Internship Repor1

Analysis over General Banking of Shahjalal Islami Bank Ltd
Chapter 1
Introduction
1
1.1 Introduction of the topic:

In the backdrop of economic liberalization and financial sector reforms, a group of highly successful local entrepreneurs conceived an idea of floating Islamic banking system. For them, it was competence, excellence and consistent delivery of reliable service with superior value products based on Islamic Shariah. Lending money is the major part of a bank. It is the main investment segment of any bank and required different phases of activities and policy guideline while going for credit facilities to a customer. Shahjalal Islami Bank has introduced investment Schemes to improve the quality of life particularly of the fixed income earner of the society.
1.2 Rational of the study:

I have to prepare a report on the "Analysis over General Banking of Shahjalal Islami Bank Ltd." for the partial fulfillment of the internship course of BBA program. In this report I will include what credit schemes are offering by the Shahjalal Islami Bank Ltd, and also function of General Banking, which will easily understandable to the readers.
1.3 Objective of the Report:

1.3.1. Broad Objective:
The general objective of this report is to complete the internship program and submit a report. As per requirement of BBA program of Stamford University Bangladesh, one student needs to work in a business organization for three months to acquire practical knowledge about actual Business operation.
1.3.2. Specific Objective:

To present an overview of Shahjalal Islami Bank Limited. A general description of the banking activities of Shahjalal Islami Bank Limited. To submit a brief description about the General Banking Department and their activities. To suggest remedial measurement for the improvement of the whole process of the General Banking Department.
1.4 Scope of the Report:

Since I am working in the Shahjalal Islami Bank Limited, Dhaka Main Branch, I get the opportunity to gain knowledge of different part of banking system. The supervisor 2
divided into the whole banking in two parts as a result I got the opportunity to work in all two divisions (investment division, General Banking division). And from these two different departments or divisions, I hope that I will be capable of doing these types of jobs in the future.
1.5 Methodology:
The report would be based on an exploratory research paper. Here I would be discussing the consumer Investment schemes and Investment appraisal procedure of Shahjalal Islami Bank and critically analyze the appraisal procedure with the standard one. Through out the report, I will use different type of research method to find out proper and correct information and also provide a good report. For preparing this internee report I will basically use my experience from different department of the Shahjalal Islami Bank Limited. And I will also use some official documents provided by the officers. For adding more value to this report I will use some books or lecture specialized on the banking sectors.
1.6 Sources of data collection

1.6.1 Primary sources:
Observation of banking activities. Fruitful conversation with the in-charge of the General Banking department of Shahjalal Islami Bank Limited, Dhaka Main Branch. Experiences gained during performing duties for General Banking department. Discussion with officials of Shahjalal Islami Bank Limited.
1.6.2 Secondary sources:

Annual reports of Shahjalal Islami Bank Limited. Various documents from General Banking department. Loans and Advances Act. Different websites. Internal Records. Brochures of Shahjalal Islami Bank Limited. Different circulars sent by Head Office and Bangladesh Bank. 3
Other published documents Investment Scheme.
1.7 Limitation
On the way of my study in Shahjalal Islami Bank Limited, I have faced the following problems, which may be termed as the limitations of the study. The major limitations of this study are given as follows: i. ii. There were some restrictions to have access to the information confidential by concern authority. I worked only on Dhaka Main branch of Shahjalal Islami Bank Limited, so I gather knowledge about activities of Head Office only by reading/hearing not in practical way. iii. iv. v. Sufficient records, publications regarding customer service were not available as per requirement. Three-month is not sufficient time to gain practical knowledge and prepare a report. The employees of the bank are so much busy so they cannot provide me to give information about the General Banking Department such as different types of loans and advances. vi. I have no proper experience to do this kind of report. So, inexperience creates obstacle to follow the systematic and logical research methodology.
Chapter 2
Organizational Overview
5
2.1 Introduction of the Organization

