of the Riba and Profit. These differences are as follows:
Riba
Profit
1. When money is charged, its imposed 1. When money is used in trading (for e.g.)
positive and define result is Riba
its uncertain result is profit.
2. By definition, Riba is the premium paid 2. By definition, profit is the difference
by the borrower to the lender along with between the value of production and the
principal amount as a condition for the cost of production.
loan.
3. Riba is prefixed, and hence there is no 3. Profit is post-determined, and hence its
uncertainty on the part of either the givers amount is not known until the activity is
or the takers of loans.
done.
4. Riba can not be negative, it can at best be 4. Profit can be positive, zero or even
very low or zero.
negative.
5. From Islamic Shariah point of view, it is 5. From Islamic Shariah point of view, it is
Haram.
Halal.
6.Riba is not related with the result of 6.Profit is related with Business
business
Bangladesh rendering all types of commercial banking service under the regulation of Bank
Companies Act, 1991. The Bank conducts its business on the principles of Musaraka, BaiMurabaha, Bai-muazzal and Fire Purchase transactions approved by Bangladesh Bank.
Naturally its modes and operations are substantially different from those of other
conventional commercial banks. There is a Shariah Council in the bank who maintains
constant vigilance to ensure that the activities of the bank are being conducted on the precepts
of Islam. The Shariah Council consists of prominent Ulema, reputed Bankers, renowned
Lawyers and eminent Economist.
2.2 Vision of AIBL
To establish Islamic banking through the introduction of welfare oriented banking and also
ensure equity and justice in the field of all economic activities, achieve balanced growth and
equitable development through diversified investment operations particularly in the priority
sectors and less development areas of the country. Encourage social-economic boost and
financial services to the low -income community particularly in the rural areas.
2.3 Mission of AIBL
To conduct interest free banking.
To establish participatory banking instead of banking on debtor creditor relationship.
To invest through different modes permitted under Islamic Shariah.
To accept deposits on profit-loss sharing basis.
To establish a welfare-oriented banking system.
To extend co-operation to the poor, the helpless and the low-income group for their
economic uplift
To play a vital role in human development and employment generation
To contribute towards balanced growth and development of the country through
investment operations particularly in the less developed areas.
To contribute in achieving the ultimate goal of Islamic economic system
The motto of the Al-Arafah Islami Bank Ltd is to explore a new horizon of innovative
modern banking creating an automated and computerized environment providing one stop
service and prepare itself to face the new challenges of globalization and 12th century.
One of the main objectives of the bank is to be a provider of high products and services to
cater to the needs of its corporate clients and provides a comprehensive range of financial
services to national and multinational companies.
2.5 Organgram
Tea Boy
DMD
MCG
Assistant Officer
Junior Officer
Vice President
Probationary Officer
Officer
Senior Officer
FAVP
Principle Officer
The management team of the Bank consists of high motivated, well educated and high skilled
and dynamic executives who have been contributing substantially in the continued growth
and progress of the bank. The management is ably supported and assisted by well motivated
and experienced officers and members of staff.
2.7 Financial Highlights of the company
Particulars
Authorized Capital
Paid up Capital
Reserve Fund
Shareholders Equity
Deposit
Investment
Import
Export
Total Income
Total Expenditure
Profit before Tax
Profit after Tax
Income Tax
Total Assets
Fixed Assets
Earning per share (Taka)
Profit Earning Ratio
Dividend per share
No. of Shareholders
Number of Employees
Number of Branches
Manpower per Branch
2009
1000.00
586.99
488.00
957.26
10108.28
8150.16
9337.49
3639.34
1120.85
771.96
348.89
158.76
157.00
12874.61
195.17
263.68
2010
1000.00
677.94
542.22
1220.16
11643.66
11474.41
12631.60
4932.90
1452.68
904.48
548.20
262.90
215.10
15336.89
208.00
387.80
15.5%
5379
803
40
20
26.00%
5402
771
41
19
According to the needs and demands of the society and the country as a whole the
bank invests money to different halal business.
The bank participates in different activities aiming at creating jobs, implementing
development projects taken by the government and developing infrastructure.
The bank is committed to establish an economic system through social justice and
equal distribution of wealth.
