Investment Credit Management

Al-Arafha Islami Bank Limited

Northern University [1] Internship Report 2011 UNIVERSITY OF INFORMATION TECHNOLOGY & SCIENCES [1] Internship Report 2014

1│Introduction

1.1 Origin of the Report

Internship is an academic requisite for the student of BBA. For this reason, University of

Information Technology & Sciences has introduced an internship program as a requirement for

the degree of BBA. As a student of Finance; I completed my internship program mainly based on

financial organizations. This program is fully managed and supervised by the respected

supervisor. For the reason, I was sent to AL-Arafah Islami Bank Limited, Rajshahi Branch under

the direct supervision, Meem Rafiul Hoq, Lecturer, department of Business Administration,

University Of Information Technology & sciences (UITS). The topic selected by my honorable

teacher was Investment Credit Management of AIBL, Rajshahi Branch. I had to stay there three

months from 1st January, 2014 to 31st March, 2014. I was introduced to Md. Syful Islam,

Manager of AIBL, Rajshahi Branch. Being introduced to the officers of AIBL, Rajshahi Branch,

I have collected information. It is possible only for their cordial help. This internship program is

the first professional and practical experience of mine. I have enjoyed it perfectly. I have tried

my level best to apply my experience to prepare this report. This is the report which is required

to fulfill my academic lessons.

Being a student of Finance I have acquired knowledge about the practical side of theoretical

learning, which can be acquired from the finance and banking related books. After taking

practical training I have prepared a report. Though I have got an overall idea about banking, I

have emphasized mainly on “Investment Credit Management” of AIBL, Rajshahi Branch.



1.2 Objective Of The Study

The main purpose of this study is analyzing the analysis of Investment of AIBL, Rajshahi Branch

and to provide some suggestions to improve its performance. However, the followings are some

of the specific objectives of the study:

1. To identify various investments, provided by the bank.

2. To determine the various sources of investments fund.

3. To determine the subsequent progression or depression of the bank in terms of investments.

4. To know the security valuation system before providing investment.

5. To know the criteria of classifying various investment schemes.

6. To examine the investment monitoring system of the bank.

7. To suggest remedial measures in the light of my analysis and interpretation.

8. To know about the latest services offered by the bank.

9. Observe the market in which the bank operates.

10. Find out the comparative position of the bank.

11. To know the culture and human resource of the bank.

1.3 Scope Of The Study

Analysis of investment in an organization is one of the important parts of overall performance

evaluation. Investment includes providing support and advances, balancing liquidity and

profitability, recovery of investment, classification of investment, etc. This study is necessary to

show whether a firm will able to meet its obligations and whether a firm operates in a profitable

manner.



1.4 Methodology Of The Study

► Study Design:

The report was fully investigative in nature. Data have been collected from both primary and secondary sources.

The methodology of the report includes direct observations, oral communications with the

employees of the bank, interviewing the officers and executives, studying files, circulars, etc.

The report includes both quantitative as well as qualitative data. In this report, no hypothesis is

considered. In order to prepare the assigned project paper I have collected necessary information

by the following ways:

(a) Primary source of information

(b) Secondary source of information

► Primary source of information

The Primary sources of information are →

AGM

Executive Officers

Senior Officers

►Secondary source of information

The Secondary sources of information are →

Statements of affairs.

Various statistical charts & graphs of the bank.

Published papers on overall positions.

Various books and journals.

Materials and documents of the bank

Website of bank.

Some articles.

Bangladesh Bank Circular.

General information about banking institutions.



Sources of Data Collection

(A) Primary sources of data:

The data, which is collected directly, is called primary data. When someone is searching in the

field directly for collecting data, it is called primary source of data. I have collected data from

primary sources using the following methods:

(1) Observation Method:

Observation method may be defined as systematic viewing. According to concise Oxford

Dictionary→ “accurate watching, noting of phenomena as they occurs in nature with regard to

cause and effect and mutual relationship”. I went to the AIBL, Rajshahi Branch and visited for

the purpose of searching Investment aspects and management. All the activities of management

of this bank have been observed. Though we have collected huge number of data about

Investment management from the Bank, we understood limitations for collecting data through

this method.

(2) Interview Method:

The interview is a face to face interpersonal situation in which one person, the interviewer, asks a

person being interviewed, the respondent, question designed to obtain answer pertinent to the

problems. In order to have the real information and data about Investment Analysis, I went to the

bank and gathered a lot of data and information through interview method.

(3) Questionnaire Method:

Questionnaire method is widely used to collect data. The real data is collected through

questionnaire method. With the purpose of collecting data, a questionnaire was prepared

according to the direction of our supervisor about Investment Credit Management of AIBL,

Rajshahi Branch. The questionnaire is given at the end of the report.



(B) Secondary Source of Data:

When data is collected from indirect source, it is called secondary source of data.

To collect data from the secondary sources, it includes:

Various annual audit reports.

Books, Magazine and papers.

Statistical report.

Report and document etc.

Analysis of questionnaire:

There are many techniques of analysis of the questionnaire. We asked those questions about

different types of account, investment disbursement and recovery, journal, ledger, abstract,

various types of vouchers, right safety etc. The above points were analyzed.

Respondents of the Questionnaire: They gave us satisfactory answers; we asked them various

questions about different matters. They also ensured us to co-operate with very kinds of help.

1.5 Significance Of The Study

In the modern age, the role of bank is very wide as well as comprehensive. AIBL. Rajshahi

branch Contributes to the fields like agriculture, small industry, trade and commerce, foreign

exchange, foreign trade, poverty alleviation etc. In recent years, the bank has brought significant

changes in different policies as well as introduces some products.

1.6 Limitations of Data Collection

Every thing has its limitations. My report is also not out of weakness. For some certain causes, I

could not effort to conduct my report properly. I have considered the following causes as the



limitations of the study. I had faced some problems during collecting data. The executive and

bank authority were very busy. So they could not give us enough time for discussion.

The major limitations of data collection are given below:

To get clear knowledge in any field, we require sufficient time. We get only three months for

internship training. This time is not sufficient to collect data from AIBL, Rajshahi branch

during the period.

This internship report is mainly based on published Income and Expenditure Statement,

Statement of Affairs, Schedule of investments etc. But for the preparation of the report, we

can’t get sufficient official datas and informations.

Since, we are students; we have no sufficient knowledge and experience in preparing report.

We performed our internship program during the months of October to January. During these

months, the officers and employees were too much busy for opening and closing the accounts

and preparing the statement.

Some officers were too much conservative. They did not want to discuss any matter.

Some times officer and employees of the bank do not want to give necessary information and

data because of secrecy.



2│Overview

2.1 │ An Overview of the Al-Arafah Islami Bank LtdA financial institution, company or corporation generally deals in the business of money, which

runs for the purpose of lending or deposit of money from the public. A bank’s deposits are

amalgamated from the scattered savings of scattered people, and then the particular concern can

invest money in different projects. Repayable on demand or otherwise and with transferable by

checks draft order and otherwise can be termed as a bank. Economic concept is a very much

sophisticated and dynamic system of relationship between different agents of society where

banks play a vital role to mobilize the economy. The banking institutions make the monetary

system more dynamic. Modern economic functions are meaningless and seedless without bank.

To make the social system developed and dynamic no one can deny the contributions of bank by

any means. Bank at as a financial intermediary to mobilize fund from the surplus to default

economic units. Now a day’s banks play a vital role as leading financial intermediary to meet the

growing needs of every economy aspect.

The purpose of banking is to ensure the transfer of money from surplus to deficit unit, serving

people properly to utilize the deposited money for developing individually and making a

productive and self-centered country. Bank in all countries work as depository of money. The

owner look for safety and amount of interest for there deposit with bank. Entrepreneurs try to

obtain money form the bank as working capital and for long term investment. During my training

of Al-Arafah Islami Bank Ltd, Rajshahi. I have learnt about general banking procedure such as

cash receipt and payment, bills and remittance ,demand draft, Payment order, System of accounts

opening ,mail transfer, Telegraphic transfer, statement of affairs, loan and advance, token issue

etc. through I have got an overall idea about the bank e.g how it is operated. I have to focus on

deposits behaviors. These entrepreneurs welcome effective and forward looking advice for

investment banking sector thus we are grateful to the deposit holder on the hand and the

entrepreneur are expected to play the role of friend, philosopher, and guild for the deposit holder.



2.2│The Corporate Profile

2.2│General Profile

Registered Name: Al-Arafha Islami Bank Limited

Registered Brand Name: AL-ARAFHA ISLAMI BANK

Registered Logo:

Registered Office: “Al-Arafah Islami Bank Limited”

36, Dilkusha C/A, Piplos Insurance Bobon (7thFloor)

Dhaka-1000, Bangladesh.

PABX: 9560198/ 9568007/ 7123255-7

E-mail: [email protected]

Website: www.al-arafahbank.com

Date of Incorporation: 18 June 1995

Inauguration of 1st Branch: 27 September 1995

Inauguration of 109th Branch: December 12, 2012

Number of Branches: 109*

Number of Employees: 1711*

Authorized Capital: BDT 500.00. Crore*

Paid up Capital: BDT 179.89. Crore *

Long Term: ‘AA’ High Safety

Short Term: ‘ST-2’ High Grade

Notification of Reporting: March 25, 2014

http://www.eximbankbd.com/



2.3 Objectives of AIBL:

To make the evidence that profit is earned through islami banking. To realize the

transparent concept of profit that obtains Najat and Jannat in akherat by the service.

To conduct the banking system through in the light of Islami shariat.

To provide all types of banking service and develop entrepreneurship including interest

free modern banking and commercial and investment in banking to the businessman.

To enhance the motion of socio-economic development of the country by providing

investment assistance to different types of investment schemes such as agriculture,

industry, housing /real estate, self employment etc.

To play an active role in creating human resource development and employment

opportunities.

To provide investment for purchasing the desired goods of limited and low –earnings

serviceman for their livelihood improvement.

To give financial assistance to the poor and ultra-poor people under different scheme for

their rehabilitation and employment.

To give required cooperation to the persons who are wishing to perform Hajj and Omrah.



2.3│The Strategic Goal

Missions of AIBL :

Achieving the satisfaction of almighty Allah both & hereafter.

Proliferation of shariah based banking practices.

