Final Riport Fsibl

8/12/2019 Final Riport Fsibl

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Investment Schemes for First Security Islami Bank Limited, Saver- Branch

Date of submission: ..

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Investment Schemes for First Security Islami Bank Limited, Saver- Branch

Letter of Transmittal

February..

D.Mizanur Rahman

Dean

Department of Business Administration

Faculty of Business & conomics

Daffodil !nternational "ni#ersity

$ub%ect: $ubmission of !nternship Report on Investment Schemes for First SecurityIslami

Bank Limited, Saver- Branch.


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Dear Sir,

! ha#e much pleasure to present the report of the internship pro'ram ( Investment Scheam on

First SecurityIslami Bank Limited, Saver- Branch.! )ould li*e to ta*e this occasion to

e+press to you my sincere 'ratitude for the placement to me in an or'anization li*e First

$ecurity !slami Ban* ,imited. And for support and encoura'ement you ha#e al)ays so

'enerously e+tended to me in my )or*.

! ha#e tried my best to 'et an orientation to the practical )or* en#ironment and to 'ather all

related information- and ha#e placed my hearty effort to prepare the report accordin'ly

directed.

! hope that my report )ill meet your e+pectation and ser#e its purpose.

Sincerely ours,

..

Md. Abu /aher 0abin1

!D0o:234334356

Batch : 36thMa%or in Mar*etin'1

7ro'ram: BBA

!""roval certificate

Letter of !uthori#ation

Date

7rofecor d.mizanur rahman

Assitant 7rofessor

Department of Business Administration

Faculty of Business & conomics

Daffodil !nternational "ni#ersity

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Su$%ect& Declaration re'ardin' the validity of the Internshi" (e"ort.

Dear Sir,

/his is my truthful declaration that the Internshi" (e"ort! ha#e prepared is not a copy of

any Internshi" (e"ortpre#iously made by any other student.

! also e+press my honest confirmation in support of the fact that the said Internshi" (e"ort

has neither been used before to fulfill any other course related purpose nor it )ill be submitted

to any other person or authority in future.

ours truly,

)*d. !$u Taher )+a$in

!D0o:234334356

Batch : 36thMa%or in Mar*etin'1

7ro'ram: BBA

erfect or forard

/i korte ho$e $o%e na0


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,etter of Authorization

,etter of Appro#al

Ac*no)led'ement

3. !ntroduction of the study

3.3. $tatement of the Research 7roblem

3.;. 9b%ecti#es of the study

3.=. $cope of the $tudy

3.5. ,imitations of the $tudy

;. Methodolo'y of the $tudy

=. Discussion of the $tudy

=.3. Meanin' of ?ustomer

=.;. ?ustomer $er#ices

=.=. 9r'an 'ram of the Mirpur43 Branch

=.5. ?haracteristics of $er#ices

=.. @arious $er#ices pro#ided by the Mirpur43 Branch

=.6. ?lassification of ?ustomer

=.. /he Ban*er ?ustomer Relationship

=..3. $ome of the conditions and practices

=..;. Ri'hts of customers

=..=. Duties and 9bli'ations of a Ban*er

=.8. /ermination of Ban*er4?ustomer Relationship

5. Result and Discussion

. Recommendations

6. ?onclusion

. References

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8. Appendi+

List of fi'ures

!ntroduction

/his report is prepared for fulfillin' a partial reuirement of both the BBA and the internshippro'ram. 9n this re'ard ! ha#e been posted in First $ecurity !slami Ban* ,imited F$!B1-sa#ar

branch for =4month duration internship pro'ram from 2342;4;233 to =342=4;233 and ha#e

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been ad#ised by the honorable mana'ement to submit my practical learnin' in )ritten from a

different phases. Bein' stimulated by this constructi#e thou'ht of the mana'ement ! am

submitted my paper for this phases mainly Focused on the !n#estment acti#ities of First$ecurity !slami Ban* ,imited F$!B1 sa#ar - branch.

First $ecurity !slami Ban* ,imited F$!B1 )as stablish in Ban'ladesh on Au'ust ; 3 asa ban*in' company under ?ompanies Act 35.9n $eptember ;;- 3. F$!B obtained

permission from Ban'ladesh Ban* to commence its business.

/he Ban* offers a )ide ran'e of ban*in' ser#ices throu'h its = branches in the country-includin' acceptin' deposits- ma*in' loans- discountin' bills- conductin' money transfer and

forei'n e+chan'e transactions- and performin' other related ser#ices such as safe *eepin'-

collections and issuin' 'uarantees- acceptances and letter of credit.

At present- the ban* has 66 branches of )hich ;6 branches are in Dha*a Di#ision- ; branches

are in ?hitta'on' Di#ision- 26 branches are in $ylet Di#ision- 2= branches are in Ra%shahi

Di#ision- 25 branches are in hulna Di#ision and 2; branches is in Barishal Di#ision.

All the 66 branches are computerized under distributed ser#er en#ironment. Another fe)

branches are plannin' to open )ithin December ;232. F$!B, has already started their on4line-$M$ and A/M ban*in' facilities for their clients.

/here )ere ; employees in the initial sta'e of the ban*. At present the number of employeeshas become appro+imately 86.

/he ban* )as started )ith 22 core ta*a. 0o) its present capital is more then ;-222 core

ta*a. /he tar'eted depository money for sa#ar branch )as ;2 la*h ta*a. But the branch )asable to collect deposit about 38 la*h ta*a in a competiti#e mar*et.