It is also committed to bring about changes in the underdeveloped rural areas for
ensuring balanced socio economic development of the country through micro credit
program, according to mudaraba system
The bank is contributing to economic and philanthropic activities side by side. AlArafah English Medium Madrasah and AIBL Library are among mention worthy.
2.9 International Trade
At the year of 2010, the bank experienced satisfactory growth in the International trade. At
the end of 2009, the total amount of International Trade (export, import and Remittance) was
13268.83 million taka; which has increased at 35.81% to reach 18020.10 million taka in
2010. The total export of the bank was 3639.34 million taka in 2009, which has increased at
35.54 % growth rate to reach 4932.90 million taka in 2010, whereas the national growth was
15.70% during the same period. Similarly the amount of import has increased from 9337.49
million taka of 2009 to 12631.60 million taka in 2010, experiencing a growth rate of 35.27%.
Last year the amount of remittance through the bank was 292.00 million taka, which grows to
455.60 million taka in the current year.
2.10 Correspondent Banking Relationship
The main aim of Al-Arafah Islami Bank Ltd is to increase its foreign exchange business and
in this connection we are doing international banking with all major banks of the world. At
present we are maintaining correspondent banking relationship with 20 major reputed banks
of the world.
community as well as makes such use of savings by making it available to productive and
priority sectors of the economy thereby fostering the growth and development of the nations
economy.
Accounts are opened under the following two modes 1
A banker should not open an account in the name of a partnership unless one or more of the
partners apply to him to do so. Except where the partner, making an application for the
opening of an account in the firms name, is deprived of the power, which fact is known to
the banker, there can be no legal objection to a banker opening an account in the name of the
firm at request. Failure, however, to make proper enquiries by referring to the partnership
agreement or any other record in writing which maybe available before opening of account
on behalf of a firm in a partners name may lead a banker in trouble.
1. All items for individual account holder as stated above.
2. Valid trade license or attested photocopy thereof issued by the competent authority
3. Two or more person can form a partnership firm by partnership deed. (Registered
notarized)
4. Clear mandate for operating the a/c from the partners regarding name of the persons to
draw cheques and borrow money, to overdraw, to mortgage or to sell properties owned
by the firm
5. In case of insolvency of the firm: Operation should be stopped after receiving notice of
insolvency of the firm
3.9 Private Limited Company
A company registered under the Companies Act, 1913 has a legal entity apart from its
shareholder. Private Company means a company which by its articles:
Restricts the right to transfer the shares if any;
Limits the number of its members 2 to 50
Prohibits any invitation to the public to subscribe for the shares, if any or debentures
of the company.
When a current account is to be opened for a private limited company the banker will have to
obtain the following requirements:
1. All terms for individual account holder as stated above
2. Copy of memorandum and articles of association duly certified by the
Secretary/Director of the company
3. Certificate of incorporation
3.10 Mudaraba Savings A/c (MSA A/c)
1. Nationality certificate from Ward Commissioner/ UP Chairman or Passport
(photocopy) of every signatories of the A/c
1
Provisional Profit
10.88%
10.47%
10.88%
10.47%
For 5 years
10.10%
10.47%
For 5 years
10.10%
10.25%
For 5 years
10.10%
10.20%
10.00%
1
24 months
9.52%
12 months
9.37%
06 months
7.41%
03 months
7.09%
6.35%
2.
3.
Material alteration
4.
5.
6.
Whether the amount in figure and in word corresponds with each one
Then the officer checks the cheque from the computer for further verification. Here is the
following information that is checked.
1.
2.
3.
The cash section deals with all type of negotiable instruments. It also includes the Vault
which is used as the store of the cash instruments. The vault is insured up to a certain
amount, which is called the vault limit; the excess cash is then transferred to Bangladesh
Bank.
transferred, the cash officer issues IBDA. The vault counter is around 35 lacs. Any client
who wants to deposit money will fill up the deposit slip and give the form along with the
money to the cash officer over the counter. The cash officer counts the cash and compares
with the figure written in the deposit slip. He then puts his signature on the slip along with
the cash received seal and records in the cash receive register and also in the computer
against the account holder.