Quality financial services adopting the latest technology.

Fast and efficient customer service.

Maintaining high standard of business ethics.

Balanced growth.

Steady & competitive return on shareholder’s equality.

Innovative banking at competitive price.

Attract and retain quality human resources.

Extending competitive compensation packages to the employees.

Firm commitment to the growth of national economy.

Involving more in micro and SME financing.

Vision Of AIBL

“TOGETHER TOWARDS TOMORROW”

To be a pioneer of Islami banking in Bangladesh and contributing significantly to the growth of

the national economy.



2.5│The Corporate Level Function

Operational Area

Until now, AIBL Bank has opened 109 branches in 18 districts.



2.5│Competitive Position

Positioning Map*

Low Service Charge High

Operational Area, Al-Arafha Islami Bank Limited

2.6│Nature of services and scope of AIBL:

1) AIBL intends to demonstrate the operational meanings of participatory economy,

banking and financial activities as an integrated part of code of life. It is an alternative

concept of Islamic banking with a unique human face approach to credit and banking

based on interest free economic transaction, mutual participation and sharing of profit

and loss through various modes of finance and human as reflected in its general name.

2) In the context of labor-surplus economy of Bangladesh, it represents a comprehensive

alternative concept and an operational model meant to combined together (a) real

Strong Brand Image Weak

Poor Service Quality Excellent

Low Management Efficiency High

AIBL

IBBL

SIBL

SCB

HSBCDBL

EXIMSCBHSBC

DBL

AIBLSIBL

IBBL



materials benefits (b) visible social advantages and (c) clear spiritual vision –all three in a

package to the benefit not merely for its clients and shareholders but also for the

advantages of vastly poor people. The bank is expected to offer an alternative income

generating program for the millions of urban and rural poor and profitable option for the

rich.

3) At the operational level, this bank will provide a clear linkage among three sector of the

real economy: (a) monetized formal sector, (b) Non monetized informal sector and (c)

Islami voluntary third sector. It will offer modern banking service and undertake project

in the formal, non formal modern banking services as well as provide special services for

the Bangladesh living abroad.

4) It offers a socio –economic action program, which will not only generate economic and

social opportunities for work but also foster the spirit voluntary sharing and participation.

This involved participation is expected to create and environment of economic security

and viable social peace through a sense of belongings.

5) Each project is to be designed in a manner to earn money. Spending and non-spending

activities become economic, social and moral necessities all at once. Work is viewed as

an extension of prayer through the diverse program of the project goes much beyond the

mere replacements of interest rate by profit sharing ratio. It is expected to introduce inter-

dependency and mutual concern into the life style, affecting the behaviors of savers,

consumers, producers, labors, farmer, poor, and rich members of the society. From the

sense of the banks program would be a scheme.

2.7│Online Banking facilities:

Process of online banking facilities is going on.



2.8│ Zone –wise division of AIBL:

Zone Number of branches

Dhaka Division 56

Chittagong Division 21

Syllhet Division 7

Khulna Division 7

Rajshahi Division 6

Rangpur Division 5

Borishal Division 4

2.9│Shariah board of [AIBL] Bank

Shariah board of AIBL is the most significant body to control Islamic rules and regulation to

maintain banking activities sacredly and properly.

Scholar Shariah board are highly reputed with extensive experience in law, economics and

banking systems and specialist in law and finance as prescribed by Islamic Shariah making up

the AIBL's Fatwa & Shariah



Supervision Board. The Board is appointed by the bank's Board of Directors. The Shariah

Board supervises the development and creation of innovative Shariah -compliant investment and

financing products and services. The Board is empowered to issue fatwa’s on any matter to it by

different business units of the bank. The Shariah auditors ensure that all the transactions are

carried out in strict compliance to Islamic principles of banking. This framework along with a

stringent compliance to rules has made AIBL the pioneering organization to practice Islamic

finance in true letter and spirit. The name of AIBL has come to signify innovation, financial

dynamism, leadership and above all a complete assurance that all the transactions are free from

riba (interest).

Members of AIBL's Fatwa & Shariah as on 31 December 2012

1 Mufti Abdur Rahman chairman

2 Md. Abdur Rahim Khan Secretary

3 Mufti Ruhul Amin member

4 Moulana Abdul Basit Barkatpuri member

5 Mufti Muinul Islam member

6 Alhaz A Z M Shamsul Alam member

7 Badiur Rahman Member (By

Default)



2.10│List of board of Directors of the bank as on 31 December, 2013

1. Badiur Rahman Chairman

2. Sarker Mohammad Shameem Iqbal Vice Chairman

3. Alhajj Md. Harun-ar-Rashid Khan Director

4. Alhajj Nazmul Ahsan Khaled Director

5. Alhajj Abdul Malek Mollah Director

6. Alhajj Hafez Md. Enayetullah Director

7. Alhajj Abdul Moktadir Director

8. Alhajj Ahamedul Haque Director

9. Alhajj Abdus Samad Director

10. Alhajj Abu Naser Mohammad Yeahea Director

11. Alhajj Abdus Salam Director

12. Alhajj Niaz Ahmed Director

13. Md. Ashik Hossain Director

14. Engr. Kh. Mesbahuddin Ahmed Director

15. Mohammed Emadur Rahman Director

16. Md. Rafiqul Islam Director

17. Anwar Hossain Director

18. Dr. Momtaz Uddin Ahmed Director



2.11│List of Employees of AIBL,

Rajshahi Branch

239/248, Saheb Bazar, Rajshahi

01721-775171, 0721-775161

No Name Position Contract Number

01 Md.Syful Islam FAVP&Manager 01727-179771,01911-725632

02 Md. Abdul Khaleque SPO&2nd Officer 01819-083650

03 Md. Toriqul Islam SPO 01718-279915,01934-163859

04 Md. Abdul Matin PO 01911-747435,01728-460057

05 A.S.M Sayem SEO 01711-467323,01971-467323

06 Abdur Rahman SEO 01717-821843

07 Md.Zakir Hossain SEO 01716-141578,01916-141578

09 Md. Jamirul Islam EO 01913-976406,01718-020543

10 Md. Fahim Siraj EO 01748-161829

11 Md.Salah Uddin EO 01716-389500,01913-362986

12 Md. Kamal Hossain EO 01717-623007

13 Md. Arafatul Islam EO 01718-080162

14 Dewan Md.Sakil Officer 01726-345691

15 Mamunir Rashid SFS 01740-556932,01728-172714

16 Md. Rezuan Hossain SFS 01725904000

17 Md.Robiul Islam MCG 01556-308622,01739-894622

19 Md.Shahinur Alam MCG 01190949098

20 Md. Munjurul Hassan Driver 01719-543369

24 Md.Fazlur Rahman Com. AG 01942-125638

25 Md. Israil Hossain Night Guard 01937-414815

26 Md. Khorsed Alom Cleaner 01745-297123



2.12│Performance of the Bank at a Glance:

(In million taka)Particular 2009 2010 2011 2012 2013

Authorized Capital 5,000.00 5,000.00 10,000.00 10,000.00 15,000.00 Paid up Capital 1,798.95 4,677.28 5,893.37 7,130.98 8,343.25 Reserve Funds & Other Reserve 1,223.18 1,779.08 2,437.43 4,079.63 4,827.20

Shareholders' Equity (Capital & Reserve) 3,564.73 9,790.36 11,989.11 14,050.69 16,091.17

Deposits 38,355.50 53,882.96 82,186.98 118,683.39 140,980.55 Investment 36,134.08 53,582.96 77,714.95 106,650.42 125,715.39 Total Income 5,305.64 7,685.57 11,332.59 16,692.58 19,723.41 Total Expenditure 3,575.81 4,462.30 7,005.81 11,937.04 14,774.85 Profit Before Tax & Provision 1,729.83 3,223.27 4,326.78 4,755.54 4,948.56 Profit Before Tax 1,589.24 2,852.47 3,946.62 3,944.10 4,360.41 Profit After Tax 858.99 1,959.04 2,198.75 1,945.41 2,276.68 Fixed Assets 466.30 655.39 968.13 2,394.62 2,517.22 Total Assets (Excluding off-balance sheet items) 48,515.79 74,005.01 106,768.18 149,320.36 173,161.63

Import Business 34,074.80 55,934.10 76,112.10 71,931.70 85,915.00 Export Business 23,546.10 32,042.40 52,202.10 58,476.60 68,980.30 Capital Measures Core Capital (Tier-l) 3,498.07 9,582.85 11,924.50 13,073.14 15,113.62 Supplementary Capital (Tier-ll) 567.89 929.96 1,123.40 1,731.59 1,511.75 Tier-l Capital Ratio 9.68 13.21 12.31 10.38 13.33 Tier-ll Capital Ratio 1.57 1.28 1.16 1.37 1.33 Total Capital 4,065.96 10,512.81 13,047.90 14,804.73 16,625.37 Total Capital Ratio 11.25 14.49 13.47 11.75 14.66 % of NPIs to Total investment 1.68 1.14 0.95 1.63 2.77 Number of Shares Outstanding 179,895,360 467,727,936 589,337,199 713,098,010 834,324,671 Earning per Share (Taka) 2.00 4.14 2.79 2.03 2.46 Book Value per Share (Taka) 19.82 16.47 16.69 19.70 19.29 Price Earning Ratio (Times) 11.23 13.24 13.55 11.97 7.76



Price Equity Ratio (Times) 2.71 4.06 2.26 1.23 0.99 Dividend per Share Cash Dividend (%) Bonus Share 30 26 21 17 13.50 Number of Branches 60 78 88 100 110 Number of Employees 1,296 1,711 1,807 2,110 2,387 Number of Shareholders 11,382 49,386 54,267 52,739 58,466

2.13│Organizational Structure Of AIBL:



Ownership structure:

Managing Director

Deputy managing Director

Executive vice president

Senior vice president

Vice president

Assistant vice president

First asst. vice president

Senior principle officer

Principle officer

Senior Executive officer

Executive Officer

Officer



The authorized capital of the Bank is Tk.2500.00 million and the paid up capital is Tk. 1153.18

million as on 31.12.2007. Renowned Islamic Scholars and pious businessmen of the country are

the sponsors of the Bank. 100% of paid up capital is being owned by indigenous shareholders.