F$!B ha#e set up Cide Area 0et)or* throu'h Radio- Fiber49ptics & other a#ailable

communication media systems to pro#ide any branch ban*in' to our customers.

?ustomer of one branch is no) able to deposit and )ithdra) money at any of our branches.

All Branches are included in our Cide Area 0et)or*.

0o //DD or cash carryin' )ill be necessary.

First $ecurity !slami Ban* ,td. has officially launched $M$ ban*in' ser#ice from December

3-;22.

For safe*eepin' of customerEs #aluables li*e important documents and 'oods li*e %e)elriesand 'old ornaments- F$!B ,oc*er $er#ice is a#ailable in most of the Branches in urban areas.

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Sco"e of the Study&

/he scope of the study )ill be limited to the !n#estment scheme on First $ecurity !slami Ban*

,imited. /his study in fact ta*en )ithin its can#as of F$!B, as a )hole thou'h the internship

)as done at F$!B,- the research )ill deal )ith the different deposits scheme and different

aspects of ?onsumer ban*in' di#ision as )ell as a competiti#e analysis. /hat is confined to the

customers of First $ecurity !slami Ban* ,imited.

7roblems of the study

Chile nothin' comes alon' )ithout problem- ! also had faced some problems- )hich )ere

pic*ed up belo):

!t )as #ery difficult to collect the information from #arious personnel for their %ob

constraint.

F$!B, is #ery conser#ati#e and strict in pro#idin' confidential data.

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Respondents )ere busy as )ell as reluctant to 'o throu'h the process of uestionnaire.

/he respondents sometimes did not a'reeable in pro#idin' accurate statistics and

information.

/he ban*ers are #ery busy )ith their %obs- )hich lead a little time consult )ith.

/he communication 'ap bet)een the different personnel due to )or*load and

una#ailability of data- )hich )ere confidential and lac* of sufficient co4operation from

employees.

Despite these limitations- ! ha#e tried my le#el best to prepare the report.

Lack of time& /he time period of this study )as #ery short. ! had only 8 )ee*s in my

hand to complete this report- )hich is not enou'h. $o ! could not 'o in depth of the

study. $ometimes the officials )ere busy )ith their day4to4day )or*.

Insufficient data& $ome desired information could not be collected due to

confidentially of business.

1ther limitations&As ! am ne)comer- there is a lac* of pre#ious e+perience in this

concern. And many practical matters ha#e been )ritten from any o)n obser#ation that

may #ary from person to person.

*ethodolo'y&

!t is a e+ploratory Research Methodolo'y

Cith a #ie) to conductin' a research study- )hat is necessary is to desi'n the frame)or* andselect the appropriate research methodolo'y. A research desi'n is simply a frame)or* or aplan for a study that may be used as a 'uide in collectin' and analyzin' data. 9n the other

hand- the research methodolo'y is a )ay to systematically sol#e the research problem.

Methodolo'y means the underlyin' principles and rules of or'anization of a philosophicalsystem or inuiry procedure.

/here are #arious methods of conductin' the research- such as4 !nter#ie) Method- 9bser#ation

Method- istorical Method- $tatistical Method- Guestionnaire Method and the li*e. Hi#en the

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nature of the present study- it is reuired to collect datainformation from the primary and

secondary sources.

Sam"lin' lan&

2. o"ulation&/he population of this research pro%ect is defined as fallo):a. lement : +istin' !ndi#idual customers of $I!B,

b."nit : 9nly those customers )ho ha#e an account in $I!B,

c. +tent : $I!B, ?ustomers

d. /ime : 8 $eptember 2 J December 2

3. Sam"le Frame& !ndi#idual customer those )ho come to $I!B, and ha#e account or

financial relation )ith the Ban*.

4. Sam"le si#e&/o conduct this research the sample size )as calculated by the follo)in'formula:

n K L; p1 e;

ere- n K sample size KN

L K @alue of confidence le#el 2>1 from L table K 3.6

7 K 2. $o- K 3 4 p1

p K p K 2.- so K 2.1 K precision K 2. 2. K 2.;

e K le#el of si'nificance 32> error1 K 2.3

3.61; 2. 2.

n K

2.31;

K 68.26

K 68 appro+imately1

ence- reuired sample size for conductin' this research pro%ect is 2appro+.1 customers

those )ho are account holder of $I!B,.

5. Sam"lin' rocedure&For conductin' this research the $a#e branch of $I!B, )asta*en into consideration to collect the data. !ndi#idual customers those )ho come to the Ban*

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Findin's

Most of the costumers do not *no) the re'ulations of the in#estment modes.

$horta'e of human resources in !n#estment $ection.

Deposit schemes fa#orin' to the customers.

$enior le#el e+ecuti#es should be more cooperati#e )ith the subordinates.

Re'ardin' security ser#ice of the ban*- account openin' and closin' system- phone

uery- cash )ithdra) and deposit facility- credit profit rate- online ban*in'- e+ternal

and internal en#ironment are satisfactory to the customers.

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Most of the customers are ser#ice holder and businessmanO they li*e to come to F$!B,

because near to residence office )or* place- better ser#ice- easier ban*in'

procedure.

mployees of the ban* are more cooperati#e )ith the customers.

mployees of the ban* ha#e 'ood *no)led'e to sol#e the ueries of the customers.