3.15 Bills & Clearing Section
A cheque is a bill of exchange drawn on a specified banker and not expressed to be payable
otherwise than on demand. [Section-6, Negotiable Instrument Act, 1881]
A cheque may be an open cheque (which can be presented for payment by the holder) or a
crossed cheque (which can be paid only through a collecting banker.)
The picture below (Fig.1) shows a typical cheque issued by banks.
Cheques of its customers are received for collection from other banks. In case of receiving
cheques, following points should be checked very carefully:
The cheques should not carry a date older than the receiving date for more than 1
months. In that case it will be a stale cheque and it will not be allowed for
collection.
The amount in figure and words in both sides of the pay-in-slip should be same.
The name mentioned in the cheque should be same in both side of the pay-in-slip
and it should be the same with the name mentioned in the cheque
1
Local
remittance represents remittance that takes place within the territory of a country.
Virtually there are three types of remittances as under:
DD- Demand Draft
TT Telegraphic Transfer
1
PO - Payment Order
3.20 Demand Draft
According to Section 85 (A) of the negotiable instruments Act, a demand draft is an order to
pay money drawn by one office of the bank upon other office of the same bank for a sum of
money payable to order on demand.
The followings are essential features of a demand draft issued by the bank:
1. It is a negotiable instrument
2. It is drawn by one office of a bank upon another office of the same bank
3. It is payable on demand.
3.21 Issuance of DD
1. A prescribed Application Form bearing No (F20). The following columns should be
filled in properly.
(a) Name & address of the applicant
(b) Telephone No
(c) Date
(d) Signature of the applicant
(e) Name of the payee
2. Commission to be realized/charged as per Head Office circular, at present
@0.1 %
but min TK.40/3. Total amount should be deposited by the party in cash or cheque as per arrangement.
4. Printed DD block/leaf to be filled in by a bank official as per request of the purchase
(a) Name of the issuing branch
(b) Date
(c) A/c payee rubber stamp
(d) Payees name
(e) Amount in words and figure
(f) Drawee branch
4.1 INVESTMENT OF AIBL
Investment is the action of deploying funds with the intention and expectation that they will
earn a positive return for the owner (Brokington 1986, p.68). Funds may be invested in either
real assets or financial assets. When resources are used for purchasing fixed and current
assets in a production process or for a trading purpose, then it can be termed as real
investment. The establishment of a factory or the purchase of raw materials and machinery
1
for production purposes are examples in point. On the other hand, the purchase of a legal
right to receive income in the form of capital gains or dividends would be indicative of
financial investments. Specific examples of financial investments are: deposits of money in a
bank account, the purchase of Mudaraba Savings Bonds or stock in a company.
4.2 Investment Objectives of Al-Arafah Islami Bank
The objectives and principles of investment operations of the Banks are The investment fund strictly in accordance with the principles of Islamic Shariah.
To diversifies its portfolio by size of investment, by sectors (public and private), by
economic purpose, by securities and by geographical area including industrial,
commercial and agricultural.
To ensure mutual benefit both for the Bank and the investment client by professional
appraisal of investment proposals, judicious sanction of investment, close and
constant supervision and monitoring therefore.
To make investment keeping the socio-economic requirement of the country in view.
To increase the number of potential investors by making participatory and productive
investment.
To finance various developments schemes for poverty alleviation, income and
employment generation with a view to accelerating sustainable socio-economic
growth and upliftment of the society.
4.3 Strategies
Risk in the investments and return thereon are interrelated. An investment policy that
emphasizes a high return must accept relatively high risk. Conversely, an investment policy
that will tolerate only small amount of risk must be prepared to accept a relatively low return.
As such, it is really difficult whether to select a high return port-folio on high risk or low risk
port-folio with a low return.
Nevertheless, considering all aspects following guidelines shall be followed as strategy for
banks investments.
i.
If two port-folios have the same risk but different returns, the port-folio having
higher return shall be preferred.
ii.
If the two port-folios have the same expected returns, but different degrees of risk,
the port-folio with lower risk shall get preference.
iii.
If one port-folio has both a higher return and a lower risk than another, the first
port-folio shall be preferred.
iv.