The equity of the bank stood at Tk. 2037.50 million as on 31 December 2008, the manpower was

1292 and the number of shareholders was 12013. It has achieved a continuous profit and

declared a good dividend over the years. High quality customer service through the integration of

modern technology and new products is the tool of the bank to achieve success. The bank has a

diverse array of carefully tailored products and services to satisfy customer needs. The Bank is

committed to contribute significantly to the national economy. It has made a positive

contribution towards the socio economic development of the country with 109 branches of which

17 is AD throughout the country.

Composition Of The Board:

As like other banks in the private sector. Board of directors of the bank is a unique combination

of both private and Govt. sector experience. Currently it consists of 12 directors.

Capital:

The Al-Arafah Islami Bank Ltd. has been consistently maintaining the capital adequacy ratio, as

prescribed by Bangladesh bank. This has been made possible by a policy of building up both

capital and reserves. The bank started with an authorized capital of tk 500.00 crore in 1995 and

paid up capital at the time stood at tk. 179.89. crore

Reserve fund:

Reserves fund increased to take 100.10 in 2013.

Distribution of branches:



The bank covers by its activities all the important trading and commercial centers of the country.

As on December 31, 2013 it had 109 branches within Bangladesh. All the branches are equipped

with computers in addition to modern facilities, logistics and professionally competent

manpower.

Branch network:

The bank is maintaining its presence in almost all the division of the country. As on 31

December 2013,it has 109 branches within Bangladesh. almost all the branches are equipped

with computer in addition to the modern facilities and logistics and professionally competent

manpower.

Number of employee:

There is 1711 employee in Al-Arafah Islami Bank Ltd.

Management and internal organization:

The board of directors being at the highest level of organization structure plays an important role

on the policy formulation and major decisions.

The management committee manages the routine affairs of the bank. The board of director has

the authority to approve the balance sheet, etc. The Chairman keeps board of directors

informed ,on the progress of the bank and implements the polices established.

3│ Investment Department



3.1│Introduction:

General banking represents the formal banking where all general banking activities are included.

General banking is formed to provide financial service to the general people. General banking

sector includes customer service department. Customer service department provide various client

service to their clients. Accounts opening and closing, travel related services, reply client

quarries about different department and control documentation of client file, requirement is the

major function of this department. Customer services department is the most important

department of Al- Arafah islami bank ltd, because at first, customer wants to know their various

information about banking related services from customer service department. So as a part of

service organization this department should satisfy to their clients with the best services.

General banking includes deposit services, local currency remittances, Investment disbursement

etc. it should be mentioned that cash management is also an important part of general banking.

3.2│General or formal banking:

AIBL is a special type of modern and online banking system of our country, which includes

formal banking, non –formal banking and voluntary banking system. In the formal banking

system it is working like other commercial bank but the names of the customer’s deposits are

different from the normal commercial bank, such as al wadiah current deposit A/C. Mudaraba

saving deposit A/C. The bank shores profit with its customer’s account and also its investment.

In the formal corporate sector, this bank would among others, offer the most up-to-date banking

services through opening of various types of deposit and investment account, financial trade,

provide letter types of opening letter of credit collection of bills, effecting domestic and

international transfer, of equipment and customer durable, hire and installment scale for goods,

investment in low cost housing and management of real estates participatory investment in

various industrial agricultural, transport education and health project and so on.

3.3│Various scheme of formal banking sectors and banking products:



A. Name of The Account Profit rate (%)

General Account

Al Wadiah Current Deposit 0.00%

Mudaraba Saving Deposit 6.00%

Mudaraba saving Deposit(Staff) 6.00%

Mudaraba Short Notice Deposit (SND) 5.50%

Mudaraba term Deposit(3month) 10.00%

Mudaraba term Deposit(6month) 10.25%

Mudaraba term deposit(12month) 10.50%

Mudaraba Deposit Scheme

Installment Term Deposit (ITD) 12.00%

Saving Inv. Deposit (SID) 12.00%

Millionaire Deposit Scheme (MMDS) 12.00%

Lakhapati Deposit Scheme (LDS) 12.00%

Kotipoti Deposit Scheme (MKDS) 12.00%

Special Pension Deposit Scheme 12.60%

Profit Term Deposit (PTD) 12.00%

Double Benefit Deposit Scheme(DBDS) 12. 63%

Triple Benefit Deposit Scheme (TBDS) 12.78%

Monthly Term Deposit (MHD) 12.00%

Pension Deposit Scheme (PDS) 12.60%

Source:AIBL,Rajshahi Branch, Statement of affairs as on 30-12-13

Investment:

B. Name of The Account Profit rate (%)



Murabaha (general ) 15-18%

Murabaha post import 15-18%

Bai muazzal (common /general) 15-18%

Bai muazzal(real-estate) 15-18%

Bai muazzal(staff) 15-18%

Bai muazzal staff real –estate 9.00%

Hire purchase (general ) 15-18%

Hire purchase (real –estate) 15-18%

Hire purchase staff real –estate 9.00%

Quard against MTDR 0.00 %

Quard against CAR 0.00 %

Grameen Small Investment Scheme 10.00%

Small Enterprise Investment Scheme 10.00%

Baim (Agriculture) 13.00%

Demand Draft (DD):

DD is the most significant instrument of remitting fund. It is an order to pay money drawn by

one branch payable to another branch on demand.

Mail Transfer (MT):

This branch transfer money another branch of this bank in another place in against of

commission money of this security paper has to be transferred to an account of another branch.

Telephone transfer (TT):



It is the quickest method of remitting fund from one place to another. In this procedure no

instrument is sent to the paying branch. Messages sent over telephone or telex and the paying

branch makes payment after getting message.

Payment Order (PO):

It is the written document. This payment order can be encased on that branch from where it is

issued. Several supplier organizations use this payment order and here is no account is needed to

open with bank. It is issued locally.

3.4│Cash department:

Cash section is the nerve and too much sensitive center of general banking department. It is an

important and sensitive section of a bank where services are providing to the clients for

promotion of the business of a bank.

3.5│Account Facilities:

Al –Arafah Islami bank provide different types of account under account facilities. These

accounts can be classified into following categories as shown below:

General Account:

A) Al wadiah current deposit account

B) Mudaraba saving deposit account

C) Mudaraba short notice deposit account

Special (fixed) deposit Account:



Mudaraba Term Deposit Receipts :

a) 01 months

b) 03 months

c) 06 months

d) 12 months

e) 24 months

f) 36 months

Mudaraba Scheme Deposit :

a) Mudaraba monthly profit deposit scheme

b) Mudaraba saving

c) Mudaraba special deposit pension scheme (2 years)

d) Mudaraba special deposit pension scheme (5 years)

e) Mudaraba special deposit pension scheme (8 years)

f) Mudaraba special deposit pension scheme (10 years)

g) Mudaraba special deposit pension scheme (12 years)

h) Mudaraba monthly saving scheme

i) Mudaraba hajj saving deposit

j) Mudaraba lakhopati deposit scheme

k) Mudaraba millionaire deposit scheme

l) Mudaraba double Scheme.

3│ Foreign Exchange



3.6│ Introduction:

The foreign exchange regulation act 1947 as adopted in Bangladesh defines foreign exchange

means foreign currency including any instrument drawn, accepted, made or issued under clause

13 of article 16 of Bangladesh bank order 1972 and all deposits, credit and blanches payable in

any foreign currency and drafts, traveler’s cheques, letter of credit bill of exchange expressed or

drawn in Bangladesh currency but payable in any foreign currency.

3.7│Definition letter of credit:

Letter of credit is a commitment of making payment by a bank known as issuing bank in behalf

of the importer making payment to the exporter as beneficiary while the beneficiary has to

comply with certain terms and conditions and after submission of stipulated documents.

According the uniform customs & practice for documentary credit (UCPDC) documentary credit

and standby letter of credit mean “any arrangement, however named or described, whereby a

bank (the issuing bank) acting at the request and on instructions of a customer (the applicant or

on its own behalf).

3.8│Types of letter of credit:

Documentary credit may be either-

1. Revocable credit

2. irrevocable credit

3.9│Special documentary credit:

Revolving credit :



The revolving credit is one, which provide for restoring the credit to the original amount after it

has been utilized. How many times it will be taking place must be specially mentioned in the

credit. The revolving credit may be either cumulative or non-cumulative.

Transferable credit :

A transferable credit is one that can be transferred by the original beneficiary in full or in part to

one or more subsequent beneficiaries.

Such credit can be transferred once only, unless otherwise specified. Fractions of a transferable

credit can be transferred separately, provided shipments are not prohibited.

Back to Back credit :

The back to back be a new credit opened on the basis of an original credit in favor of another

beneficiary. Under the back concept the seller as the beneficiary of the first credit offers it as

security to the advising bank for the issuance of the second credit. The beneficiary of the back–

to-back may be located inside or outside the original beneficiary country

Red clause credit:

A Red clause credit is a credit with a special condition incorporates into it that authorizes the

conforming bank or any other nominated bank to make advance to the beneficiary before

presenting of the documents.

Under the above credit, the opening bank is liable for the pre-shipment advice made by the

negotiable bank, in case the beneficiary fails to replay or deliver documents for negotiation.

Standby credit:

The standby credit is a documentary credit or similar arrangement, however named or described

which represents n obligation to the beneficiary on the part of the issuing bank to:

A) Reply money borrowed by the applicant, or advanced to or for the account of the applicant.



B) Make payment on account of any indebtedness undertaken by the applicant.

C) Make payment on account of any default by the applicant in there performance of an obligation.

3.2.5 Foreign Exchange business :

Foreign exchange business (export, import & remittance) of the bank stood at Million in 20012

as $288888880o against $ 1852560 million in 2011.

TABLE: BREAK UP OF FOREIGN EXCHANGE BUSINESS

YEAR Amount ($ in million)

2000 1602.1

2001 1306.7

2002 1722.20

2003 2624.1

2004 140420.10

2005 18020.01

2006 28865

4│ Investment Department



4.1: Introduction: Investment is the soul in every financial institution, and it represents total

development of the banking activities. Without investment a business concern can't commence as

financial institution. Investment collects from the scattered savings of the different scattered

people. After collecting deposits then bank invest in different schemes as investment. As AIBL

is, a Islamic shariah based bank so it invests in various schemes to earn profit.