Accordin' to the customers opinion more A/M booths needed to be setup in different

places.

Accordin' to the data analysis customers feelin' about ban*in' in F$!B, are #ery satisfied.

(ecommendations

Different types of products and ser#ices are a#ailable in F$!B, but clients are not

concerned about that so ad#ertisement and promotional acti#ities should be increased.

!ncreasin' more deposit schemes under consumer ban*in'.

7ro#idin' prompt ser#ice in account openin'.

0o) a day- the online ban*in' ser#ice is #ery much popular in all o#er the )orld- so

the ban* should try to de#elop in this side.

F$!B, should increase Debit card & credit card facilities.

$I!B, online ser#ice should be fast & accurate.

/he )ebsite of $I!B, is not 'ood enou'hO most of the pa'es are under construction.

/he pa'e should be constructed as soon as possible.

$hould increase the A/M Booths.

More manpo)er is reuired to run the business smoothly.

mployee trainin's and )or*shops should be administered in order to 'i#e them

*no)led'e and professionalism in customer interactions. /hey should be tau'ht about

ho) to deal )ith the problem of customers and problematic situations.

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7hysical and technolo'ical facilities should be increased in e#aluatin' credit

proposals.

+perienced and e+pert personnel should be *ept )ithin the ban*- )hich )ill lead to a

uality selection of clients

$I!B, should more focus on customer needs. /hey need to concentrate more on their

e+istin' ser#ices and product inno#ation.

A yearly conference )ith the employees should be arran'ed )here they )ill e+chan'e

their #ie)s )ith the mana'ement about different aspects. /his )ill help to increase the

efficiency of the employees.

7rompt ser#ice should be 'i#en to the customers. !n this re'ard arran'in' %ob rotation

re'ularly for employees to impro#e the s*ills in different types of ser#ice. /his )ill

increase the efficiency of the ser#ice.

More emphasis should be 'i#en on the customers< complaint.

!nformal trainin' can be a )ay to impro#e the s*ills of the employee. Allocatin' %ob

responsibility to the employees accordin' to their profit.

/ry to create a 'ood ima'e to customers throu'h different promotional tools

8. 8onclusion

$hah%alal !slami Ban* ,imited is one of the leadin' !slamic sharah based commercial ban* in

Ban'ladesh. $I!B, is committed to pro#ide e+cellent ser#ice to its #alued customers. /he

mana'ement of $I!B, al)ays 'i#es special efforts to uphold the interest and trust of their

customers. By pro#idin' e+cellence ser#ice and special effort $hah%alal !slami Ban* has

placed itself to a stron' position amon' all the ban*s. /he main focus of $I!B, is toconcentrate on the consumer demand- )hich differentiates $I!B, )ith other ban*s. $I!B, has

been successfully created a brand ima'e !slamic sharah based in the mar*et and is maintainin'

a stron' position in the mar*et. But still it has some )ea*ness- )hich can be easily o#ercome.

$I!B, has much more potential to e+plore the e+istin' mar*et. $o- to be the number one

fore#er they ha#e to be #ery perfect in their business.

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A ban* cannot be able to reach the 'oal until it ma*es the customer satisfied by pro#idin'

ser#ice as much as the customer needs. After preparin' this report it becomes #ery e#ident to

say that there should be a 'oal to ma*e the customer al)ays happy and satisfied )ith the

ser#ice- only then a ban* can run its business safe and soundly in this competiti#e era. !n fine it

can l said that ?onsumer Ban*in' di#ision is the department of $hah%alal !slami Ban* )hich

comes closure to the customers. $I!B, has an efficient & effecti#e team )ith performances in

an e+cellent manner. $o- considerin' all the ser#ice of $I!B, should become more conscious

to deal )ith its customers as the customers ha#e no) more choice to ban* )ith others.

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!ims 9 o$%ectives

/o conduct interest4free ban*in'.

/o establish participatory ban*in' instead of ban*in' on debtor4creditor relationship.

/o in#est on profit and ris* sharin' basis.

/o accept deposits on Mudaraba & Al4Cadeah basis.

/o establish a )elfare4oriented ban*in' system.

/o e+tend co4operation to the poor- the helpless and the lo)4income 'roup for their

economic enlistment.

/o play a #ital role in human de#elopment and employment 'eneration.

/o contribute to)ards balanced 'ro)th and de#elopment of the country throu'hin#estment operations particularly in the less de#eloped areas.

/o contribute in achie#in' the ultimate 'oal of !slamic economic system.

Islamic Bankin' in Ban'ladesh

/here are currently se#en commercial ban*s operatin' under !slamic principles. /hey are:

3. !slami Ban* Ban'ladesh ,imited-;. Al4Arafah Ban* ,td.=. $ocial !n#estment Ban* ,td-

5. +im Ban* ,td-

. $hah%alal !slami Ban* ,td.6. !cb !slamic Ban* ,td

. First security !slami Ban* ,td.

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hand- are the sole responsibility of the pro#ider of the capital. Mudaraba is also *no)n a Girad

and Muaradah.

Mudaraba is a contract of those )ho ha#e capital )ith those )ho ha#e e+pertise- )here the

first party pro#ides capital and the other party pro#ides the e+pertise )ith the purpose of

earnin' alal la)ful1 profit )hich )ill be shared in a mutually a'reed upon proportion. /histype of business #enture ser#es the interest of the capital o)ner and the Mudarib a'ent1.