Keeping in view the risk factor, the bank shall maintain flexibility in
determination of rate of return on investments on case to case basis in
consideration of the risk element involved in the respective investment.
v.
Emphasis is given for expansion and strengthening cottage and small industries
sector and rural industries. This immensely potential industrial sub-sector shall
create employment opportunities to rural and semi-urban population and shall
have positive contribution in employment and income generation and poverty
alleviation of the low-income group.
vi.
Bai- Mechanism
Share
Mechanism
a) Bai-Murabaha
b) Bai-Muajjal
c) Bai-Salam
d) Istishnaa
a) Mudaraba
b) Musharaka
Ijara Mechanism
a) Hire Purchase
b) Hire Purchase
Under shirkatul
Melk
4.5 Bai-Murabaha
Bai-Murabaha may be defined as contract between a buyer and a seller under which the seller
sells certain specific goods (permissible under Islamic Shariah and the Law of the land), to
the buyer at a cost plus agreed profit payable in cash or on any fixed future date in lump-sum
or by installments. The profit marked up may be fixed in lump-sum or in percentage of the
cost price of the goods.
1
Categorization
Processing and appraisal
Sanction
Documentation
Purchase of goods by the Bank
Taking delivery of goods by the Bank
Sales and delivery of goods to the client
4.8 Application
Obtain application in triplicate from the client of F-167A and record the
same in the
A good number or newly graduated doctors from Medical Colleges are unemployed. Many of
the medical graduates are waiting for job because the opportunity for Government service is
limited. If these young doctors could be self-employed by extending investment facilities,
they could make modern facilities available at the door-steps of rural people. In view of the
above facts, Al-Arafah Islami bank has taken the initiative an introduced the " Doctors
Investment Scheme" to ensure modern treatment and medical facilities available to the people
through extension of Banks investment facilities for self-employment of newly graduated
doctors and at the same time extending investment facilities to the established medical
practitioners to procure modern and sophisticated medical equipment.
2007
2008
2009
2010
2011
Bai-
12,003.92
17,112.56
23,522.94
31,138.88
41,731.48
HPSM
8,496.87
10,664.08
14,131.48
18,065.10
23,344.46
Bai-Muajjal
4,478.34
4,753.54
4,965.74
5,512.13
5,735.19
& 1,337.05
1,386.14
1,865.26
1,801.33
2,416.84
Murabaha
Purchase
Negotiation
Quard
640.23
923.16
1,298.19
1,765.65
1,694.32
Bai-Salam
407.98
610.27
807.14
Mudaraba
52.00
52.00
52.00
102.00
102.00
Musharaka
428.91
346.28
37.02
12.13
27.13
Total
27,437.32
35,237.76
46,280.61
59,007.49
75,858.56
4.11 AIBL has Extended Finance Covering all Sectors of the Economy
*** INVESTMENT PORTFOLIO AS ON 31 DEC 2011***
SECTOR
AMOUNT IN MILLION
PER CENTAGE
TAKA
US DOLLAR
INDUSTRIAL
42666
675
45%
COMMERCIAL
33185
525
35%
REAL ESTATE
8533
135
9%
TRANSPORT
3793
60
4%
AGRICULTURE
3793
60
4%
OTHERS
2844
45
3%
TOTAL
94814
1,500
100%
If the branch is an
authorized dealer in foreign exchange market, it can remit foreign exchange from local
country to foreign country. This department mainly deals in foreign currency, thats why it is
called foreign exchange department.
Bank branch should be authorized dealer, with due approval from Bangladesh Bank to run
foreign exchange transactions. According to the Bangladesh Law, the payment must be
received within 120 days.
Foreign Exchange Department is dividend in to 3 sections
Import
Export
Remittance
Commercial Importer
2.
Industrial Importer.
3.
Definition of L/C
A letter of Credit is a conditional bank undertaking of payment. In other words letters of
credit is a letter form the importer bankers to the exporter that the bills if drawn as per terms
and conditions are compiled with will be honored on presentation
As per UCPDC 500 a credit may be either:
i)
Revocable.
ii)
Irrevocable.
The Credit, therefore, should clearly indicate whether it is revocable or irrevocable. In the
absence or such indication the credit shall be deemed to be irrevocable.
