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Chapter 01
Introduction
1
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1.1 Introduction:
In order to rehabilitate the war devastated banking system of Bangladesh, after 16 th
December 1971, the government promulgated a law called Bangladesh Bank temporary!
"rder, 1971#cting $residents "rder %o & of 1971!' By this order the (tate Bank of
$akistan was declared as Bangladesh Bank and the offices, branches and assets of the
said (tate Bank was declared to be deemed as offices, branches and assets of Bangladesh
Bank' It was also declared by the #foresaid "rder that all currency notes and coins issued
by the said (tate Bank and government of $akistan and were in circulation in Bangladesh
shall be deemed to have issued by the Bangladesh Bank' By the steps stated above, the
banking system of Bangladesh started with a legal shape'
$rivate sector banks started functioning during the year 19)*+) with the ob-ective of
government policy to make sure effective and meaningful participation of the private
sector in the overall national economy'
.he number of banks in all now stands at 9 in Bangladesh' "ut of the 9 banks, four are
%ationali/ed 0ommercial Banks %0Bs!, &) local private commercial banks, 1& foreign
banks and the rest five are Development inancial Institutions DIs!' (onali Bank is the
largest among the %0Bs while Bank #sia is leading in the private ones' #mong the 1&
foreign banks, (tandard 0hartered and 2(B0 has become the largest in the country'
Besides the scheduled banks, (amabai 0ooperative! Bank, #nsar+3D$ Bank,
4armasansthan 5mployment! Bank and rameen bank are functioning in the financial
sector' Bangladesh Bank BB! regulates and supervises the activities of all banks'
.he perception of Islamic banking has been bloomed from the inspiration of building up
a society on -ustice in accordance with basic socio+economic principles of Islam' .he
difference between Islamic bank and conventional bank is on principles' .he functions of
this type of bank are completely different' .his bank is established on Islamic (hariah
and all types of transactions are free from interest' ustified profit is the basis of financial
&
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transaction of this bank' .his bank is committed to establish socio+economic -ustice'
Islami Bank Bangladesh 8imited is the first interest free commercial bank in (outh+5ast
#sia' .he bank has opened 196 branches and 1 (:5 centers covering important
commercial areas'
Islami Bank Bangladesh is a financial institution whose status, rules and procedures
e;pressly state its commitment to the principle of Islamic (hariah' 0onse
1.! "rigin o# the report:
.his report is based on an internship program' IB.?# arranges internship program to
gather practical knowledge about banking activities followed by IBB8 for @niversity
students as @niversities conducted with different organi/ation after the completion of
theoretical courses of program of :asters of Business #dministration :B#! A Bachelor
of Business #dministration BB#!' 5ach intern must carry out a specific pro-ect, which is
assigned by the IB.?#' 0onse
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1.$ "%&ectives o# the stud':
.he first ob-ective of writing the report is fulfilling the partial re
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1.()ethodolog' o# the stud':
or carrying out this pro-ect paper we had to study the actual banking operations of
IBB8'
In order to carry out this study, two sources of data and information have been used
a) Primary data
e discussed with the e;ecutives A officials of the IBB8 and found the appro;imate
data, which has been presented in the report' e also discussed with the officials of
conventional Banks A IB.?# regarding the issue and found necessary information,
which has been presented in the report'
b) Secondary data
#nnual ?eports of &*+&7 of Islami Bank Bangladesh 8td'
Desk report of the related department
:anuals of Islami Bank Bangladesh 8imited Bai+:urabaha, Bai+:ua--al,
Bai+(alam, :usharaka!
.raining sheets which are provided by Islami Bank .raining and ?esearch
#cademy IB.?#!'
#udit ?eports
ebsite
?elevant books, ?esearch papers, %ewspapers and ournals'
Internet and various study selected reports'
E
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1.* +cope o# the +tud':
.he scope of the organi/ation part covers the organi/ational structure, background, and
ob-ectives, functional departmentali/ation and business operation of IBB8 as a whole and
especially this report focuses on general banking and investment operation of IBB8'
1. -imitation o# the stud':
.here are some limitations in our study' e faced some problems during the study which
we are mentioning them as below+
i) Lack of time:
.he time period of this study is very short' I had only ) weeks in my hand to complete
this report, which was not enough' (o I could not go in depth of the study' :ost of the
times the officials were busy and were not able to give us much time'
ii) Insufficient data:
(ome desired information could not be collected due to confidentiality of business'
iii) Lack of monitory support:
ew officers sometime felt disturbed, as they were busy in their -ob' (ometime they
didnFt want to supervise us out of their official work'
iv) Other limitation:
#s we are newcomer, there is a lack of previous e;perience in this concern' #nd many
practical matters have been written from our own observation that may vary from person
to person'
6
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Chapter 0!
Corporate ro#ile o#
IBB-
7
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!.1 /e#inition o# Islamic %anking:
#n Islamic bank is a financial institution which operates with the ob-ective to implement
and materiali/e the economic and financial principles of Islam in the arena of banking'
=#n Islamic Bank is a financial institution whose status, rules and procedures e;pressly
state its commitment to the principle of Islamic (hariah and to the banning of the receipt
of interest on any of its operations>+OIC.
.he "rgani/ation of #li A (haskar 199E, pp+&+&E! Islamic bank is a Gcompany which
carries on Islamic banking business' Islamic banking business means banking business
whose aims and operations do not involve any element which is not approved by the
religion IslamG #ct %o '&76!'
iauddin hmed says, GIslamic banking is essentially a normative concept and could be
defined as conduct of banking in consonance with the ethos of the value system of IslamG
lbid!'
!.! Bangladesh Bank -icense #or IBB- operation:
.he bank operates within the frame work of the e;isting banking laws, rules and
regulation sub-ect to such minor ad-ustment that may be considered for an Islami Bank to
)
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function' In addition to the above all re
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business life' (o, the ob-ectives of the Islamic Banking may be derived from the broader
ob-ectives of the Islamic economy' .wo
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+econdl'to review critically the different models of Islamic banking presented over the
years in the conte;t of the practice of Islamic banking with a view to refining the theory
as well as improving the practice'
3hirdl'it is essential to put the whole theory and practice of Islamic banking in the
perspective of an Islamic economy and the Islamic moral and social order' #ny element
of the Islamic system however important cannot produce the desired results if it is
allowed to operate in isolation' It must lead to other complementary changes to complete
the process'
!.* 4ole o# contri%ution o# IBB- to Bangladesh Econom':
Islami Bank Bangladesh 8imited has many success stories of achievements' .hese are
summari/ed below
IBB8 is the pioneer institution of Islamic Banking in Bangladesh'
.he success of IBB8 has imbibed other sponsors at home and abroad to establish
Islamic Banking in Bangladesh' our national, one international Islamic Banks
have since been established in the country' # private sector traditional bank has
also established two full+fledged Islamic Banking branches' (everal other e;isting
and proposed traditional banks have also e;pressed their intention to introduce
Islamic Banking'
IBB8 has successfully mobili/ed deposits from a section of people who hither+to+
before did not make any deposit with interest based banks'
.he Islamic Banking products which are offered by IBB8 through its 196
branches located at important centers all over the country and spontaneous
acceptance of those products by the people proves the superiority of Islamic by
the people proves the superiority of Islamic banking'
IBB8s market share of deposit investment and ancillary business is steadily
increasing
IBB8 through still a tiny bank handless more than 1J of countrys e;port and
import trade'
11
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#mong the contemporary commercial Banks IBB8s position is first in respect of
mobili/ation of deposit, deployment of found and earning profit'
Investment in industrial sector occupies nearly 9'19J of IBB8s investment
portfolio' .his is a uni
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their customers' # substantial part of their financing would be for specific pro-ects or
ventures' .heir e
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"ur vision is to always strive to achieve superior financial performance, be concidered a
leading Islamic bank by repuyation and performance'
"ur goal is to establish and maintain the modern banking techni
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I3' .o play intermediately role if necessary'
3' .o insure the (hariah 0ompliance in Islami Banks by sending (hariah
Inspection report to the Bank :anagement'
3I' .o conduct training course on (hariah issues for 2uman ?esources
Development of the memberFs bank'
3II' .o arrange (eminar and (ymposium on banking issues'
3III' .o identify the problems and making recommendation'
IL' .o collect data and information regarding Islami banking the same to
others'
L' .o publish Books, ournal, :anual, Brushier and distributing the same
among the members bank'
LI' .o translate various Banking Books and #rticles into Bengali 8anguage
(ource Islami bank 0entral (hariah Board ournal 1st 5dition, :arch &!