So Investment can be stated as, the investment decisions of a firm are generally known as the

capital budgeting or capital expenditure decisions. A Capital budgeting decisions may be defined

as the firm’s decision to invest its current funds most efficiently in the long –term assets in

anticipation of an expected flow of benefits over a series of years.

The main features of Investment decisions are,

The exchange of current funds for future benefits.

The funds are invested in long-term assets.

The fund benefits will occur to the firm over a series of years.

The main sources of investment fund of AIBL are various types of deposit. This Bank collects

deposits from people and various organizations at a certain rate of profit payable of them and

lends this money to people at certain rate of profit more than the rate of collecting money.

Generally Bank invests its fund, which collected by the following deposit heads:

4.2 Different schemes of Investment AIBL:

1. Investment in Agriculture

2. Investment in Industry.

3. Investment in Trade and commerce.

4. Investment in Foreign Exchange.

5. Investment in House Building.

6. Investment in Transportation.

7. Investment in Hire purchase.

8. Investment in Mosque and Madrasha.

9. Investment in import export schemes.

10. Investment in Small Industries investment scheme.

11. Investment in Consumer investment scheme



12. Investment in Rural, agri, Investment scheme.

13. Investment in Agri-gramen small schemes.

4.3 Sources of Fund

Al-Wadiah Current Account:

Anyone can open this account by filling up a specific form and deposition profit is given

to these types account holder. Customers can deposit and withdraw any amount at any time

specific prior notice. For opening a current account, the applicant should submit the following

papers and information.

1. Nationality certificate from the concern authority.

2. Two copies of recent passport size photographs.

3. If the applicant is as service holder he should collect employee certificate from his

employer and is to be submitted.

4. An introducer who has a current deposit account with the respective branch should

identify the applicant's signature.

5. The applicant should deposit minimum Tk. 1000 to open an account.

Mudaraba Savings Account:

The procedures of opening a savings account are almost same as the current deposit

account. Some of the rules and regulations to operate a saving deposit account are mentioned

below:

1. Only saving deposit account holder or a current deposit account holder of the respective

branch can be introducer of the applicant for opening a MSD Account.

2. The introducer should attach two copies of recent passport size photograph of the

applicant. In this case, the introducer will maintain his or her account number.

3. The applicant has to deposit Tk. 1000 to open an account.

4. If the client is private or public limited company, the people authorized to open and

operate the account should put join signature where it is necessary.



5. Maximum a customer can withdraw his money from this account two times a week with

seven days prior notice. Profit rate of this account is 6% per annum.

6.

Mudaraba Term Deposit:

One can open this account for maximum three years but minimum three months. Profit

and principal will be returned at maturity. Profit rate are 8.5% per annum for this account.

Mudaraba Special Deposit and Pension Scheme (MSDPS) :

This is a special savings scheme of AIBL. One can open this account for different terms.

Profit given to this savings scheme is @ 12.5% per annum for five years and @ 12.5% per

annum for ten years savings.

Table: Year-Wise Deposit of AIBL, Rajshahi Branch:

Year Total Deposit

(Taka in Lac)

2011 12013.98

2012 12633.89

2013 14399.35

Source: Statement of Affairs of AIBL, Rajshahi Branch (2011-2013)

Deposits is the 100% secured savings in a bank. From the above table, the deposits trend is

increasing from year to year and here it is in good position.



Table: Statement of amount of deposit for the year of 2012 to 2013

(Account-wise)

Account Name 2012 TK. In lac 2013 TK.In lac

Mudaraba Savings Deposit @ 6% 1189.40 1319.31

Mudaraba short Notice Deposit @ 5.50% 54.41 68.88

Mudaraba Term Deposit: 7179.53 8067.06

Up to 01 months @ 9% 3548.66 3004.41

Up to 03 months @11% 1631.99 2838.55

Up to06 months @ 11% 373.30 407.49

Up to 12 months @ 11% 1595.74 1786.68

Up to 24 months @11% 1.57 -

Up to 36 months and above @ 11% 28.25 29.91

Installment Term Deposit (ITD) @12% 1054.59 1151.08

Mudaraba Hajj Deposit @ 12% 1.90 2.03

Mudaraba Pension Deposit @12.60% 48.40 49.29

Mudaraba Millionaire Deposit @12% 262.85 274.04

P.P Mudaraba Term Deposit (MTDR) @12% 176.40 200.78

Mudaraba Lakhopoit Deposit @12% 223.74 233.57

Mudaraba Kotipoti deposit @12% 101.61 74.41

Profit term [email protected]% 461.50 689.22



Double Benefit [email protected]% 306.70 291.21

Triple Benefit [email protected]% 4.33 4.80

`

Source: Statement of Affairs of AIBL, Rajshahi Branch (2005-5009)Figure 4.1.8:Graph of

Deposits of AIBL,Rajshahi Branch.



INVESTMENT MANAGEMENT

4.4 Concept of Investment Disbursement:

When Bank distributes its fund in various ways to various sectors to earn profit to operate

Banking function and to give some profit to deposit holders, and then it called disbursement.

4.5 Principle of Investment:

There are some principle of lending which have to be maintained for successful Banking

business. The main principles of lending of the study branch are as follows.

i. Principle of Safety: Safety means the assurance of repayment of distributed loans. To

ensure the safety of loan, Bank must have to maintain eligible securities from borrowers.

ii. Principle of Profitability: Profitability is the main objective of commercial Banks. The

Al-Arafah bank Ltd. Is no exception to this rule. This branch earns profit by lending at a

higher rate of profit than the rate of profit to be paid on its deposit money.

iii. Principle of Liquidity: The Bank must to maintain sufficient liquidity to repay its

depositors and a trade-off between the liquidity and profitability is must.

iv. Investment restriction imposed by Central Bank: At the time of sanctioning loan, the

commercial Banks must have to follows the restrictions that are imposed by the

Bangladesh Bank from time to time.

v. Principle of Diversification: Principle of diversification means to distribute the

investment to a target number of borrowers, rather to a small number of borrowers. This

will increase the services of the Bank and it will reduce the risk if investment recovery.

4.6 Types of Investment:

AIBL is a join venture of three sector private commercial Bank integrating formal, non-

formal and voluntary sector Banking is successfully operating its human resource management

through its 61branches around the country since its inspection in 1995.



Fig. Types of Investment

4.7 Modes of Investment

Murabaha : Bai-Marabaha represents the agreement between the bank and respective

parties.It is a mode of investment under which the Bank as per contract and request of the client

procures certain goods permissible under Islamic Shariah from a third party and sells those to the

client at a cost PLUS declared profit payable in cash in any future fixed data in lump-sum or by

installment. It brief it is called cost plus (declared profit) sales.

Important Features :

INVESTMENT

Buying & Selling Modes Profit & Loss Sharing Modes Other

Murabaha Bai-MuajjalDirect Investment Quard against FID

Mudaraba Musharaka

Bai-Salam Bai-Istisna



1) Bank must purchase the good so that ownership of Bank on the goods is established at

least for a moment.

2) There must be three parties in order to perform buying and selling under Murabaha (a)

Bank (b) Seller of goods (c) purchaser of good. Goods however must not be purchased

from client or from any its sister concern. Goods must also be Halal as per Shariah.

3) A commodity in the true sense of the must be involved in buying and selling.

4) There must be an agreement between the Bank and client cost of the goods sold and the

amount of profit added there with should be separately and clearly mentioned in the

Murabaha agreement.

5) After procurement of the goods the client shall take delivery of the same signing on the

rivers of the purchase schedule and immediately after the Bank shall take goods on plays

as security of Banks investment.

6) On expiry of the stipulated period, Bank can terminate the contract and dispose of the

pledged goods at its own discretion.

Precautions :

1) The marketability of the goods is to be verified along with price there of so that the client

does not become reluctant rather feel encourage adjusting the investment speedily.

2) The quality and quantity to be ensured.

3) The price of the goods must be competitive.

4) Collateral may be obtained for uncommon items.

5) The feasibility of the proposal shall be as curtained.

Bai-Muajjal :

It is a mode of investment under which the bank at the instance of the client procures

certain gods permissible under Shariah and the law of the country & sells those to the client at a

price payable at a fixed future date in lump sum or in fixed installments under this mode goods

are delivered in advance and price is paid later agreed by the parties.




1) Goods are to be purchased from a third party excluding sister concern (s) of the client.

2) Ownership of Bank on the goods must be established at least for a single moment before

selling the same to the client.

3) Like Murabaha, Bank is not bound to declare cost of goods and profit mark up separately.

4) It is a credit sale by which ownership of the goods is transferred by the Bank to the client

before receipt in sale price. That is payment is deferred for a fixed period. Bank may or

may not retain possession of the goods considering the security aspects.

Bai-Salam :

Bai-Salam may be defined as advance purchase of a commodity/product making advance

payment by the Bank on execution of a contract where in it is clearly mentioned that the

commodity will be delivered as per specification, size, quality and quantity at a fixed future time

in a particular place. The burden of cost of transportation and storage is also specially mentioned

in the contract to avoid confusion. Generally, industrial and agricultural products are purchased

in advance under the above terms to finance so that production is not hindered for want of fund.


1) There must be a written contract between the Bank and the client, which shall be the

principal instruments to govern the advance buying and selling.

2) The name and description of the commodity, specification, quantity, quality, size, date,

time and place of delivery, transportation cost and godown rent if any, must be mentioned

clearly in the contract.

3) Purchase price, shall be paid in advance as mentioned in the contract immediately after

sign the agreement. If mentioned in the contract delivery of the commodity/product can

be taken in installments also

4) If the client fails to deliver the commodity in the time per specification as well as in

specified quantity, the client shall be bound to repay the price received earlier in advance



against the product along with compensation for delayed period. On the other hand if, the

Bank receives less than the quantity contracted for, the client must pay back the value of

product supplied less than the quantity contracted for.

5) It is not necessary to mention cost of product and profit separately in the contract. Only

purchase price of the product may be mentioned.

6) Bai-Salam is the only exceptional mode allowed by Islamic Shariah in which case goods

be sold without having good in possession and existence. If the goods are ready for sale

Bai-Salam is not allowed in Shariah.

7) After taking delivery of the goods, Bank shall be the owner & shall bear all risk till

delivery of the same to the purchaser.