The Shahjalal Islami Bank Limited was incorporated as a public limited company as on 1st day of April 2001 under the Companies Act. 1994. The Bank started its commercial operation on May 10, 2001. The Bank has made a significant progress within a very short period of its existence and occupied an enviable position among its competitors after achieving remarkable success in all areas of business operation. The authorized capital of the Bank is Tk. 4,000 million and Paid up capital of the Bank stood at Tk. 2,740 million as on 31 December 2009. The total equity (capital and reserves) of the Bank as on December 31, 2009 stood at Tk. 5,430 million. Managing Director: Muhammed Ali Phone: +880 2 9570807, Mobile: 880 187031674 Contact Person: Md. Jillur Rahman, Deputy Managing Director Phone: +880 2 9568800 Contact Address: Shahjalal Islami Bank Limited Uday Sanz, Plot No. SE (A),2/B Gulshan South Avenue, Gulshan-1, Dhaka Phone: +8802-8819029 Fax: +880 2 9570809, 9553562 E-mail: sblho@shahjalalbank.com.bd, shahjalajislamibank@gmail.com, sblho@aitlbd.net. Web: www.shahjalalbank.com.bd
2.2 Shahjalal Islami Bank Limited at a glance:

With a view to materialize the dream of the people of Bangladesh for doing their banking transactions in line with what is prescribed by Islam, a group of highly successful entrepreneurs conceived an idea of floating a commercial bank styled as Shahjalal Islami Bank Limited which is named after the name of the renowned saint Hajrat Shahjalal who dedicated his life for the cause of peace in this world and hereafter and for the service of humanity. The sponsors are reputed personalities in the field of trade & commerce, industry and finance. Shahjalal Islami Bank Limited offers the full range of banking services for personal and corporate customers, covering all segments of society within the framework of Banking Company Act and rules and regulations laid down by our central bank. Diversification of products and services include Corporate Banking, Retail Banking and
Consumer Banking right from industry to agriculture, real estate to software and is backed by the latest technology. The Bank is being managed by a group of highly experienced professionals with diversified experience in finance and banking. The Management of the bank constantly looks after customers satisfaction and believes that a satisfied customer is a great Ambassador. The Bank has already achieved tremendous progress within only five years. The bank has already ranked as one of the quality service providers & is known for its reputation. Offers the full range of banking services for personal and corporate customers, covering all segments of society within the framework of Banking Company Act and rules and regulations laid down by our central bank. By now, the Bank established correspondent Banking relationship with 29 Banks covering their global network of 610 branches/units of International repute at different important locations. It also established accounting relationship with 10 Banks and maintaining 26 NOSTRO Accounts in 8 (eight) major Currencies at different convenient locations. The Board of Directors of our Bank consists of reputed Industrialists and Businessmen who are successful in their respective fields headed by Mr. Sajjatuz Jumma, the Chairman of the Board who is an eminent Industrialist & reputed businessman in Bangladesh and current Chairman of Islamic Banks Consultative Forum (IBCF). The Board generally deals with policy matters relating to management of Business and sets goal for the growth & development of the Bank as a whole, review of the same from time to time and gives necessary guidance to the management. The Bank is managed by a Team of professional Executives and Officials having profound banking knowledge & expertise in different areas of management and operation of Banks. The Team is headed by the immediate past Executive President and CEO of Islami Bank Bangladesh Ltd. (IBBL) for about 7 years. During his Incumbency, IBBL attained a remarkable growth & development. Above all, he had the opportunity to hold the position of Chairman of the Board of Directors of Islami General Insurance Company & then he Joined Shahjalal Islami Bank Ltd on February 25, 2004 as the Managing Director and Chief Executive Officer (CEO) to enrich Islamic Banking methodology in the Country. During the short span of time, Shahjalal Islami Bank so far introduced a good number of attractive deposit products to broaden the resource base and also Investment products to deploy the deposit resources so mobilized. Some more schemes covering the deposits, Investments & Services will be introduced gradually in near future suiting to the taste and requirement of the clients. The Bank has a strong Shariah Council consisting of prominent Ulama, Fuquah & Economists who meet periodically to confer decisions on different Shariah issues relating to Banking Operation & to address them and to give necessary guidance to the management on Shariah Principle. Since inception, Bank has been performing in all the sectors i.e. general Banking, Remittance, Import, Export &
Investment. All our branches are fully computerized having on line Banking facility for the clients. All activities of the Bank including its products and services are mainly for different economic groups of Bangladesh at home & abroad. Bangladeshi expatriates living abroad in different countries form a strong economic group who contribute greatly towards the economic development of the country.
2.3 Mission of SJIBL