!.10 4ole o# I/B #or Islamic Banking:
.he purpose of the Bank is to foster the economic development and social progress of
member countries and :uslim communities individually as well as -ointly in accordance
with the principles of (hriah i'e' Islamic law' .he functions of the Bank is to participate
in e
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!.11 Corporate in#ormation at a glance 5s on Fe%ruar'
!, !00
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1
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.hus, financial intermediation in an Islamic framework has been developed on the basis
of the above two principles' 0onse
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compared with an Islamic bank' compared with a conventional bank' It is, in
effect, a multi+purpose institution'
7' It can charge additional money
compound rate of interest! in case of
defaulters'
7' .he Islamic banks have no provision to
charge any e;tra money from the
defaulters')' In it very often, bankFs own interest
becomes prominent' It makes no effort to
ensure growth with e
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1' .he nature of deposits of Islamic Banks is different from that of conventional
Banks' .he Islamic Banks mobili/e deposit on :udaraba and #l+adiah basis under
Islamic (hariah, while conventional Banks do this on prefi;ed interest basis' .he
Depositors of Islamic Banks are business partners of the Banks and they share the
$rofitKloss of the business'
&' It is obligatory for Islamic Banks as per (hariah to pay Pakat while 0onventional
Banks do not act on such obligation' In the Bank 0ompany #ct, 1991 there is no
provision to pay Pakat by the Islamic Banks'
*' .he Islamic Banks deploy their funds as per different modes of
InvestmentKinancing approved by Islamic (hariah' :ost of the Investments of Islamic
banks are on Bai+:ode' In this mode Banks sell specified goods to the clients on cost
plus agreed upon profit or at a negotiable price payable after a certain fi;ed period' If, the
client fails to pay the price within the fi;ed period, the Islamic Banks cannot impose or
reali/e additional amount as income of the Bank'
' #s activities and operations of Islamic Banks particularly Investment $ort+folio is
completely separate form that of 0onventional Banks, the #ct and $rocedures for
initiation of legal action against the default clients should be separate under the
framework of Islamic urisprudence'
E' Inspections of Islamic Banks are made as per system adopted for 0onventional
Banks and sometimes by the Inspectors without having any knowledge of Islamic system
and law' .he inspection of Islamic banks should be done with a view to identifying both
general and shariah lapses by the persons having good knowledge of Islamic (hariah and
Banking'
!.1* Basic Functions o# IBB-:
.he functions of Islami Bank Bangladesh 8imited are as under
.o maintain all types of deposit accounts
.o make investment
.o conduct foreign e;change business'
.o e;tend other banking services
&
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.o conduct social welfare activities through Islami Bank oundation'
!.1 "rgani>ational +tructure o# IBB-:
&1
5;ecutive $resident 5$!
Deputy 5;ecutive $resident D5$!
5;ecutive 3ice $resident 53$!
(enior 3ice $resident (3$!
3ice $resident 3$!
(enior $rincipal "fficer ($"!
#ssistant 3ice $resident #3$!
$rincipal "fficer $"!
(enior "fficer ("!
"fficer
$robationary "fficer
#ssistant "fficer rade + I
#ssistant "fficer rade + II
#ssistant "fficer rade + III
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Chapter 0$
General Banking o#
IBB-
&&
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$.1 Introduction:
eneral Banking activities are the most important part of any bank' It also play a vital
role in deposit mobili/ation of the branch' eneral banking is the heart of all business
banking activities' .his department performs the core function of the bank, operates the
day+to+day transaction' It is the storage point of the all kinds of transaction of foreigne;change department, loans and advance department and itself' (o general banking
section is the lifeblood in banking service'
.he relationship between customer and banker begins with opening an account by the
customer' "pening an account binds banker and customer into contractual relationship'
#ll kinds of fraud and forgery are initiated by opening an account' .herefore, the bank
should take e;treme caution in selecting customers' 3arious general banking activities
are given stated below
$.! Functions o# General Banking:
unctions of eneral Banking department are as follows
#ccount opening section
?e
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(aving all transaction record in computer
0losing and transfer different types of accounts'
4eeping good relation with valued customers
$roviding necessary support to the customers
$.$ 3'pes o# ccount:
Bank receives deposit by different accounts' .here are two types of deposit accounts
i' #l+ wahdia
ii' :udaraba mode
l7 ?ahdia:0urrent account is conducted under #l+ wahdia system
)udara%a mode:under the :udaraba mode client are called sahib #l :all and bank
plays role as a :udarib
@nder the )udara%a )ode:
.here are many types of product under this :ode' .hese are as follows
:(# + :udaraba (avings #ccount
:2(# + :udaraba 2a-- (avings #ccount
:(B + :udaraba (avings Bond
:(( + :udaraba (pecial (cheme
:.D? + :udaraba .erm Deposit ?eceipt
::$D( + :udaraba :onthly $rofit Deposit (cheme
::( + :udaraba :ahor (avings #ccount
:(%# + :udaraba (hort %otice #ccount
$.( General characteristics o# deposit accounts:
l78a'adia Current AC 58C6
&
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#0# accounts are unproductive in nature as far as banks loan able investment fund is
concerned sufficient fund has to be kept in li
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ro#it: IBB8 offers a competitive price to attract depositors on the basis of market
forces'
3a%le: ro#it on /eposit
'ear :.D? #K0 :(# 2a-- :(( :(B*
month
6
month
1&
month
&
month
*6
month
1+1
years
11+
&Eyear
s
E
years
1year
s
Eyers )year
& )'*7J )'7E 9'1* 9'*& 9'E1 7'6 1'
6
1'6 1'
6
1&'*6 1'
6
11'))
&1 )'6J )') 9'&* 9'& 9'61 7'69 1'E
7
1'E7 1'E
7
1&'9 1'E
7
1&'1
&& 7'6J 7'9 )'&9 )'6 )'6* 6'7 11'&
&
11'6E 9'E 11'&& 9'E 1'79
&* 7'7J 7'*9 7'71 7')7 )' 6'* 1'
E
1')E )') 1'E )') 1'
& 6'&J 6') 6'76 6'91 7'E E'&) 9'16 9'E1 7'7E 9'16 7'7E )')1
&E 7'*1J 7'6E 7'9) )'1E )'*1 6'&* 11')
11'&& 9'1 1') 9'1 1'*9
&6 7'6&J 7'97 9'1 9'E) 1'7 6'7 11'&
6
11'69 1'*
11'&6 1'*
1'*9
&7 6')J 7'1 9' 9'& 9'6E 9'1 1'
1' 9'7 1' 9'7 9')
&) 6'EEJ 6')E )' )'* 9' 6' 9') 1'&E 9' 9') 9' 9'6
$.(.1 General practice in account opening section
8ho can open AC
$ersons over 1) years e;cept some restricted persons!
#ccount of club
#ssociation
#gent
overnment
(emi+overnment
"rgani/ation
8i
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Illiterate persons etc
$.(.! DC 5Dno? 'our Customer!