BA!4$A,AM

Bai4$alam is a term used to define a sale in )hich the buyer ma*es ad#ance payment- but the

deli#ery is delayed until some time in the future. "sually the seller is an indi#idual or business

and the buyer is the ban*.

!$/!$0AEA $A,/he !stisnaEa sale is a contract in )hich the price is paid in ad#ance at the time of the contract

and the ob%ect of sale is manufactured and deli#ered later. /he ma%ority of the %urists consider!stisnaEa as one of the di#isions of $alam- /herefore- it is subsumed under the definition of

$alam. But the anafie school of Iurisprudence classifies !stisnaEa as an independent and

distinct contract. /he %urists of the anafie $chool ha#e 'i#en #arious definitions to !stisnaEasome of )hich are: (/hat it is a contract )ith a manufacturer to ma*e somethin'Q and Q!t is a

contract on a commodity on liability )ith the pro#ision of )or*Q. /he 7urchaser is called

EMustasniaE contractor and the seller is called E$aniaE ma*er or manufacturer and the thin' is

called EMasnooaE- manufactured- built- made.

GARD A$A0 Bene#olent loans1

Gard asan is a contract in )hich one of the parties the lender1 places into the o)nership ofthe other party the borro)er1 a definite parcel of his property- in e+chan'e nothin' more than

the e#entual return of somethin' in the same #alue of the property loaned.

BA!4M"AIIA, Deferred $ale1

/he terms QBaiQ and QMua%%alQ are deri#ed from the Arabic )ords EBaiE and A%al


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Fuaha %urists1 ha#e defined !%araha as o)nership of a benefit for consideration. /his is also

*no)n as lease or ire contract. Al4!%arah is an Arabic term. /his has been deri#ed from the

Arabic term ("%rP or ("%ratP )hich means consideration< or return< or )a'es


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9perational /echniues of !slamic Ban*

$9"R?$ 9F F"0D$/he financial resources of the !slamic ban*s consist of ordinary capital resources comprisin'

paid4up capital and reser#es- and funds rose throu'h borro)in's from the central ban* and

other ban*s inter4ban* borro)in'1- and issue of !slamic financial instruments. /he ma%or partof their operational funds is- ho)e#er- deri#ed from the different cate'ories of deposits

accepted on the !slamic principles of Al4Cadiah safe custodianship1 and Mudaraba trust

financin'1. For the sa*e of ease of understandin' )e call these t)o sources as 7rimary< and$econdary


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/he !slamic ban*s ha#e established interest4free fund arran'ements )ith local and forei'n

ban*s on the basis of reciprocity. 0ormally- under prior arran'ement- the !slamic ban*s *eep

surplus funds )ith selected ban*s. Chen needed- these ban*s also place interest4freecompensatin' balance )ith the !slamic ban*. !f balances are not eual- then periods for )hich

funds placed are ad%usted.

$?90DARS $9"R?$

!slamic ban*in' is a response to such e+i'encies. !t mobilizes sa#in's of the common people inline )ith !slamic $hariah. /echniues employed by !slamic ban*s for sa#in' mobilization are

as follo)s.

Al4Cadiah Account!slamic ban*s recei#e deposits in their Al4Cadiah account. /his account is similar to the

demand deposit account of interest4based ban*s. ?on#entional interest4based ban*s do not pay

interest on this type of deposit account. !n addition- depositors may )ithdra) all or a part of

the funds deposited in this account )ithout restriction. /he term Al4Cadiah means deposit ofmoney allo)in' somebody to claim the funds in the account. /he ban* as trustee preser#es and

safe *eeps the funds deposited. /hus- depositors feel safe *eepin' their money )ith the ban*because the ban* pro#ides assurance of returnin' their money on demand.

Heneral Mudaraba Account

/he Mudaraba account of !slamic ban*s is different from the chec*in' account of an interest4based ban*. Mudaraba is a form of business contract )here one party supplies money and the

other mana'es the business by in#estin' labor and time. 7rofits 'enerated from the #enture are

shared by both in a proportion a'reed upon at the time of contract. o)e#er- in this

arran'ement- the financier is solely responsible for any loss that may be incurred. /hefinancier of the business is *no)n as $ahib al Mal- Rabbul Mal or o)ner of the capital and the

mana'er of the business is called Mudarib or entrepreneur.

/erm Mudaraba Account

!slamic ban*s also recei#e term deposit from their clients. /he term deposit is- of course-

alto'ether different from that of the interest4based ban*s. Fi+ed term deposits recei#ed by!slamic ban*s are called Q/erm Mudaraba DepositsQ. Henerally an !slamic ban* recei#es these

types of deposits for a minimum period of = months to = years at the ma+imum. /he ban*

in#ests the money- and shares any profits )ith the depositor based upon a percenta'e a'reed

upon at the time of contract. !n the e#ent a loss in incurred- depositors share the loss inproportion to the deposit in their account. At the end of the term the contract terminates and

the depositors )ithdra) their money- plus or minus any 'ains or losses. /he depositors- if they

li*e- can a'ain deposit their money for a ne) term under a ne) contract. 0o chec*boo* isissued a'ainst a /erm Mudaraba Deposit- ho)e#er- /erm Mudaraba ?ertificate is pro#ided to

the depositor.