Types of L/C
1. Revocable Credit: As per Article no. 8 (a) A revocable credit is a credit which can
be amended or canceled by the issuing bank at any time without prior notification to the seller
since to offers little security to the seller.
2. Irrevocable Credit: As per Article no 9 an irrevocable credit constitutes a definite
undertaking of the issuing Bank. A credit cannot be amended or cancelled without the
agreement of all parties. It gives the seller grater assurance of payment. An irrevocable credit
can be either confirms or unconfirmed dependant on the desire of the seller.
1
L/C.
2. Transferable L/C.
3. Divisible L/C.
4. Back to Back L/C.
5. Revolving L/C.
6. Restricted L/C
7. Red clause L/C.
8. Green Clause L/C
9. With Recourse
10. Without Recourse
5.2.6 Registration of Importer
As per import & Export control Act. 1950 no person can indent, import or export any goods
into Bangladesh except kin case of exemption issued by the Government of the peoples
Republic of Bangladesh. Violation of this order is punishable with fine under the
provisions of Sea Customs Act 1878 as applied by sub section (3) of Section 3 of this
Act.
Procedure for obtaining, IRC ( Import Registration Certificate )
Through public notice or import policy the chief controller of imports & Exports invites
applications usually for registration of importers. The following papers/ documents are
required for submission to CCI&E or area office of CCI & for import registration certificate:
1. Application form.
2. Nationality Certificate.
3. Income Tax registration Certificate with GIR.
4. Trade License from the municipal or local Authority.
5. Membership Certificate.
6. Partnership deed (for partnership firm)
7. Certificate of Registration with the register of joint Stock Co. & Articles and
Memorandum of Association in case of Limited Co.
8. Bank Certificate.
1
Beneficiary: Beneficiary of the L/C is the party in whose favor the letter of credit is issued.
Usually they are the seller or exporter.
Confirming Bank:
confirmation of making payment in addition to the issuing bank. It is done at the request of
the issuing bank having arrangement with them. This confirmation constitutes a definite
undertaking on the part of confirming bank in addition to that of issuing bank.
Reimbursing/Paying Bank: the bank nominated in the letter of credit by the issuing bank to
make payments stipulated in the document, complying with reimbursing bank.
1. Contract
Beneficiary
Applicant
SELLER
BUYER
2. Doc .Credit
Application
4. Advise of
Doc .Credit
3. Documentary Credit
ADVISING BANK
The Canadian Advising Bank
ISSUING BANK
The Bangladeshi Issuing Bank
h. Resolution.
i. Photo one copy.
Bank will supply the following papers/documents before opening of the L/C
a) L/C application form.
b) LCAF Form.
c) IMP Form
d) Murabaha agreement.
e) Charge documents paper.
The above paper must be completed duly filled and signed by the party and verified the
signature.
5.2.7 Import Procedure under Al-Arafah Islami Bank
1. Selection of Clients On the basis of
a. Credit Report.
b. Credibility.
c. CIB Report.
(To association of liability if any with other bank.)
2. Induction of client as Importer.
3. L/C
a. Conditional Undertakings of bank payments.
b. .Processing to open
c. Permissibility and marketability of the item.
d. Price competitiveness.
e. Credit report of the supplier.
f. Fixation of the cash security.
g. Documentation.
h. Preparation of vouchers.
i. Realizations of the cash security, commission and other charge.
4. Througing of L/C
a. SWIFT is a worldwide community. It has over 7500 financial institution over 199
Countries as its member.
b. Air mail/Telex through advising Bank.
5. Lodgment
a. Checking of import documents upon receipt from negotiating banks.
1
Exports are allowed against firm contract. As per contract, importer will ship the goods and
the buyer will make payment after selling the consignment.
c. Export against advancement payment
Sometimes exporter receives payment in advance. In that case Authorized Dealer should
obtain a declaration from the exporter on the Advance receipt voucher certifying the
purpose of the remittance. Then the exporter will export the goods against the advance
payment.
b) Personal Effects.
c) Goods shipped under the order of Govt.
d) Export of fresh fish, vegetable and fruits.