.his type of form is mandatory for opening #ccount' or opening #K0 the following
things are mandatory+
0ommissioner 0ertificate
.wo copy passport si/e photo of client'
"ne copy nomineeFs photo'
(ign of introducer is verified
$.(.$ ccount "pening 4egister
#fter fulfilling all the re
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0ustomer has to certify by different department of bank that he or she has no liabilities to
this branch of the bank' .hen total particulars of the #K0 holder will prepare and sent to
the customerFs desired branch' 8iability of recogni/er is secondary and account holder is
primary'
$.* -ocal 4emittance
IBB8 sells and purchase $'"', D'D' and .'.' to its customers only' I. does not offer
remittance service fre
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Demand Draft is very much popular instrument for remitting money from one corners of
a country another' .he instrument is basically used for transfer and payment' Difference
between pay order and demand draft is in terms of place only $'"' is used for remitting
money within the city whereas D'D' is used for within the country' D'D' too constitutes
current liability on the part of a bank' #t IBB8 D'D' is not sold to people other than its
customer'
ccounting entries #or issuance o# //
0ashKpartyFs #K0++++++++++++++++++++++++Dr
IB #K0++++++++++++++++++++++++++++++++++0r
Income #K0 0ommission+++++++++++++0r
Charges For Issuing //
+ervice Charge:
.k' 1 to .k' 1, .k' 17+
#bove .k' 1, 1 .k' for every 1,
;at:
1EJ of principle amount
$.*.$ 3elegraphic 3rans#er 5336
.elegraphic transfer is one of the fastest means of transferring money from one branch to
another or from one to another' .he .'.' issuing bank instructs its counterpart by tested
tele; message regarding remittance of money' %o instrument is given for .'.' unless both
parties have account as money is transferred'
ccounting entries #or issuance o# 33
0ashK?emitterFs #K0Kche
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.k' 1 to .k' 1, .k' 17+
#bove .k' 1, 1 .k' for every 1,
;at:
1EJ of principle amount
$. Clearing Collection /epartment
$..1 Clearing
#s far safety is concerned customers get crossed che
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dishonored then authori/ed branch send the che
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1' ?eceived seal on deposit slip'
&' IBB8 8ocal "ffice $rincipal Branch crossing indicating them as collecting banks'
*' 5ndorsement given G$ayees #K0 will be credited on reali/ation'
' 5ntry on register from where a controlling number is given'
0ollecting bank can collect it either by its branch of by the drawers bank' .hey will
forward the bill then to that particular branch' "B0 number will be given on the
following letter' %ow following procedures will take place in case of the following two
cases'
A. ills !"oileted "hrou#h ranch):
If the bill is forwarded to a branch they will collect it through IB0 procedure' 0ollecting
branch will receive and I'B'0'# from that particular agent branch according treatment
from the angle of collecting branch will be'
#K0 concerned branch'''''''''''''''''''''''Dr'
0ustomer #K0 ''''''''''''''''''''''''''''''''''''''''''0r'
Income #K0 commissionC postage''''''''''''''''''''0r
In this case commission will be charged by the collecting branch, not the agent branch'
. ills Collected "hrou#h $ra%er&s ank:
#ccounting treatment for the collecting branch will be
a' 0learing '''''''''''''''''''''''''''''''''''''''''''''''Dr'
b' 0ustomer #K0''''''''''''''''''''''''''''''''''''''''0r'
$..* In?ardBills #or Collection 5IBC6
In this case bank will work as an agent of the collection bank' .he branch receives a
forwarding letter and the bill' %e;t steps are
1' 5ntry in the I'B'0' registers number given
&' 5ndorsement given +G"ur branch endorsement confirmedG
*' .he instrument is sent to clearing for collection''''''''''''''''''''''''Dr'
' :iscellaneous 0reditor #K0 "B0''''''''''''''''''''''''''''''''''''''''0r'
%ow following $rocedures will take place in case of the following two cases
*&
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Credit 3ransaction:hen a branch re
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bank' .here are three keys of the vault which are given to three seniors most officers'
Daily as estimated amount of cash brought out from the vault for transaction purpose' %o
more than .k' crore brought at once from the vault on a single day'
$.9.$ Cash acking and 2andling
0ash packing and handling needs a lot of care as any mistake may lead to disaster'
$acking after banking hour when the counter is closed, cash are packed according to
denomination' %otes are counted several times and packed in bundle, stetted and stumped
with initial'
$.9.( Evening Banking
#fter the banking hour the cash counter is closed' But sometimes customers come to
draw or deposit money after the service hour' 2owever, their money is received or aid
recorded in the ne;t daybook' .his is known as evening banking'
$. /ispatch +ection
$..1 In?ard dispatch
1' Inward mail, other than those which are registered, marked confidential and
addressed personally to same official, may be opened by an authori/ed member of
staff who should enter in the inward mail register and mention the serial number
of the mail register on the letterK paper received, affi; =received> date stamp on it
and delivery the same to the concerned officials against acknowledgement'
&' 8etters addressed personally to any official shall be opened by the address only'
*' ?egistered mails and mails marked confidential will be opened by an officer or
management in small Branches' #ll these letters shall however enter in the inward
mails registers'
' (top payment instructions and court orders shall be received authori/ed officials
who will immediately note date A time on it and take necessary steps'
$..! "ut?ard dispatch
1' "utward letters must be serial number and entry in the register with name and
address'
*
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&' 5ach typist will maintain a typist master file and dispatch 0lark also maintain a
separate master file for future record'
*' 8ocal letters may be delivered through peon book' If the area is large and letters
are many then service are given through post office'
' 8etter dispatched must be entered in the outward mail register and bear proper
postal stamps if sent through post office'
E' If the letters are sent by registered post or courier service, postal or courier receipt
must be maintained by the dispatch department in a file' (imilarly
acknowledgements received back should be maintained in the file
Chapter 0(
*E
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Investment o#IBB-
(.1 Introduction:
Investment operation of a Bank is vital important as the greatest portion of total revenue
is generated from it ma;imum risk is centered in it and a Bank e;istence mostly depends
on prudent management of its Investment $ort+folio' .o survive in world economy, a
bank should have to contribute in the proper resources mobili/ation through its efficient
investment policy so that it is profitable, safe and li
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.he special feature of the investment policy of the Bank is to invest on the basis of profit+
loss sharing system in accordance with the tenets and principles of Islami (hariah
5arning profit is not only motive and ob-ective of the BankFs investment policy but also
emphasis is given in attaining social welfare and in creating employment opportunities'
(.! /eposit mo%ili>ation:
In recent years Islami Bank Bangladesh 8imited had succeeded in attracting increased
deposit' Investment of the Bank increased to .k' 166)1&'7) million as on in &7 from
.k' 1*&)1&' million in &6' .he percentage of deposit growth in &7 was &E'6J'
.otal number of depositors of IBB8 increased to *)&79' 8ac in &7 from
*&71*1' 8ac of the preceding year, registering an increase of 19J'
Basically Islami Bank has its own product line such as :udaraba (avings #ccount
:(#!, :udaraba (pecial (cheme :((!, :udaraba .erm Deposit :.D?!, :udaraba
(hort %otice #ccount :(%#!, :udaraba :onthly $rofit Distribution (cheme
::$D(! etc' this 5ntire $roduct makes a tremendous response over the client' :ore
over the client are becoming very much interested to accept the new methodology
introduced by IBB8 instead of conventional banking where there is no use of .erms call
interest..hen most recently IBBl has introduced a new product call :udaraba (aving'
Bond already augment resources matching with its structure, it has received tremendous
response' In 199), 1 year and five yearFs .erm :udaraba (pecial (aving pension!