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/erm Mudaraba Account

!slamic ban*s also recei#e term deposit from their clients. /he term deposit is- of course-

alto'ether different from that of the interest4based ban*s. Fi+ed term deposits recei#ed by!slamic ban*s are called Q/erm Mudaraba DepositsQ. Henerally an !slamic ban* recei#es these

types of deposits for a minimum period of = months to = years at the ma+imum. /he ban*

in#ests the money- and shares any profits )ith the depositor based upon a percenta'e a'reedupon at the time of contract. !n the e#ent a loss in incurred- depositors share the loss in

proportion to the deposit in their account. At the end of the term the contract terminates and

the depositors )ithdra) their money- plus or minus any 'ains or losses. /he depositors- if theyli*e- can a'ain deposit their money for a ne) term under a ne) contract. 0o chec*boo* is

issued a'ainst a /erm Mudaraba Deposit- ho)e#er- /erm Mudaraba ?ertificate is pro#ided to

the depositor.

$pecial Mudaraba AccountChen an !slamic ban* recei#es a Mudaraba deposit for in#estment in some specific business-

sector- or pro%ect- the deposit is called a Q$pecial Mudaraba DepositQ. !n this case- an !slamic

ban*- )hile recei#in' deposits- comes to an a'reement )ith the depositors that the money to

be recei#ed )ill be in#ested in some specific business such as the fertilizer or salt businessO orin some specific sector li*e the industrial sector- te+tile sector- e+port4import sectorO or in some

specific in#estment sector of the ban* such as real estate- shippin' or a special pro%ect. 7rofitsearned from these types of specific pro%ects are distributed bet)een the ban* and the $pecial

Mudaraba depositors based a pre#iously a'reed to percenta'e. As before- in the e#ent of a loss-

the depositors share the loss in an amount proportional to their deposits in the account.

8entral Bankin' in Islamic Frameork

!ntroduction/he central ban* has the sole authority to issue money currency1 and the responsibility to

re'ulate the ban*in' system in order to secure the #alue of money and realize the other

ob%ecti#es of monetary policy. Money ser#es as the medium of e+chan'e and the commonlyaccepted means of payment- and as such as a measure of #alue. +cessi#e fluctuations in the

#alue of money lead to economic distortions and causes social ineuities. !nflation 'i#es

)indfall 'ains to the rich and the business people but causes hardship to the fi+ed and lo)4income 'roups by erodin' their purchasin' po)er. Corse still- deflation often depri#es the

latter of their employment and means of li#elihood. /he phenomena of inflation and deflation

are characteristic of the financial system based on the institution of interest- )hich is

prohibited in !slam.

9b%ecti#es of monetary policy in !slam

?onsistent )ith the !slamic ideals of social %ustice- euity- fairness and balance- there are three

ma%or ob%ecti#es of monetary policy in an !slamic economy- )hich discards interest. /hese

ob%ecti#es are:

$tability in the #alue of moneyO

conomic )ell4bein' )ith full employment and optimum rate of economic 'ro)thO and

Distributi#e %ustice.

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For a proper appreciation of the abo#e4mentioned ob%ecti#es of monetary policy and ho) these

may be realized- they are e+plained belo).

Sta$ility in the value of money

!n an !slamic economy- it is almost mandatory on the central ban* to preser#e the #alue ofmoney. /hus- the central ban* should allo) e+pansion of money supply to the e+tent it is

%ustified by a possible contribution to 'ro)th in real balances. /he stability in the #alue of

money should be accorded hi'h priority because of the uneui#ocal stress of !slam on honestyand fairness in all human dealin's- and because of the ne'ati#e impact of inflation on socio4

economic %ustice and 'eneral )elfare. But- rather than absolute- this ob%ecti#e )ould mean

relati#e stability in the 'eneral price le#el. Absolute price stability is neither feasible nor

desirable as it may conflict )ith the optimum 'ro)th and full employment ob%ecti#e of themonetary policy.

:conomic ;roth and :m"loyment

Chile inflation is incompatible )ith the 'oals of an !slamic economy- prolon'ed recession and

unemployment that cause human sufferin's are also unacceptable. Monetary policy has-therefore- to aim at a hi'h rate of economic 'ro)th )ith full employment and utilization of

producti#e resources. o)e#er- ma+imization of economic 'ro)th per se and at all costs is not

the ob%ecti#e of monetary policy in an !slamic economy. Material prosperity is to be attained)ithin the frame)or* of !slamic #alues. !t should not be attained throu'h the production of

essential and morally 4 uestionable 'oods and ser#ices. !t should not lead to an e+cessi#e and

o#erly4rapid use of Allah4'i#en resources at the e+pense of future 'enerations- and it should

not be harmful to present or future 'enerations by de'eneratin' the moral and physicalen#ironment. n#ironmental de'eneration )ith de'radation and depletion of land- )ater and

forest resources and serious air and )ater pollution are already matters of 'reat concern around

the )orld. ence the concept of (sustainable de#elopmentQ- )hich means meetin' the needs ofthe present 'eneration )ithout compromisin' the needs of future 'enerations. conomic

de#elopment and sound en#ironmental mana'ement are complementary aspects of the same

a'enda. Cithout adeuate en#ironmental protection- de#elopment )ill be underminedO )ithoutde#elopment- en#ironmental protection )ill fail.