Bai- Istisna :

Bai- Istisna is a mode of investment of AIBL. It is one of the most important modes of

investment. According to the buyers order it anybody makes a contract for producing a fixed

Istisna quantity of products in a fixed period of time and if the procducts price is paid in advance

or installment basis is called Bai-Istisna.

Bai-Istisna is applicable to the production of industrial commodities and construction.

In Bai-Istisna who produces or builds is called SANI or Labor, and who controls the SANI or

labor is called “MASNU”

Essential properties:

1. There is a must written contract between the bank and the party. Here the name and

description of the commodity, specification, place of delivery must be concluded in this contract.

2. There is no time limit for providing products. But in bank it is not limited.

3. The price of goods should be paid in fully in cash or installment basis.

4. At the time of executing contract, commodities whole price should be paid in case or

installment basis.



5. Goods supply may be in once a time.

6. If specific products are produced before and ready to sale can’t be traded in Bai-Istisna

mode.

7. After executing contract till production, any party can reject the contract.

Mudaraba :

Murabaha is a mode of partnership financing based on Islamic Shariah principal under

which entire capital is provided by the Bank against a farm contract to the client on the

stipulation that the client will manage the business with due diligence properly and effectively.

Profit shall be shared by the partners as per agreed ratio and loss if any shall be born by the Bank

i.e. supplier of capital. Supplier for the capital is known as Sahibul Mul" and the user of the

capital is known as "Mudarib"

Conditions :

1) Bank being the Shaebul Mal will provide the capital and the Mudarib will manage the

cushiness. The amount of investment shall be made known to both the parties

2) Normally Bank will not interfere in the affair of business. But will have the right to

supervise and oversee the operation.

3) The Bank and the Mudarib will share profit equally. However, Bank may allow more

share of profit to the Mudarib at its discretion since he will manage the business.

4) Profit will be distributed to both the parties. For the time being parties will divide profit

twice in a year i.e. 30 June and 31 December.

5) In case of specific purpose Mudaraba profit will be distributed at the end of each deal.

6) Suitable Books are of A/Cs having to be maintained by the Mudarib.

7) Genuine loss if any shall be borne by the Bank. Bunk will not shoulder any loss incurred

for any fault of the Mudarib.



8) In case of specific purpose Mudaraba the specified purpose with clear description have to

be incorporated in the Mudaraba agreement.

Bai-Musharaka :

Musharaka means partnership. Two or more persons jointly contribute capital and share

profit as per agreed ration and loss as per capital ration. Under this mode Bank participates with

its client as a partner of an enterprise. The Islamic Shriah principle of Musharaka is Sirkat-Al-

Inam, which means profit, is divisible as per agreed ration irrespective of capital contribution

whereas loss is borne strictly on the basis of capital contribution of the partner’s

involved.Conditions:

1) Both Bank and the client jointly contribute capital.

2) The entrepreneur will manage the enterprise.

3) The Bank shall take part in the policy and decision-making as well as oversee the

operation of the enterprise. The Bank shall appoint suitable person (s) at the cost of the

enterprise to mange and maintain the books of accounts properly, if felt necessary.

4) As the entrepreneur shall manage the enterprise, the Bank may pay more of profit to him

that the of proportionate capital investment.

5) Loss, if any, shall be shared on the basis of equity ratio.

6) Written agreement incorporation there in all the terms and conditions shall be executed

by the parties involved.

Hire Purhase-Musharaka Mutnakasha (HP-MM) :

Hire Purchase-Musharaka Mutanakasha (HP-MM) is a mode of investment under which

the Bank as per contract shall invest for purchasing durable asses like Machineries Equipment,

Transport, Land & building etc. along with the clients with the stipulation that the client hall pay

off the rent at the agreed rate on the out sanding equity of the Bank together with the installments

of principal amount of equity of the Bank for the purpose of eventual ownership of the concerned

asset.



Features :

1) The Islami Shraih principle of investment under HP-MM is Musharaka Muta-naquasha,

which means the rent, shall be devisable as per equity involved and unpaid rent if any

shall not be treated, as equity and the asset shall be acquired on participation ownership.

2) Possession of the assts shall be passed on to the client for use as per practicability.

3) Bank shall retain the ownership till payment of equity portion of the Bank along with

rental.

4) The ownership of the asset shall gradually pass on to the upon payment of Bank's equity

involved and on the reverse upon increase of client's equity.

5) Rent shall no be compounded in any case. i.e. no rent shall be charged on

unpaid/outstanding rent. Incidence of rent shall be reduced proportionately with the

reduction of equity of the Bank on payment of installment by the client.

6) Since it is kind of Musharaka, case can be paid to the credit of clients account. However,

the purpose for which cash is disbursed must be ensured from the point of Banking.

7) In case of need the equity portion may be increased or decreased by making lump sum

payment by either side. Very often the client may require funds to the

equipments/machineries for short period as working capital which may be paid to the

debit of respective HP-A/C if found feasible and covered by the value of assets.

Direct Investment :

Investment may be made for purchasing land for development and subsequent disposal or

for construction of flats and disposal of the same for gainful purpose. The Bank under joint

ownership with the client may also develop housing estate, build up multistoried building and

disposal of the same subsequently for gainful purpose.

Quard against Term Deposit Receipt (TDR) :



Quard against term deposit may be allowed by creating loan account and profit upon loan

is not be recovered. Simultaneously profit on term deposit for the like amount is not being paid.

The Bank may recover an amount of service charge for the job.

Quard-E-Hasana:

Quard-E-Hasana by way of temporary over daft in current A/C, without charging profit

may be allowed keeping securities there against. Apart from above quard may be allowed to

employees against PF & Benevolent Eund.

Voluntary Sector :

In is the right item for globalization of Islamic voluntary sectors activates. In this process

Al-Arafah Islami Bank Ltd. In the 21st century play a very vital role in reactivation and

institutionalizing the role of Islamic socio-economic institutions and various voluntary and

obligatory tools of redistribution of income through innovative financial instruments and

management of found.

This Bank has a special program of development of various religious and social service

oriented institutions. Within this program, Mosque, Maktab, Waqf, Charitable organizations etc.

will be modernized and activated. All properties under this program will be utilized in productive

activates on participations basis. Besides, Hajj (Pilgrimage) and Kurbani (Specific of animals

according to dictates of Islam) schemes are included in the program of Al-Arafah Islam Bank

Ltd.

Al-Arafah Islami Bank. is the process of organizing voluntary capital maker operation for

mobilization of necessary fund and in the process of developing the following financial

instruments with different sets or rules in conformity with Sharah:

Cash Waqf Deposit Certificate (Special and General)

Quard-E-Hasana Certificate (Special and General)

Zakat/Ushar Payment Certificate



Hajj Savings Certificate

.Year-wise Investment:

Table: Year-wise Investment of AIBL, Rajshahi Branch (2002 To2013)

Year Investment (Take in Lac)

2002 2949

2003 3518

2004 4798

2005 5587

2006 7862

2007 7629

2008 7709

2009 9270

2010 9890

2011 10955.41

2012 15273.21

2013 13697.35

Sources: Statement of affairs as on 30-12- 2013 AIBL

From the above graph, the sector wise investment of AIBL,Rajshahi Branch is increased

from year to year. So the investment mechanism is productive.

Table: Sector wise statement of investment of AIBL, Rajshahi branch for the year of 2009 to 2012



Investment NameTaka in Lac Taka in Lac

2009 2010 2011 2012

Murabaha (General/Commceial) 2788 2788 - -

Murabaha Post Import (MPL) 1424 1424 - -

Bai Muazzall (General/Commercial) 044 044 2051 2943

Bai Muazzall (Real Estate) 4 4 9964 9136

NI Bai Muazzall Staff Reall Estate 10 10 - -

Bami-CIS (Staff) 1 1 - 1915

Hire Purchase (General) 16 16 - -

Hire Purchase (Real Estate) 13 13 2120 7833

Hire Purchase Staff Reall Estate 14 14 - 1132

QUARD Against MTDR 56 56 4650 1100

QUARD Against CAR 4 4 1534 5415

Murabaha Import Bills 488 488 - 1729

Total = 7862 7862 20319 31203

Sources: Statement of affairs. 2012 AIBL

Figure:Sector wise investment garph.

From the above statement, it can represent that this branch has no all kinds of investment scheme

yet has some important investment schemes and invest money.From 2009 to 2012 the investment

progress is satisfactory and productive.



Particular Taka in Thousand

2010 2011 2012 2013

Bai-Muazzal (General) 269043461 205139316 294747 622997

Bai-Muazzal (Real Estate) 171755921 996422 913668 85066

Bai-Muazzal (CIS) 783353 768322 1915739 194870

Hire Purchase (RE) 842390 2120022 783353 320

H.P.S.M (RE) 2159896 120600 1132655 2304

Quard Against (MTDR) 3198796 4650000 1100000 9262

Mudraba Import Bill 39425774 15280230 1729726 79788

Quard Against CAR 50152 153460 54152 -

Total 707850050 770906011 927095830 9946907

Total Investment of AIBL Rajshahi Branch for the year of 2010, 2011, 2012, 2013 is as follows:

Sources: Statement of affairs. 2013 AIBL



Figure: Total investment graph.

A bank performance depends on controlled investment disbursement recovery system.

According to the above investment chart total investment has increased from 2007 to 2009 .If the

recovery position is well then the profit will be very high. And another investment scheme

should be created.

INVESTMENT RECOVERY



4.8 Introduction

It is the responsibility of the manager to monitor the over all profile and risk aspect of the credit

portfolio in accordance with the criteria set down in the Bank credit policy. Such monitoring

shall be evidenced from the comments of the manager in monthly call/visit reports of the

assigned officers and kept in the credit. File with copy to regional officer/head office. This

review shall be formally performed at intervals prescribed by head office but it is the

responsibility of the manager to ensure at all items that the credit portfolio meets the standard set

forth by the Bank.