(cheme has been introduced to meet the e;pectation of the e;istingKpotential depositors
of the Bank that has also received tremendous response'
(.$ Investment:
Investment of the bank increased to .k' 1,,9&1 :illion as on *1'1&'&7 where the
investment of preceding year is .k' 1,1*,E7E million and the growth rate in &7 is
&7'6J rather than the growth rate of the preceding year 17'&J'this increased
*7
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investment growth of the bank in &7 is due to promote investment for effective
utili/ation of depositorsF fund'
3a%le7(.1 +ector78ise Investment
(ector+wise distribution of investment as on *1st December &7 vis+S+vis the
corresponding period of last year is given below
.aka in :illion
+ector7?ise Investment !009 !000
+ector mountH to 3otal
Investmentmount
H to 3otal
Investment
Industrial 7),7)) E'*7J 6&,6& EE'1EJ0ommercial *,)77 *'&)J &),9) &E'E&J
?eal 5state ),E)) E'9*J ),*E) 7'*6J
.ransport 6,)E '7J E,)9 E'19J
#griculture &,6E6 1')*J &,7&& &'J
"thers ,E&7 *'1&J ,979 '*)J
.otal 19&1 1J 11*E7E 1'J
Chart7(.1 Comparison o# +ector78ise Investment as on $1.1!.!007
*)
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54.37%30.28%
5.93%
4.47%
1.83%
3.12%
Industrial
commercial
Real Estate
Agriculture
Transort
!t"ers
3a%le7(.$ )ode ?ise Investment:
5)illion in 3aka6
)ode7?ise Investment !009 !00
)ode mountH to 3otal
Investment
mountH to 3otal
Investment
Bai+:urabha 7*,)** E'9EJ E9,6E E&'*6J
2ire $urchase @nder
(hirkatul :elk
E,&1 *'6J *9,*99 *'69J
Bai+:ua--al 6,E6 'E&J 6,9&1 6'9J
$urchase A %egotation 11, 7'6&J ,)7 '&7J
Huard 1,9EE 1'*EJ 1,97 1'7J
Bai+(alam 1,1E* ')J 96 ')J
:udaraba E '*J E 'J
:usharaka 1* '1J 1* '1J
.otal 1,9&1 1J 11*,E7E 1J
*9
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Chart7(.$ Comparison o# )ode ?ise Investment as on $1.1!.!009
$ursuant to the Investment $olicy adopted by the Bank a 7+year $erspective Investment
$lanF has been drawn+up for the year &* to &7 and put into implementation' .he plan
aims at diversification of the investment port+folio by si/e, sector geographical area,
economic purpose and securities to bring in phases all sectors of the economy and all
types of economic groups of the society within the fold of BankFs investment operations'
(.( "%&ectives and principles o# Investment:
42.71%
22.01%
10.#1%
10.47%
8.58%
2.87%
1.35%
0.93%
0.40%
0.0#%
0.01%
$udaraa &a'ings
$udaraa Term (eosit
)urrenc* + )ontingenc*
$udaraa &ecial &a'ings
$udaraa &a'ings ,ond
$udaraa $ont"l* -roit
(eosit &c"eme
$udaraa &/(
,ills -a*le
$udaraa a
$udaraa oreign )urrenc*
(eosits
$udaraa $u"or &a'ing
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.he ob-ectives and principles of investment operations of the Bank are
.o invest fund strictly in accordance with the principles of Islami (hariah'
.o diversity its investment portfolio by si/e of investment, by sectors public and
private! by economic purpose, by securities and by geographical area including
industrial, commercial A agricultural'
.o ensure mutual benefit both for the Bank and the investment client by
professional appraisal of investment proposals, -udicious sanction of investment
close and constant supervision and monitoring thereof'
.o make investment keeping the socio economic re
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.he Bank e;tends investments under the principles of Bai+:urabaha, Bai+
:ua//al, 2ire $urchase under (hirkatul :eelk and :udaraba' .he Bank is
making sincere efforts to go for investment under :udaraba principle in near
future'
(.* 3he salient #eatures o# investment o# IBB-:
.he salient features of the investment policy are outlined below
"bservance of the legal investment limited of the Bank'
"bservance of legal investment limited per client'
"ptimum utili/ation of inevitable fund'
$rofitability of the investments'
(afety and security of the investments'
Investment at minimum possible risk e'g' default risk and li
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0ategori/ation categories!
$rocessing and appraisal
(anction
Documentation
$urchase of goods by the Bank
.aking delivery of goods by the Bank
(ales and delivery of goods to the client
(.9 /i##erent )odes o# Investment:
.here are three types of investment :echanism which are as follows
1. Bai7)echanism 53rading )ode6:
a' Bai+:urabaha
b' Bai+:ua--alc' Bai+(alam
d' Bai+IstinhnaFa
&'I&ara )echanism
a' 2ire $urchase
b' 2ire $urchase under (hirkatul :elk
$. +hare )echanisms
a' :udaraba
b' :usharakah
(.9.1 Bai7)echanism 53rading )ode6:
*
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a6 Bai7)ura%aha
.he terms =Bai+:urabaha> have been derived from #rabic words and Bai and ?ibhun!'
.he word means purchase and sale and the word means an agreed upon profit =Bai+
:urabaha> means sale on agreed upon profit' Bai+:udarabaha may be defined as a
contract between a buyer and a seller under which the seller sells certain specific goods
permissible under Islamic (hariah and the 8aw of the land!, to the buyer at a cost plus
agreed profit payable in cash or on any fi;ed future date in lump+sum or by go downs'
.he profit marked+up may be fi;ed in lump+sum or in percentage of the cost price of the
goods'
Important #eature:
1' It is permissible for the 0lient to offer an order to purchase by the Bank
agriculture goods deciding its specification and committing him to buy the same
from the Bank on :urabaha, i'e' cost plus agreed upon profit'
&' It is permissible to make the promise binding upon the 0lient to purchase from the
Bank, that is, he is to either satisfy the promise or to indemnify the damages a
caused by breaking the promise without e;cuse'
*' It is permissible to take cashKcollateral security to guarantee the implementation
of the promise or to indemnify the damages'
' It is also permissible to document the debt resulting from Bai+:urabaha by a
uarantor, or a mortgage, or both lay any other debt' :ortgage Kuarantee K0ash
(ecurity may be obtained prior to the signing of the #greement or at the time of
signing the #greement'
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E' (tock and availability of goods is a basic condition for signing a Bai+:urabaha
#greement' .herefore, the bank must purchase the goods as per specification of
the 0lient to ac
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Categori>e the proposal as under:
Bai7)ura%aha Commercial:
Investment for $urchase and sale goods to individual KirmK0ompany for 0ommercial
purpose shall be termed as Bai+:urabaha 0ommercial'
Bai7)ura%aha Industrial
Investment to industrial undertakings in the orm of 8and, Buildings, :achineries,
5 means sale for which payment is made at a future fi;ed date or within
fi;ed period' In short, it is a sale on 0redit' Bai+:ua--al may be defined as a contract
between a buyer and a seller under which the seller sells certain specific goods
permissible under Islamic (hariah and the 8aw of the 0ountry!, to the buyer at a cost
plus agreed profit payable in cash or on any fi;ed future date in lump+sum or by go
downs' .he seller may also sell the goods purchased by him as per order and
specification of the Buyer'
Important Features:
i' Bank is not bound to declare cost of goods and profit mark+up separately to the
client'
ii' (port delivery of the item and payment is deferred'
6
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iii' "wnership and possession of the goods is transferred by the Bank to the client
before receipt of sale price'
iv' 0lient may offer an order to purchase by the Bank any specified goods and
committing himself to buy the same from the Bank on Bai+:ua--al :ode'
v' It is permissible to make the promise binding upon the client to purchase from the
Bank' .hat is he is to either satisfy the promise or to indemnify the damage
caused by breaking the promise'
vi' 0ashK0ollateral (ecurity should be obtained to guarantee the implementation of
the promise or to indemnify the damages'
vii' :ortgageeKuaranteeK0ash (ecurity may be obtained before Kat the time of
signing the agreement'
viii' (tock and availability of goods is a pre+condition for Bai+:ua--al agreement' .he
responsibility of the bank is to purchase the desired goods at the disposal of the
client to ac
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Categori>ation:
Categori>e the proposal as under
Bai7)ua&&alJ Commercial:
Investment for $urchase and sale goods to individual KirmK0ompany for 0ommercial
purpose shall be termed as Bai+:urabaha 0ommercial'
Bai7)ua&&al Industrial:
Investment to industrial undertakings in the orm of 8and, Buildings, :achineries,
5
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Bai+(alam is a mode of investment allowed by Islamic (haria in which
commodityies!Kproduct(! can be sod without having the said commodity ies!