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ro$lems and 8hallen'es of Islamic Bankin' in Ban'ladesh

3. 0ature of the 7roblem and ?hallen'es/he !slamic ban*s in the )orld ha#e been facin' a number of challen'es. $ide by side- the

!slamic ban*in' in Ban'ladesh is also facin' numerous problems of challen'es. First- they

ha#e not yet been successful in de#isin' an interest4free mechanism to place their funds on ashort4term basis. /hey face the same problem in financin' consumer loans and 'o#ernment

deficits. $econd- the ris* in#ol#ed in profit4sharin' seems to be so hi'h that almost all of the

!slamic ban*s in Ban'ladesh ha#e resorted to those techniues of financin' )hich brin' them afi+ed assured return. As a result- there is a lot of 'enuine criticism that these ban*s ha#e not

abolished interest but- they ha#e- in fact- only chan'ed the nomenclature of their transactions.

/hird- the !slamic ban*s do not ha#e the le'al support of the ?entral ban* in Ban'ladesh- do

not ha#e the necessary e+pertise and trained manpo)er to appraise- monitor- e#aluate an auditthe pro%ects that are reuired to finance. As a result- they can not e+pand despite ha#in' hu'e

e+cess financial liuidity.

/he implementation of an interest4free ban*in' in Ban*in' raises a number of uestions and

potential problems )hich can be seen from the macro and micro operational point of #ie). Apartial list of the issues confrontin' !slamic ban*s in Ban'ladesh includes.

;. 7roblems Related to Macro 9peration of the !slamic Ban*s

,iuidity and ?apital

@aluation of ban* Assets

Financial $tability

/he 9)nership of Ban*s

,ac* of ?apital Mar*et and !nterest4free Financial !nstruments

!nsufficient ,e'al protection

?ontrollin' and $uper#ision by the ?entral ban* on the Basis of !slamic $hariah

,ac* of "nified $hariah Rulin's

Absence of !slamic !nter4Ban* Money Mar*et

0e) Ban*in' Re'ulations

Accountin' principles and 7rocedures

$horta'e of $upporti#e and ,in* !nstitutions

$horta'e of $*illed and /rained Manpo)er in !slamic $hariah ban*in'

,ac* of ?o4operation amon' the !slamic Ban*s

,ac* of Familiarity by !nternational Financial and 0on4financial $ector )ith !slamic

7roducts and procedures.

$e#ere ?ompetition in the Financial $ector

conomics slo)do)n and 7olitical $ituation of the ?ountry

!nadeuate /rac* Record of !slamic Ban*in'

Absence of !nfrastructure for !nternational !slamic /rade Financin'

Defaultin' ?ulture of the Borro)ers

$hort4term Asset ?oncentration in the !slamic Ban*s

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,ac* of ?ourse or paper on !slamic conomics- Ban*in' and Finance at the

ducational !nstitutions.

,ac* of "niform 9perational procedure of !slamic Ban*in'

,ac* of $pecialised !slamic Ban*s and 0on4Ban* financial !nstitutions

,ac* of ?onsortium or $yndication of the !slamic Ban*s

,ac* of armonization of !slamic financial 7ractices

,ac* of !nter4country $tudy on the practical 9perations of !slamic Ban*in'

,ac* of $econdary $ecuritisation Mar*et

,ac* of ?oordinated Research Cor* on !slamic conomics- Ban*in' and finance

,ac* of Ape+ /rainin' !nstitute for the !slamic Ban*s.

7roblem Related to Micro 9peration of the !slamic Ban*s :

!ncreased ?ost of !nformation

?ontrol o#er ?ost of Funds. Mar*4up Financin' and ?orrupted Mar*4up

+cess Resort to the Murabaha Mode of Financin'

"tilization of !nterest Rate of fi+in' the 7rofit Mar'in in Bai4Modes

Financin' $ocial ?oncerns.

,ac* of 7ositi#e Response to the Reuirement of 'o#ernment Financin'.

Failure of !slamic Ban*s to Finance i'h Return 7ro%ects.

$acrifice of allocati#e fficiency

,oss of Distributi#e fficiency.

Depression of 7rofit.

,ac* of Full4fled'ed $hariah Audit.

Fraud4For'ery or corruption in !slamic Ban*s.

Minimum Bud'et for Research and De#elopment.

Cor*in' n#ironment.

!ssuance of ,etter of Huarantee ,H1

Minimum Bud'et for Research and De#elopment.

,ac* of $hariah Manual or Huidelines.

!slamic !n#estment Ris* Analysis and measurement Methodolo'y.

0on4e+emption of $tamp Duty for 7urchasin' 7roperty by Ban*s.

,ac* of ?o4operation bet)een !slamic Ban*s and !slamic 0H9s for e+tendin'

Microcredit.

,ac* of stablishment of ,in*s )ith other /rainin' !nstitutes and $hariah $uper#isory

Bodies.

,ac* of !ntention of the Mana'ement to be strict )ith $hariah Huidelines.

/he abo#e problems are some of the burnin' problems confrontin' the !slamic ban*s in

Ban'ladesh. o)e#er it is felt that much operational )or* and in4depth research )or*

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has to be underta*en to allo) the !slamic ban*s to flourish )ith hi'hest uality and

stren'th.