4.9 Periodic review and follow-up should aim at ensuring:

a) That terms of approval have been adhered to;

b) That conduct (turnover, regularity of repayments etc.) of the borrowing accounts

during the period under review has been satisfactory or as expected;

c) That the continuing value of collateral in adequate;

d) That there are no adverse trends in market, economic and political conditions which

may endanger the reliability of the facility.

e) That the borrowers business in being satisfactory conducted a reflected through a

review and analysis of their financial and operating statements and detailed

information such as quality of the inventory, aging of receivables, trend in sales and

profitability, liquidity and cash flow situation, maintaining various ratios, particularly

those stipulated by Bank at the time the facility was granted etc.;

f) That the business reciprocity offered and received is commensurate with the facilities

allowed;

g) That earnings from the account are cost effective (i.e. and adequate to meet direct cost

of funds and leave sufficient margin for adequate risk reward) overheads and profits;

All extension of credit therefore to be reviewed and graded at intervals prescribed by

head office. The purpose of this procedure is to monitor lending performance and to identify

potential delinquent credits.



The basis of review/classification is risk of transaction, repayment record, conduct of the

account financial capacity and record of the borrower, collateral conditions, supporting and

documentation and the degree of conformity to Bank policies.

The responsibility for review and classification of investment facilities starts and branch

level with the Branch Manger and Second Officer or Investment Officer and then with Regional

Manager and finally with head officer investment division. Regardless of may formalized times

for review or required reporting of facilities extended, any circumstance may cause a facility to

be reviewed and formally classified by Branch Manage with the approval of Head Investment

division.

4.10 Follow-up and Delinquent Account

Follow-up and frequent before and date and constant persuasion on or before due date are

to be made by the branches for timely adjustment and to avoid over duce.

As soon as an account is classified delinquent (in any group) a detailed report will be sent

to Regional Manager and Head Officer Investment Division by the Branch manager. Thereafter a

monthly outstanding report on all delinquent facilities is to be prepared by the Second Officer

that will be sent to Regional Manager to Head Officer Investment Division jointly signed with

Branch Manager. This monthly outstanding statement should be accompanied by a status report

and future action plan to upgrade the facility to satisfactory status from the Branch Manger.



Procedure to be followed for recovery of irregular/stuck-up/overdue investment

i) Contacting the investment cline in writing and meeting personality

In order to ensure timely recovery of investment, supervision at all stage shall be

ensured. This will include supervision from the date of disbursement to total repayment. In case

repayment as per schedule does not come the Manger shall personally enquire about the causes

of non-repayment. If he is convinced that the difficulty is temporary in nature and is likely to

overcome shortly he should discuss the situation with the investment clients and obtain

reasonable definite repayment schedule under intimation to Head Office. Apart from the above

as and when any investment becomes irregular/stuck-up/likely to be overdue, the Branch

Manager apart from contacting the borrower in writing shall also consult discuss with the

investment clients about his/their difficulties in regularization/ repayment there of. It necessary

the Manager will give suggestion in consultation with Head Office for overcoming the difficult

situation. He will personally pursue in such a manner with the investment client so that

investment can be realized without hindering good relationship with investment clients. If

necessary he will utilize the influence of the local elites to insist the party to make repayment.

ii) Sending Resume of Investment to Head Office

Branch Manager will send the Resume of Investment Vide F-87 mentioning there in the

latest position of investment, security, irregularities occurred and the efforts made in the

meantime for regularization/recovery of the investment as well as suggesting future action

iii) Issuance of Registered Notice

If persuasion does not bring any fruitful result he will issue a final registered notice

impressing upon the client concerned to repay with in 15 Days time form the date of receipt of

the letter with acknowledgement due.



iv) Legal Notice to be issued

If the investment client docs not forward repay with in a reasonable period, legal notice is to

be served through panel lawyer of the Bank with copy endorsed o Head Office. The reaction

of legal notice is also to the knowledge of Head Office with comments of the Branch

Manager for further instruction.

v) Suit to be filed

If filing sit is allowed by head Office the same should be filed against the debtor/client

concern and the guarantor if any under Civil Procedure Code 9 for specific performance to be

deemed as breach of contract. In case the investment is not covered by collateral security suit is to

be filed with attachment of assets before judgment. On the other hand if the investment is secured

by Mortgage of Property Title Suit is to be filed. The copy of plinth as well s copy of written

statement submitted by dependent is to be submitted to Head Office for record.

vi) Disposal of Murabaha Stock

In case where the investment is secured by pledge of stock it should be mentioned in the

Registered Notice that in case the party fails to lift Murabaha goods on making repayment, the

Bank shall dispose off the same by inviting open tender National/Local daily.

vii) Inviting Tender for Disposal of Stock

Inspire of the above if the client does not come forward to lift the goods, tender notice shall

be published in one National/Local daily on obtaining Head Office approval. The goods shall be

delivered to the highest tendered on obtaining Head Office approval and money/title suit as the

case may shall be filed for short fall (if any). For minimizing the cost of advertisement,

tender/sale notice of several clients shall be published through one tender/sale notice.



viii) Criminal Suit for Recovery of Vehicle/Machineries

In case of Hire Purchase Investment, criminal suit under section 406/420 read with section

no. 98 or 100 CRPC for breach of contract as well as issuance of search warrant for recovery of

immovable/movable that is transport/machineries shall be filed in case the investment client fails

to reply the installment as per schedule and also do not surrender the assts. After taking

possession of the assets, the same shall be sold by inviting tender and Money Suit under section

9 of the Civil Procedure Code for specific performance to be deemed as breach of contract if not

banked by Mortgage of property or title Suit/Mortgage Suits for realization of money by selling

the mortgaged property where in Mortgagor also can purchase the auctioned property under Civil

Procedure Code.

ix) Civil prison in case asset of judgment debtor for execution of decree not found

It may be mentioned that in case no assets is found for execution of decree civil prison of

the judgment debtor may be executed under order 21 Rule 37 of Civil Code. It may be mentioned

that under the aforesaid Order and Rule the Judge can accord 6 months jail to the judgment

debtor and the plan tiff is to bear the cost of food of the prisoner at government rate.

Steps to be after of Suit

After filing of Suit the following steps shall be taken:

1) Branch shall follow-up the progress of the suit effectively with the legal advisor by

constant touch with him for speedy disposal of cases/suits.

2) Quick service of Summons on the dependant shall be ensured. In case normal service of

Summons in not possible, arrangement shall be made for substitute service i.e. by way of

publication of Summons on the daily newspaper.

3) Steps shall be taken for attaching the assets of investment clients before judgment so that

Bank's profit remains secured/safeguarded.

4) Steps shall take for issuance of decree by the court at the curliest. As soon as the decree is

given by the court certified copy shall be obtained and true copy shall be sent to Head



Office. A copy of the decree shall also be sent to the judgment debtor impressing to

payoff as per terms of decree.

5) It shall be ensured that payment by judgment debtor is made as per terms of decree. In

case of default execution case shall be filed without delay unless otherwise advised by

Head Office & decrial amount shall have to be revered on auctioning the property of the

property of the judgment debtor.

6) After filing suit if any compromise prayer I done by the dependent, the terms and

conditions of compromise petitions shall be sent to Head Office prior to filing/submitting

the same in the court.

7) If any prayer for amiable compromise is made by the investment client at any stage, the

same shall be sent to Head Office with comments and observation of the Branch Manager

for consideration of head Office.

8) When there is no chance for recovery of any irregular/stuck-up/over due investment even

by taking legal action the investment shall he treated as "Bad". It may be mentioned that

an investment become bad for the following reasons:

a) The financial condition of investment clients' turn out poor and his business is

collapsed and there are no realizable assets.

b) Borrower is not traceable and all efforts to find him out fail.

c) Investment become time barred for taking legal action.

Considering the above points if the Manager is convinced that the investment should be written

off he shall seek permission from Head Office for submitting write off proposal in this regard.

Doubtful Debt:

Doubtful debts mean where doubt over the full recoverability of the principle and/or

profit. Although a loss in anticipated its is not possible at this stage to quantify the exact of that

loss. Management is required to purse such debts with the utmost resolution to entire avoid or

minimize the Bank losses.



Procedures for Writing of Bad Debts:

All requests for the writing-off irrecoverable credit facilities will be initiated by the

Branch Manger after all avenues for recoverability of the account have been exhausted an that no

purpose is served by retaining the account on our books. He will forward the case to Regional

Manager. The Regional Manager will satisfy himself as to the findings of the Branch manger if

necessary, by conducting a further personal review of the account at the branch. The Regional

Manger will send his recommendation to Head Office Investment Division.

When head write-off its bad debt then it debited its profit/loss A/C and credited to the investment

A/C. i.e.

Profit/Loss A/C Dr.

Investment A/C Cr.

. Recovery Problems of Al-Arafah Islam Bank Ltd.

There are lot of problems in the nationalized commercial banking systems in Bangladesh.

Proper loan recovery is the main problem of the AIBL, Rajshahi Branch. There are lots of

causes, which themselves, directly influence the loan recovery of AIBL is very defective. In

most of the cases, problems may arise from the sanctioning procedures of loan, investigation of

the project, investigation of the loaner etc. that is he problem in loan recovery proves are the

outcome of the default process in loan disbursement. The main reasons of poor loan recovery and

some other problems of AIBL are discussed below.



A. Problems Created by Economic Environment

The following problems arise from the affect of economic environment:

(i) Changing in the management pattern may delay the recovery of the matured loan of

the Bank.

(ii) The nationalized Banks sometimes sanctioned loan to the losing concern for further

improvement of the respective sector, but in most of the cases, they fail to achieve

progress. As a result the amount of non-repayment of loan increases gradually.

(iii) In our country many industries become sick and also close their business on account

of emerging of open market economy. The cost of production is high and quality of

goods is not of required standard. As a result they become the losing concerns and the

amount of no recovered loans increase.

(iv) There are many companies, which expand their business rapidly, but the expansion is

for short time. In the long run the amount of classified loan increases.

B. Problems Created by Government:

(i) Bank has also faced may problems in the loan recovery process as a part of

continuous pressure from various profited groups. According to the high official on

AIBL, the Bank can not work autonomously though it is an autonomous body.

(ii) The nationalized banks are bound to sanction loan to government organization,

though these are losing concern. For this reason, Banks faced problems in loan

recovery.

(iii) Existing rules and regulation are insufficient to cover the legal aspect of loan

recovery. As a result, defaulters can get release easily from all charges against them.

Frequent changes in government policies in regard to recovery of loan.

C. problems created by the Bank:

(i) Before lending bank does not proper analyze the business risk of the borrowers and bank can

not forecast whether the business will succeed of fail. If the business fails to well the loan

becomes classified.