Kproducts! either in e;istence or physical Kconstructive possession of the seller' If
the commodity ies!Kproduct(! are ready for sale, Bai+ (alam is not allowed in
(hariah' .hen the sale may be done either in Bai+:urabaha or Bai+:ua--all mode
of investment'
enerally, industrial and agricultural products are purchasedKsold in advance
under Bai+(alam mode of investment to infuse finance so that product is not
hankered due to shortage fundKcash'
It is permissible to obtain collateral security from the seller client to secure the
investment from any ha/ards via non+supplyKpartial supply of commodity
ies!Kproduct(!, supply of low
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Industrial Including small and cottage!
#gricultural
"thers, if any'
c6 IsteshnaKa
Isteshnaa is a contract between a manufacturerKseller and a buyer under which the
manufacturerKseller sells specific products! after having manufactured, permissible under
Islamic (hariah and 8aw of the 0ountry after haying manufactured at an agreed price
payable in advance or by go downs within a fi;ed period or onKwithin a fi;ed future date
on the basis of the order placed by the buyer'
Important #eature:
IstisnaFa is an e;ceptional mode of investment allowed by Islamic (hariah in
which products! can be sold without having the same in e;istence' In the
products! are ready for sale' Istisnaa is not allowed is (hariaf' .hen the sale may
be done either in Bai+:urabaha or Bai+:aa--al mode of investment' in this mode,
deliveries of goods are deferred and payment of price may also be deferred'
It facilitates the manufacturer sometimes to get the price of the goods in advance,
which he may use as capital for producing the goods'
It gives the buyer opportunity to pay the price in some future dales or by go
downs'
E
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It is a binding contract and no party or is allowed to cancel the Istisnaa contract
after the piece is paid and received in full or in part or the manufacturer starts the
work'
Istinaa is specially practiced in manufacturing and industrial sectorsC however, it
can be practiced in agricultural and constructions sectors also 0lass %ote, #bul
2ussain!'
(.9.! I&ara )echanism 5-easing )ode6
a6 2ire urchase AI&arah
.he term I-arah has been derived from the #rabic works #-r and @-rat which means
consideration, return, wages or rent' .his is really the e;change value or consideration,
return, wages, rent of service of an #sset' I-arah has been defined as a contract between
two parties, the 2iree and 2irer where the 2irer en-oys or reaps a specific service on
benefit aginst a specified consideration or rent from the asset owned by the 2iree' It is a
hire agreement under which a certain asset is hired out by the 2iree to a 2irer against
fi;ed rent or rentals for a specified period'
%6 2ire urchase under +hirkatul )elk
2ire purchase under shirkatul :elk is a special type of contract which has been
developed through practice' #ctually, it is a synthesis of three contracts (hirkat, I/ara
and sale' (hirkat means partnership' (harikatul :elk means share an ownership' hen
two or more persons supply e
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benefit as per agreement and bear the loss in proportion to their respective e
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I3' #s the ownership of hired portion of the asset lies with the 2ire Bank! and rent is paid
by the 2irer 0lient! against the specific benefit, the rent is not considered as price or part
of price of the asset'
3' In the 2ire $urchase under (hirkatul :elk #greement the 2ire Bank! does not sell or
the 2irer 0lient! does not purchase the asset but the 2ire Bank! promise to sell asset to
the 2irer 0lient! part by part only, if the 2irer 0lient! pays the cost price K e
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L' 5ffectiveness of the sale contract depends on the actual sale and transfer of ownership
of the asset by the 2ire to the 2irer' It is sold and transferred part by partC it will become
effective part by part and with the sale and transfer of ownership of every share K part'
.he hire contract for that share K part will lapse and the rent will be reduced
proportionately' #t the end of the hire period when the full title of the asset will be sold
out and transferred to the 2irer 0lient!, the 2irer will become the owner of both the
benefit and the asset conse
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2ire urchase under +hirkatul )elk 3ransport
2ire $urchase under (hirkatul :elk investment in the form of .ransport +Bus, .ruckm
0ar, .a;i, 8aunch, (teamer, 0argo 3essel, #ir .ransport etc, shall be termed as 2ire
$urchase under (htrkatuT :elk .ransport'
2ire urchase under +hirkatul )elk 4eal Estate
2ire $urchase under (hirkatul :elk investment in the form of 8and, Building, :arket,
#partments, for useKrental shall be termed as 2ire $urchase under (hirkatul :elk ?eal
5state'
2ire urchase under +hirkatul )elk 4eal Estate
2ire $urchase under (hirkatul :elk investment in the form of asset for useKrental under
any scheme all is termed as 2ire $urchase under (hirkatul :elk (cheme'
(.9.$ +hare )echanism
a6 )udara%ah
It is a form of partnership where one party provides the funds while the other provides the
e;pertise and management' .he first party is called the (ahib+#l+:aal and the latter is
referred to as the :udarib' #ny profits accrued are shared between the two parties on a
pre+agreed basis, while capital loss is e;clusively borne by the partner providing the
capital'
Important #eatures:
Bank supplies capital as (ahib+#l+:all and the client invest if in the business
with his e;perience'
EE
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#dministration and management is maintained by the client'
$rofit is divided as per management'
Bank bears the actual loss alone'
0lient can not take another investment for that specific business without the
permission of the Bank 0lass, %otes, 2ussain, and #bul!'
%6 )usharaka
#n Islamic financial techni
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(.9.( "ther )odes o# Investment
3here are t?o other modes o# investment ?hich have limited impact in our countr':
a6 Luard
.he word GHuardG is an #rabic wordG which means loan or credit on advance' .he literal
meaning of Huard is giving Gungible goodsG for use without any e;tra value returning
those goods' It must follow the principle of e
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Huard means loan without interest and 2asana means beautiful' Huard+e+2asana implies
beautiful loan on good faith or beneficial loan' Islami Bank IBB8! does not recover any
charge,even service, from Huard+e+2asana account' 8oanee has to repay the principal
amount' .his loan facility in e;tended only to deserving cases on compassionate grounds
and special welfare consideration' .he principal amount is refundable within a reasonable
time' Islami Bank IBB8! grants this loan not only for consumption purpose but also for
owning factors! of production' .he ultimate ob-ects of both the consumption and
production Huard+e+2asana are to enable the loanees to support economic problems'
In Islami Bank IBB8! an investment is created against pledge of :udaraba .erm
Deposit ?eceipt :.D?!' enerally )J of the :.D? is allowed to the holder for 2alal
activities without any profit' "nly .4'&K+is reali/ed as service charge per deal' It is
called Huard against .erm Deposit ?eceipt H.D?!'