The Future of Islamic Bankin' in Ban'ladesh

3. 0eed for Re4or'anization of the Chole financial $ystem

Re#ie) of the problems of !slamic ban*in' in 'eneral and !slamic ban*s of Ban'ladesh inparticular poses a challen'in' feature for the promotion and sur#i#al of !slamic ban*s in

Ban'ladesh. /he policy implication is not that !slamic ban*s should ne#er be floated )ithin

the con#entional ban*in' frame)or*. Rather it is the con#entional ban*in' system )hoseoperational mechanism needs to be re4e+amined and con#erted into 7,$ system considerin'

beneficial impact of the latter on the economy. o)e#er- as lon' as !slamic ban*s are to

operate )ithin thecon#entional ban*in' frame)or*- the recommendations under the follo)in'

heads may be ta*en note of.

;. 0e) ban*in' philosophy for the !slamic Ban*s

/here seems to be a 'ap bet)een the ideals and actual practice of !slamic ban*s in Ban'ladesh.

!n their reports- boo*lets- bulletins and posters there ban*s e+press their commitment tostri#in' for establishin' a %ust society free from e+ploitation. $tudy sho)s that a little pro'ress

has been achie#ed so far in that direction. /hou'h this failure is attributed mainly to theper#asi#e influence of con#entional ban*in' system itself- lac* of #i'ilance of the promoters

of !slamic ban*in' in realizin' the ob%ecti#e is no less to blame. /here should be a throu'h

re#ie) of policies that ha#e been pursued by these ban*s for about a decade and points ofdeparture ha#e to be identified to redesi'n their of action.

=. Future 7olicy and $trate'y

/he first action that deser#es immediate attention is the promotion of the ima'e of !slamicban*s as 7,$ ban*s. $trate'ies ha#e to be carefully de#ised so that the ima'e of !slamic

character and sol#ency as a ban* is simultaneously promoted. /o this end- 7ilot schemes in

some #ery selected areas should be started to test inno#ati#e ideas )ith profit4loss4sharin'modes of financin' as ma%or component. !slamic ban*s should clearly demonstrate by their

actions that their ban*in' practices are 'uided by profitability criterion thereby establishin'

that only !slamic ban*in' practices ensures efficient allocation of resources and pro#ide truemar*et si'nals throu'h 7,$ modes. !slamic ban*s should continuously monitor and

disseminate throu'h #arious means the impact of their operations on the distribution of income

primarily bet)een the ban* and the other t)o parties: the depositors and the entrepreneurs- and

then on different income 'roups of the society. /hese presuppose establishment of a fullyeuipped research academy in each !slamic ban*.

5. $teppin' for Distributional fficiency./he tas* is more challen'in' for !slamic ban*s- as they ha#e toe promote their distributional

efficiency from all dimensions to'ether )ith profitability- !slamic ban*s- step by step- ha#e to

be con#erted into profit4loss4sharin' ban*s by increasin' their percenta'e share of in#estmentfinancin' thou'h 7,$ modes. /he !slamic ban*s- to do that- can be selecti#e in choosin'

clients for financin' under 7,$ modes. /hey should establish direct functional relationship

bet)een the income of the depositors and bet)een the income the income of the ban* and that

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of the entrepreneurs. /he relationship impro#es )ith share of ban* financin' under 7,$ modes

increases.

. 7romotion of Allocate fficiency

/he !slamic ban*s can impro#e their allocate efficiency be satisfyin' social )elfare conditions

in the follo)in' manner. First- they should allocate a reasonable portion of their in#estiblefunds in social priority sectors such as a'riculture includin' poultry and fishery1- small and

cotta'e industries and e+port4led industries li*e 'arment- shrimp culti#ation. $econdly- )hen

the percenta'e shares of allocation of in#estible funds are determined amon' the sectors ofin#estment financin'- profitability of pro%ects should be the criterion for allocatin' in#estment

funds. /he criterion )ould be best satisfied if more and more pro%ects )ere financed under

7,$ modes.

6.Modern ban*in' 7olicies and practices

!slamic ban*s- )ith a #ie) to facin' the 'ro)in' competition either fello)4!slamic ban*s or

the con#entional ban*s )hich ha#e launched !slamic ban*in' practices- )ill ha#e to adapts

their functionin' in line )ith modern business practices- thou'h impro#ement and e+pansionof the ran'e of dealin' in the ban*in' sector. /hus- it is necessary for them to pro#ide

comprehensi#e ban*in' and in#estment ser#ices to clients and simultaneously to ta*ead#anta'e of modern technolo'ical brea*throu'hs in areas such as electronic communication-

computerization etc.

. Ho#ernment and ?entral ban* Responsibilities

Ho#ernment should thin* acti#ely for the promotion of !slamic ban*in' in Ban'ladesh

considerin' its pro4de#elopment role. !t should amend e+istin' financial la)s- acts and

re'ulations to create fa#orable en#ironment conduci#e to smooth operation of !slamic ban*s./he ban* Reforms ?ommittee may be entrusted to draft an !slamic Ban*in' Act. Ho#ernment

should also allo) establishment of !slamic insurance and other subsidiary companies in order

to facilitate their operation. Ban'ladesh Ban* should de#elop some !slamic Monetary andsa#in' instruments and create separate )indo) for transactions )ith the !slamic ban*s and a

full4fled'ed !slamic ban*in' Department for analyzin'- super#isin'- monitorin' and 'uidin'

purpose- thereby facilitatin' !slamic ban*s for their smooth de#elopment in Ban'ladesh.