(ii) The responsibilities of the Bank are not ended after disbursement of loan. It should also take

care to borrowers whether the used the loan is right way or not. Bank can help the borrowers

giving valuable advice, how to use the loan properly. But most of the cases, Bank does not

perform the above responsibility.

(iii) In most cases, Bank fails to determine the value of security against the loan. As a result, If

the loan becomes classified bank con not recover its loan through the sale of mortgage.

4. Comparative statements of Investment and Recovery:

The comparative statements of investment and recovery of AIBL Rahshahi Branch are as

follows.

Table 4.3.7. Comparative statements of Investment and Recovery

Investment Name Investment

Tk. In Lac

Recovery

Tk. in Lac

Bai Muazzall General 5003 2312

Murabaha General 4291 1544

Bai Muazzall staff (RE) 4 1

Higher purchase (General) 16 6

Murabaha post Import(MPI) 2077 1954

Baim-CIS (staff) 4 1

Quard Against CAR 4 3

Higher purchase (RE) 12 1

HPSM staff (RE) 14 1

Source: statement of affairs AIBL Rajshahi Branch.



Figure. Comparative Statements of Investment and Recovery

Here the comparative statement of investment recovery is not satisfactory.

Recovery of Investment of AIBL Rahshahi Branch in the year of 2010,2011,2012 (in Lac)

2010 2011 2012 2013

9890 10995 15273 13797

Source: statement of affairs 2011/2012 AIBL Rajshahi Branch.

Figure: percentage from the above Recovery of Investment of AIBL,Rajshahi Branch.



statement there is a realization that in 2008 the recovery was 300.81 lac and in 2009 it was

138.31 lac &in 2010 uptomarch it was 39.66.So it is clear that from year to year the investment

recovery position is not so good.

Steps Against Defaulter:

Bank holds a right to the credit against defaulter. Normally Bank does not go for legal

action. So far as possible Bank try to collects is investment from the creditors. The Bank takes

some actions, which are mentioned here step by step:

(i) Firstly send a notice for payment the investment.

(ii) If the creditor does not response then further Bank issued another

final notice.

(iii) After failure of creditors Bank sent a legal notice to the client.

(iv) Lastly Bank goes pending a case and court takes necessary steps.

4.11. Follow-up & Monitoring of Investment

Introduction:

Branch Managers are expected to exercise commonsense and proper care in handling

investment whether sanctioned by them or any other appropriate authority. Effective control of

the investment depends upon their knowledge of the customers and proper handling of securities

charged to the Bank. The Branch Manager is the corner stone of the Bank and on him the success

of a Bank depends on a large extent. His duty is two-fold. In the first place he represents his

Bank and its management to the local public, and of equal importance he represents his local

public to the management. The ways in which he discharges the two functions make him either a

successful of an unsuccessful Branch Manager. The best way kin which the Branch Manager can

discharge his obligations is to conduct its loaning policy in a says and conservative way and to

control advances judiciously to save the Bank from falling into losses.



Branch Mangers must, therefore, see that

(i) The customer is legally competent to borrow.

(ii) All the necessary documents have been duly filled in, stamped and correctly executed

by the borrower.

(iii) A proper authority covering operation and conferring power to borrow a held in

respect of accounts operated upon by persons other than the borrowers themselves.

(iv) It should be seen that the advance does not contravene any law directed by

Bangladesh Bank of the lending policy of the Bank.

Security

(i) Branch manager should ensure the following in respect of Securities.

(ii) Security is correctly valued and is easily saleable.

(iii) Proper storage and custody are made.

(iv) Stipulated margin is maintained.

(v) Adequate insurance, where necessary, has been taken.

(vi) There is quick turnover of stocks.

Inspection and Verification

Inspection of the securities and verification of the documents are to be done regularly. If

any irregularity is found, immediate step is to be taken for regularization or rectification of the

same with intimation to head office.

Stock Statements-Hypothecation/Pledge

In case of advances against hypothecation of stock, statement of stock is to be obtained

once or twice a month as per terms of sanction. A person authorized to operate the account

should sign the certificate at the foot of the statement. These statements are to be carefully

scrutinized to see the turn over of stock, the price of the goods, quality of goods etc. The price



must be market price of invoice price whichever is lower. A copy of the statement is kept at

branch and the other one is sent to Head Office.

In case of pledge of goods, stock statements are to be verified with go down ledger and

goods register of the Bank. There should be quick turn over in the account. The balance should

fluctuated very quickly daily transaction and the cash credit accounts are to be carefully watched.

Operation of customer’s account: All advances account must be frequently scrutinized.

Troublesome accounts, if any, sometimes require daily attention. The following are bed

indications and warrant greater supervision.

(i) The balance is stagnant.

(ii) The balance is the account remains very near of goes beyond the drawing limit or

there is no good turn over.

(iii) Chouse drown by the party are return for storage of fund.

(iv) The party issues post-dated cheques.

(v) Cheques drown by the party are frequently countermanded.

(vi) Cheques deposited by the party in the account for collection are often returning.

Whatever the banker decision, he will be helped by the information he has at disposal regarding

the customer concern, and for that purpose, adequate and periodical records are of great value.

Copies of proposal/reports and general correspondences filed systematically are in valuable

when an emergency arises. In additional information received borrower from time to time should

also be carefully entered in the branch records. Over and above that the importance of bankers

touch with the borrower’s affair can hardly be over emphasized.

Financial Position

In order to ascertain the financial position of the borrower from time to time, the

following are to be obtained from the borrower and are to be carefully considered in order to see

whether the business is progressing, whether there is any healthy feature is visible, etc.

(i) Audited balance sheet.

(ii) Un-audited balance sheet, if proper balance sheet is not yet ready.



(iii) Financial statement in case the party does not prepared the balance sheet.

These are to be obtained at the end of each financial year in duplicate. One copy is to be

sent to Head Office retaining other copy with branch file.

Purpose

The amount of the advance should be applied to the purpose for which it is borrowed. In

practice it may be difficult for the banker to supervise effectively that this is done. Experience in

this regard is the best guide. It should, however, to be borne in mine that purpose is playing and

increasingly important role in modern banking.

Confirmation Letters

Confirmation letter should be signed by the borrower, guarantor or their duly constituted

attorneys, half-yearly or annually, as may be the practice of the bank not only with regard to the

balance in the account but also for the securities held. A balance confirmation letter, besides

confirmation of the balance and the securities on a particular date, extends the period of

limitation.

Limitations:

The law of limitation prescribes the period within which existing rights can be enforced

in the court of law.

Period of limitation in any account must, therefore, be watched from time to time. Every

Bank should have one limitation register. Whenever, any documents are executed by the

borrower, they are entered into it. Besides security register, it serves the purpose the diary.



Usually, documents, viz. Promissory notes etc. become burried by limitation after 3 years from

the date of the execution. So they are to be renewed positively within three years to save

limitation.

Limitation can be saved by the acts of the borrower in any of the following three ways:

(i) If he obtains balance confirmation letter from the borrower duly stamped and sign,

the limitation period will be extended. It will be 3 years from the date of that

confirmation letter.

(ii) If the borrower deposits some amount in the investment account by a pay-in slip

signed by him before the debt becomes time-berried, the limitation period will be

extended for 3 years from date of such deposit. Part-payment of a debt if made before

the expiry of the prescribed period of limitation, can also extend the period of

limitation, provided such payment has been authenticated by the borrower or his duly

authorized agent under his signature. A remittance sent by the party under his

signature for credit of his account will also have the same effect. It should, however,

be emphasized that the acknowledgement or the part payment after the expiry of

limitation will not extend the period of limitation.

(iii) If the borrower executes a fresh promissory note or a new bond etc. for the old debt,

the limit is automatically extended from the date of the fresh documents may even be

executed after the period of limitation has expire, an old debt is a good consideration

in the eyes of law, banks, however, do not depend on the sweet will of the borrowers

in such cases, who many or may not execute fresh documents. Now documents

should, therefore, be taken before the limitations expire.

While obtained fresh documents from the borrower in renewal of the original the banker

should obtained a “Link Letter” or a “Connecting Letter” from the borrower.



Diary Note

All important dates in regard to an account, i.e. due date of insurance policies, date of

collection of profit on government securities, date of expiry of sanction limits, limitations period,

date when the next balance sheet of a borrowing company are due, must be diaries.

Other Accounts

The borrower should namely pass all business to the bank with which he deals, The

borrower should not have account with any other bank and he should not be allowed to borrower

from any other bank. If the borrower is desires, the bank should meet his full requirement of

finance. A borrower with more than one creditor cannot be fully relied on unless it is a case of

consortium advance.

Miscellaneous

It should be ensured that and advance does not contravene any provision of law, a

directive of the Bangladesh bank or lending policy laid down by the head office.

Returns/Statements

A Branch Manager is the king in his own castle but he not the monarch of its affairs. He

is subject to the control of Head Office and there are several ways in which this control is

exercised. In all Banks, branches are required to render statements to Head Office on advances at

regular intervals. Such returns will include.

(i) Weekly fresh facility returns, which will include all investment and advances and other

facilities, allowed to any borrower during the week.



(ii) Monthly statement of investment and advance showing actual balance outstanding at

the end of the month and securities with charge documents held there against.

(iii) Periodical returns whenever the Head Office decides to call for such statements.

(iv) Returns required for statistical purpose or for submission to Bangladesh Bank

classified purpose-wise and security-wise and other detailed returns which may be

called for from time to time of certain classes of borrowers.

(v) Returns of advance whIch may be considered “Bad” or “Doubtful” by the Branch

Manager and his recommendation as to the writing off of the irrecoverable advances

or making provisions there against.

By means of these reports, the executive at Head Office is able to assess the course and

safety of all advances and thereafter take up action that may be appropriate to safeguard the

profit of the Bank.

Periodical inspection

Internal auditors/inspectors and external auditors periodically inspect branches. During

each inspection the inspector makes a comprehensive and detailed examination of the advance

including documents, security and turnover and whether the terms and conditions of the sanction

have complied with.



5.│Investment Credit Management

5.1. Introduction:

After analyzing the Investment of AIBL, Rajshahi Branch, I observed some foremost findings

from the year wise total deposits and total investment. To take proper decisions to run the bank

as developed and advanced service providing and for being a modern and clean shariah based

banking system. So the foremost findings of investment analysis of AIBL,Rajshahi Branch are

stated below from the sector wise deposits to investment.