(. /i##erence %et?een Islamic Banking Conventional Banking incase o# Investment )odes:
Islamic Banking Conventional Banking
01. @nder 3rading modes
Buying and selling should be confirmed in
Islamic banking' .hree components should
be ensured+ e;istence of goods, having the
possessionK ownershipK title and transfer of
ownership' #s per clients order bank will
procure the goods and then sell to the client
with adding profit' Huotation cash memo
and other papers if any! should be in favor
In conventional banking, due to basic
difference in principle, no type of loans
and advances can be compared with
trading modes' 2owever, there is an
apparent similarity at operational level of
the trading mechanism with the 0ash
0redit hypothecation and pledge! of
conventional banks' But the concept of
E)
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of bank of ensure procurement of goods'
oods once sold can not be resold i'e' in
case of payment failure bank can not charge
on the goods al ready sold' In practice, bank
charge compensation to control willful
default which is not reali/ed as income in
bankFs books of accounts' 0ustomary
trading modes are Bai :ua--al, Bai
:urabaha and Bai (alam'
buying and selling between Bank and
client is absolutely absent' 0ompound
interest is charged and accounted for in
case of failureKdelay of payment'
0!. @nder +hirkat modes:
(hirkat modes are :udaraba and:usharaka' :udaraba principle is the same
as mentioned in case of deposit
mobili/ation' :usharaka is the e
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Chapter 0*
6
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Foreign Echange
o# IBB-
*.1 )eaning o# Foreign Echange:*.1 )eaning o# Foreign Echange:
oreign 5;change means currency A trade e;change say conversion of one to another'
.his is a part of economic A (cience' .his is a big deal divided into different currencies
instrument such as Draft, .raveler 0he
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1' Bank A client'
&' Different Banks in the same foreign e;change market'
*' Different Bank A (chedule Bank of the same country'
' Different 0ontrol Bank'
Islami a Bank follows the following the two craters in respect A payment of foreign
e;change
1' 8ocal currency market value A
&' oreign currency market value'
5;change is being controlled
1' .o stabili/e the rate of e;change'
&' .o protect domestic industries'
*' or proper implementation of plans'
' .o increase the bargaining strength
E' .o check over invoicing A @nder invoicing
6' .o check the Blank marketing and smuggling
7' or regulating the international movements of goods
*.$ uthori>ed /ealer Branch:*.$ uthori>ed /ealer Branch:
Bangladesh bank in e;ercise of the power under section * of oreign 5;change
regulation #ct' 197 issues a license to schedule Bank where they have ade
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&' oreign 5;change 0ircular'
*' $ublic %otice
' Import A 5;port $olicy a/ette
E' :inistry of 0ommerce 0ircular
6' B0D circular'
7' uide lines for foreign e;change regulation'
)' "ther authori/ation i'e' %B0 Dept!
*. )ethods o# e##ecting pa'ment o# IBB-:*. )ethods o# e##ecting pa'ment o# IBB-:
Islami Bank follows the following methods to make payments between countries'
1' 3elegraphic 3rans#er 5336:.his is an instruction for transfer of money by
.elegram, 0able or tele; from a bank in one country to another Bank in different
center' .his is an instruction form the Importers Bank to the e;porters Bank' .he
.. charge is reali/ed by us from the partly as per Bank circular'
&' )ail 3rans#er 5).36:.his transfer is the order to pay cash to a * rdparty' .his
.ransfer is sent by mail A the charge must be reali/ed as per Bank circular'
*' /ra#ts Cheue:# draft is pay order issued by one Bank to another Bank or its
branch'
+ome common terms used in Foreign Echange:
"ver Bought:.his position known as long position'
"ver +old:.his position known as short position'
-IB"4:8ondon Inter Bank "ffer ?ate'
+8IF3:(ociety for orld ide Inter Bank inancial .elecommunication'
C2I+:0learing 2ouse Inter Bank $ayment (ystem'
"+34" AC:"ur #K0 with you i'e' out #K0 with #merican 5;press'
;"+34" AC: .heir #K0 with us, #l+ ?a-i #K0 with IBB8'
-"4" AC:.his #K0 i'e' third Bank ?elationship'
C@: #sian 0learing @nion'
6*
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*.9 @ni#orm Customs and ractices #or /ocumentar' Credits*.9 @ni#orm Customs and ractices #or /ocumentar' Credits
5@C/C6:5@C/C6:
.he I00 @niform 0ustoms and $ractice for Documentary 0redits @0$!, first published
in 19**, are the universally recogni/ed set of rules governing the use of the Documentary
0redit in international commerce' Banking associations and individual Banks in more
than 1 countries and territories adopted the previous revision of 19)*'
.his revision of the @0$, the first for ten years, takes into account a range of important
consideration+ including international -udicial decisions, technical innovations in banking
and other industries, case studies and day to day practice to offer a thoroughly revised
and up to date series of rules'
.hree years in preparation, the 9 #rticles of the new @0$ has come into effect onanuary 1, 199 that indispensable guide to Documentary 0redit usage' .hey provide a
comprehensive and practical working aid to bankers, lawyers, importers, e;porters,
transport e;ecutives and everyone involved in international trade'
*. ctivities o# Foreign Echange:*. ctivities o# Foreign Echange:
.here are three kinds of foreign e;change transaction
1' Import
&' 5;port A
*' ?emittance'
In the following these are discussed in brief'
*..1 I)"43*..1 I)"43
)eaning o# Import)eaning o# Import
Import means lawfully carrying out of anything from one country to county for Buying' It
will be occurred according to the overnment law'
Important olic' "rderImportant olic' "rder
Based on the needs of commodity and availability of finance, overnment declares
policy' or import of goods for a particular period having approval from the %ational
#ssembly is defined as Import policy order' Import policy is a guideline of a set of rules
6
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envisaged by overnment #uthority i'e' the :inistry of .rade and commerce for the
registered importer for import of goods inside the country'
/uration/uration
5arlier import policy has been formulated for two years' But present import policy order
has been formulated for E five! years, 5ffect from the 1 thune 1999 to *thune &*
and valid till announce of new import policy order' If re
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*' %otwithstanding anything mentioned else where, all imports into Bangladesh shall be
sub-ect to such general or specific conditions as many have been prescribed in this order'
' In addition to the conditions mentioned in the control list the conditions' ?estrictions
and procedures for import of various items mentioned in the test portion of this order,
shall as usual, apply in case of import of those items'
E' If, while determining the import status of an items mentioned in the control list the
description of goods does not conform to the 2'('0 0ode mentioned against item, or any
discrepancy arises between the 2'( 0ode and the description of goods, in that case the
description of goods shall prevail, In other words, if the import of a particular item is
shown as banned in the control list, or is shown as importable as sub-ect to fulfillment of
conditions in the list, the said ban or restriction as the case may be, shall e
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date of issuance of 80# from by Bank or registration of 80# form within Bangladesh