5.3.6 Export Documents Checking
After submissions of export documents by the exporter, Bank must check, whether the entire
required document submitted or not. Bank must examine all documents stipulated in the
credit with reasonable care to ascertain
whether or not they appear, on their face to
be in compliance with the terms and
conditions of the credit. The Banks will not
examine documents not stipulated in the
credit. To examine documents Bank must
follow the L.C terms and international
standard banking practice. Automated or
computerized carbon copies to be treated as original documents if it is marked original
Copy documents need not be signed. Multiple documents means one original and remaining
copies, Signature, Mark, Stamp or label is sufficient for authentication of document. Bank
will accept a prohibited in the L/C.
5.3.7 Export Financing
To meet up the cost of the goods to be exported, the exporter, the exporter may require Bank
finance. Besides, he may require finance for go down rent, freight etc. Event after shipment
of the goods, exporter may require Bank finance to meet-up his current expenditure up to
repatriation of the export proceeds.
There are two types of export finance:
(I) Pre-shipment finance.
(ii) Post shipment finance.
5.3.8 Pre-shipment finance
Pre-shipment investment is finance, allowed by a Bank to an exporter, to meet the cost up to
the shipment of the goods t overseas buyer. The purpose of the investment is to purchase raw
materials or finished goods or manufacturing processing, packing and transporting the goods.
country
to
Remittance
T.C
: Travelers Cheque.
F.D.D
T.T
M.T
: Mail Transfer.
I.M.O
Cheque
P.O
: Payment Order.
From the coefficient table, we can see that the beta coefficient of XI which is customer
satisfaction of Al-Arafah Islami Bank is .931 which shows a positive relationship between
overall performance of Al-Arafah Islami Bank and satisfaction of customers towards the
bank.
6.1 SWOT Analysis
Like other organizations, AIBL also have its strength, weakness, opportunities and threats.
The following stated the SWOT analysis of the bank.
Strengths
AIBL provides its customer excellent & consistent quality in every service.
AIBL is a financially sound company.
AIBL utilize state of the art technology to ensure consistent quality & operation.
AIBL provides its works force an excellent place to work.
AIBL has already achieved goodwill among the clients.
AIBL has a research division.
Weakness
They have a very few number of branches and foreign exchange department. This is a
great weakness. If they cannot recover this weakness, they will not increase earnings
from foreign exchange sector.
They cannot open sufficient number of L/C in a month. Because they have not enough
exporter and importer. This is another great weakness for foreign exchange
department.
Risk Management system is not strong. The bank has already exposed to a variety of
risks the most important of which are credit risk, market risk and liquidity risk.
IT Division is not strong because bank put due importance to utilization of technologybased service to the customers.
Opportunities
Emergence of E-banking will open more scope for AIBL.
1
This Bank should arrange a wide varieties of regular programs like "ISLAMIC
JALSA" "OAAZ MAHFIL"
etc. about Islamic Banking Function countrywide to remove the negative impression
about Islamic Bank.
Arrangement of monthly /quarterly training courses /workshops for the clients
selected by the Branches in order to promote Investment clients of the desired level.
AIBL should appoint a sufficient number of women employees to deal women
entrepreneurs and professionals and understand their needs and thus create demand
for investment.
To fulfill the vision of "mass banking" this Bank should grants investment portfolio to
new entrepreneurs /new businessmen new companies etc.
Conclusion
Most of the people in our country have a bad impression about Islamic Banking operations
regarding indirect generation of interest, which means no difference between investments of
Islamic Banks loan/credit/advance of conventional banks for this reason. They are not much
interested to investment with Islamic Bank because majority of our people have no proper
knowledge about the activities of Islamic banking as well as its investment mechanisms.
AIBL through its aggressive progress and continuous success has, by how, earned the
reputation of being one of the leading private sector banks of the country. The bank has
shown hard line progress in this important sector. Main items of import are machinery,
garments, fabrics and accessories, ships for scrapping, rice, pharmaceuticals etc. where as
main items of exports are jute products, readymade garments, leather, frozen fish, fertilizer
etc. AIBLs capital adequacy, deposits, reserves, earning per share, export, import and
remittances are increasing day by day. So, no doubt AIBL is a growing profitable financial
institution.