8. !nter4!slamic Ban* ?o4operation and 7erspecti#e 7lan

All !slamic ban*s should come for)ard to help each others and adopt a perspecti#e plan say

for ;2 years for !slamization of the ban*in' system of Ban'ladesh. /o actualize this mission-they should set4up immediately and Ape+ Research Academy and /rainin' !nstitute desi'ned

)ith modern tools. Boo*s and other accessories.

ros"ects of Islamic Bankin' in Ban'ladesh

!n my understandin' the prospect of !slamic Ban*in' is #ery bri'ht. Muslim people

e#ery)here )ant !slamic Ban*in'. !n Ban'ladesh- to 'i#e an e+ample- 3 con#entional Ban*sha#e opened separate !slamic branches recently. Fi#e hundred applications are pendin' )ith

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!slamic Ban* Ban'ladesh ,td. for openin' of ne) braches. !BB, has already 3=; branches in

the country.

/he position may not be same in all countries. But if !slamic Ban*in' succeeds in anycountry- the positions )ill same in e#ery Muslim country in my %ud'ment. /his means- that

first !slamic Ban* in any country should be )ell mana'ed and successful so that people ha#efaith in this system. stablished !slamic Ban*s should co4operate by lendin' competent

officials in settin' up ne) !slamic Ban*s.

/he problems mentioned in the precedin' pa'es are not insurmountable. Most of them can be

sol#ed )ith more research and dedicated efforts. !DB- 9!? Fih Academy- !nternational

!slamic Ban*in' or'anizations and indi#idual !slamic ban*s should put more resources inresearch in !slamic Ban*in'- Finance and conomic issues. ?ooperation of ?entral Ban*s and

the Ho#ernments )ill be needed in some areas. ! ha#e no doubt in mind that !slamic ban*in'

)ill e+pand more and more in the entire )orld.

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erformance of the Islamic Bankin' System

8om"arative "osition of the Islamic Bankin' sector in

Ban'ladesh, 3==>

)In million T/.

;rou"Banks

De"osit Investment :?cessli@uidity

asset

*an"oer Branches

Islamic

Bankin'

sector

3AA66> 3A565>.3 >>53.5 A33= 4=A

!ll "rivate

Banks

2335=.5 >A>6>6.3 52A74.2 436>7 26>4

!ll Banks

Total

2574274.7 233=23.3 A237 2=A562 7447

Comparative possition

in million TK.

912240

1463164

288557

28454

7 787575

1220912

0

200000

400000

600000800000

1000000

1200000

1400000

1600000

Islamic

Banking sector

ll private

Banks

ll Banks Total

!eposit

Investment

/he 'ro)th of !slamic ban*in' in Ban'ladesh is pro'ressin' day by day. /he remar*able shift

or con#ersion of the con#entional ban*s and their branches into !slamic lines 'i#es the si'nalof hi'h acceptance of the interest4free ban*in' by the public in 'eneral. /he !slamic ban*in'

industry continued to sho) stron' 'ro)th in ;22 in tandem )ith the 'ro)th in the economy-

as reflected in the increased mar*et share of the !slamic ban*in' industry in terms of assets-financin'- and deposits of the total ban*in' system.

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34/36


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SC1T analysis

Stren'th

Di#ersified o)nership pattern

$tron' mar*et share

Hood Financial performanceHood in#estment portfolio

?omfortable ,iuidity position

+perienced mana'ement team

$ound R de#elopment pro'rammes

!mpro#ement in automation

Cide branch net)or*

$i'nificant in#ol#ement in corporate social responsibility

Ceakness&

"nmatched asset #ersus capital 'ro)th

,imited dele'ation of po)er

,imited modern customer ser#ice facilities

Moderate reco#ery of rescheduled in#estments

i'h lar'e in#estment e+posures

!nitial sta'e of system based internal control procedures

1""ortunities&

!n#estment in $M and A'ro based industry

Real time online ban*in'

?redit card in dual currency?reation of !slamic Money mar*et product

!ntroduce abo#e years !slamic bond

Threats&

Mar*et pressure for increasin' the $,R

9#erall liuidity crisis in money mar*et

Ho#ernment pressure to reduce in#estment rate

!ncrease the capital adeuacy position

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8onclusion&

/he ban*in' system of Ban'ladesh is composed of a #ariety of ban*s )or*in' as 0ationalized

?ommercialBan*s 0?Bs1- 7ri#ate Ban*s- Forei'n Ban*s- $pecialised Ban*s andDe#elopment Ban*s. o)e#er- ;8 outof 2 ban*s in Ban'ladesh are pri#ate- of )hich only -

namely !slami Ban* Ban'ladesh ,imited- !?B !slamic Ban*- Al4Arafah !slami Ban* ,imited-

$ocial !n#estment Ban* ,imited-+im Ban*-$hah%alal Ban* and First security Ban* ,td ha#ebeen operatin' as !slamic ban*s. Besides these full4fled'ed !slamic ban*s- 32 con#entional

ban*s in the pri#ate sector ha#e opened ; full4fled'ed !slamic ban*in' branches and !slamic

Ban*in' ?ounter respecti#ely to deal )ith the !slamic ban*in' business parallel to theircon#entional operations.

References:

3. ))).dsebd.or';. ))).islamiban*bd.com

=. Ban* Fund Mana'ement by A.R han
http://www.dsebd.org/http://www.islamibankbd.com/http://www.dsebd.org/http://www.islamibankbd.com/

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