Year-wise Deposits: There are different types of deposits plan included in this bank. These

deposits plan are 100% secured plan to invest in different projects. So the year-wise deposits and

their problems and prospects are stated below in table 4.4 Year-Wise Deposit of AIBL, Rahshahi

Branch.

Table: Year wise deposits structure,

Year Total Deposit (Taka in Lac)

2005 2884.28

2006 4170.96

2007 4899.36

2008 7962.26

2009 10198.71

2010 11567.87

2011 12013.98

2012 12616.30

2013 14399.35

Source: Statement of Affairs of AIBL, Rajsahi Branch (2005-20013)



Figure 5.1: Deposit trend’s graph.

Explanation: Already it has cognizance that deposits is the 100% secured plan of this

bank.So from 2005 to 2009 total deposits has increased at the highest rate.In 2005 the deposit

was 288428 thousand, but in 2009 was 1019871948 thousand. So the bank’s deposit

condition is very well,To augment more deposits some steps should be taken, Such as

Employee of this branch should contact to the expected customer properly,

Consciousness of savings should be created to the people,

Motivation should be given to the expected customer on savings,

No interest but profit oriented earnings source should be created for the custome



A bank performance depends on controlled investment disbursement recovery system.

According to the above investment chart total investment has increased from 2007 to 2009 .If the

recovery position is well then the profit will be very high. And another investment scheme

should be created at AIBL,Rajshahi Branch. The investment scope is not so large. Because

without business source there is no sufficient source. In this branch the above schemes are very

much important sources of investment.

To invest in different schemes some steps to be taken, These are as follows,

Agriculture sector is not a perfect sector for investment, because there is no proper

recovery possibility.

Either it is productive or not should be justified.

Customers’ repayment capacity.

Customers’ relations to the bank.

Investment decisions must be business source oriented.

Real estate business is perfect for this branch.

Investment against MTDR is 100% secured.

Investment in Export-Import is favorable.

5.3 .INVESTMENT RECOVERY POSITION:

Recovery of Investment of AIBL Rahshahi Branch in the year of 2008,2009,2010 (in Lac)

2008 2009 2010

300.81 138.31 39.66 (up to March2010



Source: statement of affairs 2009/2010 AIBL Rajshahi Branch.

Figure 5.3: Percentage Recovery of Investment of AIBL,Rajshahi Branch.

From the above statement there is a realization that in 2008 the recovery was 300.81 lac and in

2009 it was 138.31 lac &in 2010 up to March it was 39.66.So it is clear that from year to year the

investment recovery position is not so good. To invest in various schemes at first recovery

possibility should be justified,e.g how much would be recovered. From the above table to

recover the Investment some principles should be applied.

(v) Firstly send a notice for payment the investment.

(vi) If the creditor does not response then further Bank issued another final notice.

(vii) After failure of creditors Bank sent a legal notice to the client.

(viii) Lastly Bank goes pending a case and court takes necessary steps.

Net profit Analysis of AIBL,Rajshahi Branch:

Table: Net Profit of AIBL, Rajshahi Branch for the year of 2011, 2012, and 2013

year Net profit amount in taka

2011 1,623,658.88

2012 1064000.32

2013 2534239.35

Figure 5.4: Net profit increasing trend



5.5. Findings

It is notified that. The amount of deposit of the branch is increased 9.11% in 2008 the

previous years 2007.Again the amount of the deposit is increased 19.07% in 2009 the

previous years 2008.as a result the total amount of deposit of the branch is also

increased from the previous year.

From above table, it has been found that the amount of Investment of the branch is

increased 8.90% in 2008 the previous years 2007.Again the amount of the deposit is

increased 20.26% in 2009 the previous years 2008.as a result the total amount of

Investment of the branch is also increased from the previous year.

Total Net profit of the branch is also increasing in 2009 from the previous years.

The value of the security is not properly valued during the loan disbursement. As a

result it is very difficult to recover the from other private commercial bank.

Additional training is necessary to increase the efficiency of officers in managing

investment.



6.│SWOT Analysis & Recommendation

6.1 │ SOWT ANALYSIS OF AIBL :

SOWT analysis is the critical and resulting study of an organization’s exposure and potential in

perspective of its strength, weakness, opportunity, and threats. This method is used by the

organization to make their existing line of performance and also foresee the future to improve

their performance in comparison to their competitors. By SOWT analysis, an organization can

also realize it position. It can also be considered an important tool for making changes in the

strategic management of the organization. So it is called the mode of analyzing a significant

subject.

# STRENGTHS:

1 AIBL bank has already obtained a high reputation in banking activities of the country. It is

one of the leading private sector commercial bank in Bangladesh. The bank has already

shown a tremendous growth in the profits and deposit sector.

2 AIBL bank has an interactive corporate culture. The working environment is very friendly,

interactive and communicative and provides as great motivation factor among the potential

customer.

3 It has excellent management Administration.

4 It has high commitment of customer, qualified and experienced human resources.

5 It has sophisticated automated system of banking activities.

6 Online facilities.

7 Location is suitable and comfortable and in a central point of Rajshahi city.

8 It is, Totally Islamic Shariah based. So it has created strong faithful relation with customers.



# OPPORTUNITY:

Great scope to increasing customers financing.

Potential environment of investment in Bangladesh.

To increase the mangoes production it can invest in this sector.

Potential sector of SME.

There is a large scope to invest in business sectors.

# Weakness:

No ATM services.

Motivation deficiency to workers.

No authority to take decisions branch wise.

Congested environment.

Heavily depends on head office for decision making.

Lack of incentives and rewards from the management section.

Absence of teamwork co- ordination among branches.

Narrow stairs.

No parking facilities for vehicles.

Poor Decoration.

No attractive office space.

# THREATS:

Many commercial foreign banks as well as private banks are established and they

capture the market.

Homogeneous retail banking products, such as insurance company, stock exchange,

financial institutions etc.

Obligatory conditions of Bangladesh Bank

Profits rate fluctuation differences.

Influence of NGO.

Customer awareness of pricing and services.

6.2 │ Recommendations:



To achieve the competitive advantages and to survive in the competitive market and to deliver

quality services, top management should try to modify and follow the recommendations.

Rectification of existing problems:

A. The synergy of dedicated manpower, technology, and market opportunity can lead

the organization to achieve the goal. A bank must establish and adhere to adequate

polices, practice and procedures for evaluating the quality of asset and the adequacy

of loan provision and service.

B. AIBL bank should train up its branch personal about all sort of information

regarding SOWT and its services.

C. Due to lack of banking knowledge about the operation procedures and services

provide to the customer by swift, certain customers are facing problem, as they have

to wait for certain time to get service. And sometimes personnel are not beings able

to operate swift without any confusion. They are not fully independent of handing

swift. Official training is the solution to this problem.

D. AIBL bank should always monitor the performance of its competitors in the field of

foreign trade.

E. For customer’s convenience in foreign exchange department of AIBL BANK LTD.

Should provide personnel to deliver faster service to their honorable customer.

F. AIBL Bank ltd. should focus on their promotional activities.

G. They should also focus on the marketing aspects to let customers know about their

product and offering and more promotional should be given to attract new customer.

H. AIBL bank must be developing electronic banking system. Technologies advantage

of a bank ensuring its competitive edge in the market place can only achieved by

efficient manpower.



6.3 │ Comments:

The bank can offer to its customer better service it all of its department are computerized

and incorporated under local area network (LAN).

At the entry position bank should enroll more expertise people to augment quality service

Now a day’s conventional banking concept is outmoded. Now banks are offering more

ancillary service like credit card, on line service and many others. AIBL bank ltd, should

differentiate its service adopting the modern facilities.

Bank is providing both internal and external training for the offers but bank should be

scrupulous about training facilities so that official can implicate this in their job.

People are very choosy about environment now a days, premises should be well

decorated and AIBL.

Bank should provide advance towards the true entrepreneur with reconsidering

conventional system of security and collateral, moreover, the whole process should be

completed within an acceptable time.

6.4│Conclusion



Bank plays an important role in Bangladesh economy as financial intermediates. The economic

polices and program by the government play vital role in the expansion of financial

intermediaries. AIBL has been rendering an important service in the development of rural and

urban economy since its inception. The widen of branch network in various commercial areas

may make tremendous contribution in overall economic development of Bangladesh. The shaheb

bazar branch of AIBL also has been rendering an important role in the development of the area

where it is situated. The effectiveness of its rile would depend on how efficiently the bank

recourse could be utilized after the evaluation the overall service of the bank are good. Yet, there

exists some problem but if the employee work with more sincerely then it would be definitely

better for the bank. It is true that the bank market is very much competitive. For this higher

authority should take proper necessary stapes to ensure more effective service to the customer.

Bangladesh is developing country. Without developing banking sector this country business

sector is not possible to possible rapidly. AIBL is playing a vital role in the banking sector bank

of Bangladesh. I wish the AIBL should take effective strategy for own development and to

enrich our banking sector more effectively.

6.5│Bibliography:



1. Al Quran. (Bangla translate Tafhimul Quran)(Sura: Bakara- 188,275, 278; Rum-39; Al-

Imran-161; Nesa-29-30; Kasas-77, and Hadith (Bukhari & Muslim Sharif)

2. Annual reports of AIBL ranging 2006 – 2003.

3. Dr. M.N Siddiqi: Some Aspects of Islamic Economy.

4. Horn green, C.T.: Cost Accounting.

5. Islami Bank 5 Years of Progress, Islami Bank Bangladesh Limited, Based on

6. Islamic Economic Research Bureau: Thoughts on Islamic Economic Banking.

7. Islamic Shariah.

8. Khan.M.Y. And Jain, P.K: Financial Management, Tata Mc Graw-Hill

9. Kothari, C.K. Research Methodology.

10. Mannan M.A.: Islamic Economic: Theory and Practice.

11. Pandy, I.M: Financial Management.

12. Rose and westerfield: Financial Management

13. Sina, The Modes of Investment of Islami banks and Conventional Nationalized Bank..

14.Shekar, K.C.: Bank Management.

15. Shekar, K.C.: Banking Theory and Practice

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Investment Credit Management

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