Bank registration unit as the case may be'
/ocument reuired to %e su%mitted along ?ith -C Form:
Importers in both public sector and private sector shall submit to their nominated banks
the following documents along with the 8K0 authori/ation orm for opening letter of
credit'
a! 8K0 application form duly signed by the importer'
b! Indent for goods issued by indenture or pro+forma invoice obtained from
the foreign supplier, as the case may be and
c! Insurance cover note'
Import -AC 5-etter o# Credit6:Import -AC 5-etter o# Credit6:
# letter of credit is a conditional Bank undertaking of payment' In other words letters of
credit is a letter form the importer Bankers to the e;porter that the bills if drawn as per
terms A conditions complied with will be honored on presentation'
Definition of 8K0
# letter of 0redit is a conditional bank undertaking of payment' In other words letters of
credit is a letter form the importer bankers to the e;porter that the bills if drawn as per
terms and conditions are compiled with will be honored on presentation
#s per @0$D0 E a credit may be either
i! ?evocable'
ii! Irrevocable'
.he 0redit, therefore, should clearly indicate whether it is revocable or irrevocable' In the
absence or such indication the credit shall be deemed to be irrevocable'
Classi#ication o# -AC:
'?evocable 8K0, Irrevocable 8K0, 0onfirmed 8K0, .ransferable 8K0, Divisible 8K0,
?evolving 8K0, ?estricted 8K0, ?ed 0lause 8K0, reen 0lause 8K0, Back+to+Back 8K0
3'pes o# -AC:
67
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1' ?evocable 0redit
#s per #rticle no' ) a! # revocable credit is a credit which can be amended or canceled
by the issuing bank at any time without prior notification to the seller since to offers little
security to the seller'
&' Irrevocable 0redit
#s per #rticle no 9 an irrevocable credit constitutes a definite undertaking of the issuing
Bank' # credit cannot be amended or cancelled without the agreement of all parties' It
gives the seller grater assurance of payment' #n irrevocable credit can be either confirms
or unconfirmed dependant on the desire of the seller'
Classi#ication o# importer:Classi#ication o# importer:
Importers are those who ate authori/ed by the import .rade authority i'e' A 00I A 5 for
import of goods essential for consumption or for production purposes'
.here are mainly three types of importers'
1' 0ommercial Importer
&' Industrial Importer
*' Importers under age 5arner (cheme
1' 0ommercial ImporterIt means an importer registered under the importers, e;porters and indention registration
order 19)1 who import goods from sale, when issued to commercial importers, given the
category held by him with I.0 classification and public notice against which they are
admitted into import trade'
&' Industrial importers
hen issued to an industrial consumer, gives the items of import as raw materials and
packing materials and spare parts, the value of entitlement and I.0 classification'
*' Importers under 5(
It means registration importers who import only under the 5(' In this scheme, the
foreign e;change re
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-AC -IC3I" 4"CE/@4E F"4 "EIG -AC-AC -IC3I" 4"CE/@4E F"4 "EIG -AC
or opening 8K0 the client is to submit to the bank an application in the printed format of
the designated bank' .his is called 8K0 application form which is also an agreement
between the importer and the bank' .he form is to be stamped under stamp #ct' In force
in Bangladesh' .he importer must submit the 80# A I:$ and indent or contract'
$urchase orderKpro+forma invoice duly accepted by the importer! along with 8K0
application'
.he 8K0 application must be completedK filled in and signed by the authori/e person of
the importer giving the following particulars
a' ull name and address of the supplier of beneficiary and importer'
b' Brief description of the goods'
c' 8K0 value for @(V, etc' 0? value! which must not e;ceed the 80# value'
d' .he unit price,
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8K0 amount can be decreased provided the relevant Indent is amending accordingly and
with the consent of beneficiary'
5ach of clauses of the 8K0 can be amended provided the parties involve the 8K0 consent
to it' $rocedure or preparation and dispatch
#mendment is to be typed in the Banks printed format' .he copies of the amendment
must be dispatched to all concerned as done in dispatching the 8K0' #mendment be kept
in the 8K0 file chronologically date wise'
Bank charge:
#mendment commission is to be reali/ed form the party as per instruction of Bangladesh
Bank ' 5' 0irculars'
#ccounting procedure'
Dr' $artyFs #K0'
0r' 0ommission #K0'
0r' $ostage A .elegraph #K0'
-ia%ilit':
If the amount of 8K0 increased the liability voucher is to be passed as under
Dr' 8iability as per contra 5( 8K0!'
0r' #sset as per contra 5( 8K0!'
Dr' #sset as per contra 5( 8K0!'
0r' 8iability as per contra 5( 8K0!'
# fresh 8iability is to be passed including amount of increase on the date of amendment'
BCD 3" BCD -AC:BCD 3" BCD -AC:
:eaning of Back to Back 8K0:eaning of Back to Back 8K0
7
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Back to Back 8K0 is a type of import 8K0 either in inland or in abroad, which open
against lien on valid e;pert 8K0'
In our country in e;port garment this method of finance is widely used and very well
known to the manufacturers of garments' Bangladesh e;porter received an irrevocable8K0' for supply readymade shirts from an #merican Bank' or manufacture of the
ordered shirts the e;porter' Dose not has re
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&' Backward lender must have!
*' .o continuous
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Check up the document:
Before lodgment, documents must be checked with 8K0 file' 0heck up as under
1' Invoice
&' Bill of 8ading
*' Draft
' Bank forwarding date'
1' I%3"I05
a! .he invoiced amount tallied with draft amount'
b! .he invoice is shown by the beneficiary ad s signed by him'
c! Description of goods in the invoice and bill of 8ading are identical'
&' Bill of 8ading
re also to be referred to the draw for their acceptance'
.he reply of importer is to reach to the Bank within 7& hours in case of non+acceptance'
.he dishonor is to be communicated to the negotiating bank within reasonable time'
@nusual delay in communication of dishonor is not acceptable to the negotiating Bank
and the issuing Bank forfeits its right to claim refund'
?etirement $rocedure for Deferred $ayment of issuance BillsK BB Bills ?etirement $rocedure for Deferred $ayment of issuance BillsK BB Bills
8hen the dra#t is returned %' the dra? 5importer6 a#ter dul' accepted %' him the
#ollo?ing procedure to %e maintained.
1' .he maturity date is to be worked out and noted in the bill ?egister and also in
due date diary' .he due date diary may be maintained by the dealing officer ad the
:anager in+charge of foreign 5;change Determent'
&' .he oreign 0orrespondent should be advised the due date maturity and be
authori/ed to debit the %"(.?" account or to claim reimbursement on due date
as per 8K0 terms'
7*
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*' #ll the documents delivered to the importer e;cept accepted bill of e;changeK
draft'
*..! EM"43)eaning o# Eport:)eaning o# Eport:
5;port means lawful carrying out of anything from one country to another country for
sale
/e#inition o# Eporter/e#inition o# Eporter
.he importers and e;ports trade of the country is regulated by the Imports 5;ports
0ontrol #ct 19E' %o person Kfirm is allowed to e;port any thing from Bangladesh unless
he is registered with 00I and 5 under the registration order Importer and 5;porter!