The future of Al-Arafah Islami Bank hinges, by and large, on their ability to find a viable
alternative to interest for financing all types of loans. They should recognize that their success
in abolishing interest has been only partial and they have yet to go a long way in their search
for a satisfactory alternative to interest. Simultaneously, Al-Arafah Islami Banks need to
improve their managerial capabilities by training their personnel in project appraisal,
1
monitoring, evaluation and performance auditing. Moreover, the future of Islamic banks also
depends on developing and putting into practice such accounting standards which provide
timely and reliable information of the type that the Islamic banks would require for profitsharing, rent-sharing or for cost-plus financing. These standards are yet to be developed. The
Al-Arafah Islami Bank would have to work hard to pursue their clients to accept these
standards so that a reliable information base is established.
BIBLIOGRAPHY
Books
Kothari, C. R.; Research Methodology Methods & Techniques, Second Edition, McGraw
Hill Com. Inc.; New York, USA, 2010.
Khan, M.Y. & Jain, P.K, Financial Management, 3rd Edition, Tata McGraw-Hill Publishing
Co. Ltd., New Delhi, 1999.
Runyon, Richard P., Inferential Statistics, Philippines: Addison-Wesley Publishing Company,
Inc., 1977.
Bragg, S.M., Accounting and Finance for Your Small Business, 2 nd Edition, McGraw-hill
Book Co. USA, 2011.
Periodicals & Journals
Adams, D., and Vogel, R.C.; Financial Markets in Low Income Countries: Recent
Controversies and Lessons. World Development, 1986, Volume 14 (4). PP 34-39
Anu, Mahmood 1998. Inside Bangladesh Economy. Published by BIBM, 63 New Eskaton,
and Dhaka-1000. PP 9-21.
Philips, J. (2009) Challenges to effective Implementation of Micro-Finance Programs in
Refugee Setting in Forced Migration Review No 20. Oxford.
1
Reports
Annual Report of Al-Arafah Islami Bank Ltd, 2010
Annual Report of Al-Arafah Islami Bank Ltd, 2011
Prospectus of Al-Arafah Islami Bank Ltd, 2011
Service Rule of Al-Arafah Islami Bank Ltd, 2011
Loans and Advances Guideline of Al-Arafah Islami Bank Ltd, 2011
Others: Web Sites
1. http://www.al-arafahbank.com
2. http://www.bangladeshbank.com
3. http://studyfinance.com
4. http://letsriseup.wordpress.com/2012/11/28/islamic-banking-principles/
APPENDIX
PROFIT AND LOSS ACCOUNTS
For the year ended 31 December, 2011
Particulars
Notes
Investment Income
Profit Paid on Deposit
Net Investment Income
15
16
17
18
31 December, 2010
(Taka)
1,701,397,140
(819,714,448)
881,682,692
31 December,
2011(Taka)
1,118,339,963
(550,797,453)
567,542,510
354,330,314
116,754,951
471,085,265
1,352,767,957
267,312,793
67,032,616
334,345,409
901,887,919
253,064,455
232,787,796
20
3,879,804
3,119,855
21
40,352,105
34,696,877
22
13,597,210
11,103,505
Legal charges
Audit Fee
Salary & Allowances to the Managing
Director
2,711,699
100,000
3,139,353
100,000
2,600,000
2,840,000
15,806,628
16,542,596
9,559,875
41,326,495
7,926,331
41,428,391
23
24
382,998,271
969,769,686
114,300,000
114,300,000
855,469,686
384,023,920
1,427,360
385,451,280
470,018,407
77,523
470,095,930
353,684,705
548,203,215
70,000,000
200,000
70,200,000
478,003,215
215,101,447
215,101,447
262,901,768
1,440,539
264,342,307
Appropriation
Statutory Reserve
171,093,937
95,600,643
Retained Earning
Earning per Ordinary share (EPS)
299,001,992
550.24
168,741,664
387.80
25
26
BALANCE SHEET
As at 31 December, 2011
Notes
PROPERTY AND ASSETS
Cash
4