19E&' .o become an e;porter an 5?0 e;port ?egistration 0ertificate! must be obtained
from the office of 00I A 5'
Eport under -AC
5;porters are allowed to e;port the commodity under irrevocable letter of credit' @nder
this type of e;port, e;porter will ship the goods as pr terms of the credit and will get
payment as per arrangement of the credit'
General 4ules #or Eport
.here are some rules, which are mandatory for e;port of any goods form Bangladesh'
.he rules are as under
1! %o $erson can e;port any goods from Bangladesh, unless he is duly registered as an
e;porter with the 00I A 5'
&! #ll e;port must be declared on the 5L$ form, which is consisting of copies'
*! 5;port mush is against any of the following
a! 5;port 8K0'
b! irm 0ontract'
c! #dvance $ayment'
! .ransport documents related to land route or sea and any other #uthor)i/ed Dealer'
.he #irway Bill and any other documents of title to cargo may be drawn to the order of
a Bank in the country of import' 2owever in case of advance payment, transport
7
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document may be drawn to the order of oreign Importer Bank endorsement of transport
documents is prohibited' Directions under (l' %o' shall not apply in the following cases
+tages )echanism o# Eport+tages )echanism o# Eport
1! 5;porter will make the goods ready for shipment'
&! #rrangements have to be taken for inspection of the goods by the competent
authority as per credit terms'
*! 5;porter will declare on 5L$ form against e;port 8K0Kirm 0ontractK #dvance
payment'
! 5;porter have to arrange approval for e;port from custom authority on 5L$ from by
submitting 5;port 8K0, 5;port permission from 00I A 5, Huota clearance from 5$B,
@'D' in case of garments, invoice, packing list along with shipping bill prepared by 0A
agent'
E! #fter completion of custom formalities, shipping company will receive the goods and
will issue B'8'
6! 5;porter will collect visaK license and certificate of origin for final documentation'
7! 5;porter will submit the full set of documents to the negotiating bank for negotiation'
)! %egotiation bank will dispatch the documents to the issuing bank for clearance of the
goods from destination against payment as per credit terms'
*..$ 4E)I33CE*..$ 4E)I33CE
)eaning o# 4emittance)eaning o# 4emittance
.he word =?emittance> originates from the word =remit> which means to transmit
moneyK fund' In banking terminology, the work =remittance means transfer of fund one
place to another' hen money transferred from one country to another is called =oreign
?emittance>
7E
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3'pes o# 4emittance:3'pes o# 4emittance:
oreign remittance may be classified into'
Inward oreign ?emittance'
"utward oreign ?emittance'
)echanism o# 4emittance)echanism o# 4emittance
0#D+ oreign currency #K0 Dollar'
0#$+ oreign currency #K0 Dollar'
:0D+ :udaraba foreign currency deposits'
$0+ $rivate foreign currency'
0#D+ 5;p'+ oreign currency #K0 dollar e;port'
%?"+ %on residence dollar'
%?.+ %o residence .aka'
$D#$+ properly development #K0 dollar'
$D#$+ properly development #K0 pound'
Instruments o# Foreign 4emittances:Instruments o# Foreign 4emittances:
0ash for Dollar, $ound, rance r' ?iyal or any other currency'
.'0' .ravelers 0he
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Chapter 0
+8"3 nal'sis o#
IBB-
+8"3 -+I+ "F IBB-:
5very organi/ation has some internal (trengths and eaknesses as well as they have also
some e;ternal opportunities and threats' .o survive in world competitive market, every
77
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organi/ation should emphasi/e on (". analysis that help to take proper decision and
to achieve the ultimate goal of the organi/ation' #s a internee of IBB8 %ew :arket
Branch, I have tried to find out what are their (trengths and eakness as well as
opportunities and threats are stated below
.1 +34EG32+ .! 8EDE++E+
S' Ade(uate inance
S* +ore funds for Investment
S, -onest and eliable /mployees
S0 .eli#ious )eelin#s of the people
1' Centrali2ed $ecision +akin#
1* Lack of up3to3date e(uipments
1, $eficiency of e4pertise
10 Lack of Advertisin#
15 Lack of ade(uate employees
.$ ""43@I3IE+ .( 324E3+
O' Innovative and modern customer
service
O* etainin# vast customers
O, Special ima#e
O0 Poverty alleviation
"' ules and re#ulations
"* Islamic ankin# Operation introduced
by conventional ankin#.
", Call money system
"0 Lo%er salary structure
.1 +34EG32+
7)
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S' Ade(uate inance
Islami Bank Bangladesh 8td' has ade
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O' Innovative and modern customer service
.his bank can introduce more Innovative and modern customer services to its customers to
survive better in the competition market
O* .etainin# vast customers
IBB8 has a vast opportunity to hold most of the customers by e;tending its banking
operation all over the country as most of the people of Bangladesh are religious minded'
O, Poverty alleviation
IBB8 has a great opportunity to save the countyFs poor people from being taking loan from
different %"s or few banks with higher interest rate'
O0 Special ima#e
IBB8 has created special image to the people as a more reliable bank' $eople believe that if they
keep their money in Islami bank it will be more secured than other banks'
.( 324E3+
)
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"' .ules and re#ulations
?ules and regulations of Bangladesh Bank defers with Islamic Banking (ystem' (o they have
to face various problems to operate their activities according to the Islamic (hariah'
"* Lo%er salary structure
%ow many of the Banks are hiring young talent and e;pertise employees with higher
remuneration where IBB8 could not hire skilled manpower because of lower salary structure
compared to other banks'
", Call money system
In the money market of Bangladesh, there is no call money system of Islami (hariah'
"0 Islamic ankin# operation introduced by conventional ankin#
1ew other conventional banks have started to open their Islamic Banking operation shortly'
)1
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Chapter7 09
Conclusion
4ecommendations
)&
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Conclusion:
Islamic bank Bangladesh limited is a bank which operates it s activities according to
Huaran and (unnah' Its banking activities are based on profit Y loss sharing' It does not
create any illegal pressure on client'
.he strength of islami bank Bangladesh limited is + employees of Islamic Bank
Bangladesh 8td' are honest because they strongly believe in Islamic rules and regulations'
.hey do not take any types of bribe form clients' (o believes of people are increasing on
the activities of Islamic Bank Bangladesh limited' :any people of Bangladesh are
involving with IBB8 for doing their daily financial activities' It has a bright future
because it has got huge customers than other conventional banks in Bangladesh that are
based on interest'
.he weaknesses of Islamic bank Bangladesh limited are + although it is getting bright
future but it does not operate its activities 1J based on Islamic shariah' Because still
there is not e;isted an Islamic environment in the economic activities of Bangladesh' It is
performing its daily financial transaction with other financial institution that are not
based on Islam' In this case, it is involving with some %on+Islamic activities
unintentionally' "n the other hand every client is not 1J honest' (o they are taking
investment form IBB8 and after maturity, they are showing loss on that pro-ect
intentionally' (o IBB8 is losing some profit form their investment'
.hreats of Islami Bank Bangladesh 8imited are + at this time, many financial institutions
have commenced their financial activities according to Islamic shariah' .his type of
organi/ation will create more competition in the financial market' (o it is a threat for
Islamic bank Bangladesh limited'
#fter all, although it is facing some problem, it has a bright future and day+by+day it is
enhancing its financial activities over the country' :any organi/ations are following to
IBB8 and they are starting their business based on Islamic (hariah in our economy'
)*
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4ecommendations:
It is not une;pected to have many problems in any organi/ation' I have found some of the
problems of IBB8' .o solve these problems, I can suggest following recommendations
1' .his Bank should arrange a wide varieties of regular programs like GIslamic alsaG
G"aa/ :ahfilG G(eminarG G:os
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appoint skilled manpower so that they can provide more innovative and
modern customer services'
Bi%liograph':
Books:
#hmed, Piauddin 19)*, Evaluation of Islamic Banking, Institute of $olicy (tudies,
8ahore, $akistan'
?a
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Balance Sheet
Islami Bank Bangladesh
Limited
)6
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)7
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PROPERTY & ASSETS 31.12.2007 31.12.200
Tk. Tk.)as" 17076455162 2351894
)as" in "and including .oreign currenc* 2907141037 141014
,alance it" ,( ,an6 + its agent %an6 141#9314125 2210879
,alance it" ot"er ,an6 + inancial Institutions 4012328480 132912
In ,anglades" 2353854350 75931
!utside ,anglades" 1#58474130 5#981
$one* at call + s"ort notice
In'estment in s"are + securities 203#5710399 35577#
o'ernment 20341950000 353400!t"er 23760399 2376
In'estments 144920#09595 11357507
eneral In'estment etc 133881027350 10#7040#
,ills urc"ased + (iscounted 11039582245 #87100ied Assets including -remises urniture + itures 3987232#75 3724#9
10000136044547217745"ther assets :
Total Assets%on Banking #ssets 1913#2349717 150252821663252862921324194035248ibilities8I#BI8I.U A
#((5.( :17#7587001890283048)urrent + ot"er accountDeposits A
"ther account 191#5151#75 1401#123103#9282#25872279475$udara%a &a'ing (eositsBills
payable #2403504533 5211854518853512573952213542#Bearer 0ertificate of
Deposits:udaraba .erm Deposits :
101957271717826184480$udara%a -eretual ,ond"ther:udaraba Deposits 3000000000
1184133625410007232797Total Libilities"ther 8ibilities 1795210134#3 14024558-aid u )aital0apitalK(hare+Zholder 5