In hand (including foreign currencies)
With Bangladesh Bank And Sonali
Bank
Balance with other
Financial Institutions
In Bangladesh
Outside Bangladesh
Banks
and
2010 (Taka)
232,088,682
215,076,298
1,523,363,956
1,041,878,189
1,755,452,638
1,256,954,487
1,001,829,867
24,616,909
1,026,446,776
-
1,685,451,726
148,358,265
1,945,696,220
-
15,571,766,350
1,851,423,411
17,423,189,761
9,858,411,266
1,616,000,765
11,474,412,031
2011 (Taka)
Premises,
215,105,651
207,998,760
947,973,316
-
563,712,927
-
21,368,168,142
15,336,888,196
2,443,198,486
3,393,889,202
489,435,134
7,874,927,822
2,377,235,299
196,649,305
16,775,335,248
1,997,518,930
3,034,099,564
361,454,432
4,041,409,656
1,971,479,235
237,695,675
11,643,657,492
2,902,648,591
19,677,983,839
2,473,065,666
14,116,723,158
854,204,000
64,603,248
470,317,865
2,057,198
299,001,992
1,690,184,303
677,939,000
64,603,248
299,223,928
2,057,198
176,341,664
1,220,165,038
21,368,168,142
15,336,888,196
520,154,732
5,779,158,951
78,276,574
299,150,653
3,481,736,610
13,045,211
Total Assets
LIABILITIES AND CAPITAL
Liabilities
Borrowing
from
other
Banks,
Financial Institution and Agents
Deposit and Other Accounts
Al-Wadia Current Accounts and
Mudaraba Savings Deposit
Mudaraba Short Notice Deposit
Mudaraba Term Deposit
Mudaraba Special Deposit
Bills Payable
Other Liabilities
Total Liabilities
10
14
6,377,590,258
612,935,153
5,764,655,123
3,793,932,474
377,144,599
3,416,787,875
5,764,655,123
3,416,787,875
Other Commitments:
Documentary Credits and other short
term trade related transactions
Forward Assets Purchased and Forward
Undrow note issuance and Revolving
Underwriting Facilities
Undrow Formal standing Facilities,
Credit lines and other commitments
Total off Balance Sheet items including
part of these financial statements
Project Questionnaire
AL-ARAFAH ISLAMI BANK LIMITED
Name ..
Address
1. Al-Arafah Islami Bank incurs minimal time in approving loan.
a. Strongly Agree
b. Agree
c. Neutral
d. Disagree
e. Strongly Disagree
2. You are satisfied with the installment procedure and interest rate that you have to pay after
taking loan.
a. Strongly Agree
b. Agree
c. Neutral
d. Disagree
e. Strongly Disagree
3. Al-Arafah Islami Bank provides an attractive interest rate on FDR.
a. Strongly Agree
b. Agree
c. Neutral
d. Disagree
e. Strongly Disagree
4. Al-Arafah Islami Bank provides the services all the time that it promises to do so.
a. Strongly Agree
b. Agree
c. Neutral
d. Disagree
e. Strongly Disagree
5. You dont have to wait for a long time in depositing or withdrawing cash in Al-Arafah
Islami Bank.
a. Strongly Agree
b. Agree
c. Neutral
d. Disagree
e. Strongly Disagree
6. Depositing and withdrawing cash is easier in Al-Arafah Islami Bank.
a. Strongly Agree
b. Agree
c. Neutral
d. Disagree
e. Strongly Disagree
7. You are satisfied with the process for applying and getting loan from Al-Arafah Islami
Bank.
a. Strongly Agree
b. Agree
c. Neutral
d. Disagree
e. Strongly Disagree
8. You are satisfied with the locker charge against the service, Al-Arafah Islami Bank is
providing.
a. Strongly Agree
b. Agree
c. Neutral
d. Disagree
e. Strongly Disagree
9. Al-Arafah Islami Bank has made easier for you to check your account through internet and
SMS banking.
a. Strongly Agree
b. Agree
c. Neutral
d. Disagree
e. Strongly Disagree
10. You are satisfied with the online banking system of Al-Arafah Islami Bank.
a. Strongly Agree
b. Agree
c. Neutral
d. Disagree
e. Strongly Disagree
Prepared by
Md. Ariful Islam
Student
Southeast University