To be one of the best financial institutions in the country in respect of providing personalized services to all our customers backed by the latest technology and a team of highly motivated personnel capable of satisfying customers need.
2.4 Vision of SJIBL

Shahjalal Islami Bank is committed to maintain a standard that makes every banking transaction fruitful to its customers. Our endeavor is to offer our customers best possible services with transparency, accountability, reliability, accuracy and timely delivery with adapted solution for all kinds of business requirements. Our goal is to achieve Excellence in Banking.
2.5 Objectives of SJBL

From time immemorial Banks principally did the functions of moneylenders or "Mohajans" but the functions and scope of modern banking are now a days, very wide and different. They accept deposits and lend money like their ancestors, nevertheless, their role as catalytic agent of economic development encompassing wide range of services is very important. Business commerce and industries in modern times cannot go without banks. There are people interested to abide by the injunctions of religions in all sphere of life including economic activities. Human being is value oriented and social science is not value-neutral. Shahjalal Islami Bank believes in moral and material development simultaneously. "Interest" or "Usury" has not been appreciated and accepted by "the Tawrat" of prophet Moses, "the Bible" of prophet Jesus and "the Quran" of Hazrat Muhammad (sm). Efforts are there to do banking without interest Shahjalal Islami Bank Limited avoids "interest" in all its transactions and provides all available modern banking services to its clients and wants to contribute in both moral and material development of human being. No sustainable material well-being is possible without spiritual development of mankind. Only material well-being should not be the objective of development. Socio-economic justice and brotherhood can be implemented well in a God-fearing society.
The objectives of Shahjalal Islami Bank include: A To conduct interest-free and welfare oriented banking business based on Islamic Shariah. B To implement and materialize the economic and financial principles of Islam in the banking arena C To contribute in sustainable economic growth. D To help in poverty alleviation and employment generations. E To remain one of the best banks in Bangladesh in terms of profitability and assets quality F To earn and maintain a 'Strong' CAMEL Rating G To introduce fully automated systems through integration of information technology. H To ensure an adequate rate of return on investment I To maintain adequate liquidity to meet maturing obligations and commitments. J To play a vital role in human development and employment generation K To develop and retain a quality work force through an effective Human Resources Management System. L To ensure optimum utilization of all available resources M To pursue an effective system of management by ensuring compliance to ethical norms, transparency and accountability at all levels.
2.6 Departments of SJIBL

All branches of Shahjalal Islami Bank Limited are divided into three departments: General Banking Department. Foreign Exchange Department. Investment Department.
2.6.1 General Banking Department

General banking department is one of the most important departments of Shahjalal Islami Bank Limited. Basically bank provides the main services to the customer through this department. In general this section of the Shahjalal Islami Bank Limited is divided into five sections. Accounts opening section Cash section Remittance section Bills and clearing section Accounts section 9
2.6.2 Foreign Exchange Department

Banks play a very important role in effecting foreign exchange transaction of a country. Mainly transactions with overseas countries are in respect of imports; exports and foreign remittance come under the purview of foreign exchange department. Banks are the vital sectors by which such transactions are effected/settled. Central Bank records all sorts of foreign exchange transactions. The other banks dealing with foreign exchange are to report to Bangladesh Bank regularly (viz. daily, monthly, quarterly, yearly etc.). The foreign exchange department consists of three sections. They are: Import section Export section Foreign remittance section
2.6.3 Investment Department

Banking business consists of borrowing and lending. Bank act as an intermediary between surplus and deficit economic units. Thus a banker is a dealer in money and credit. Banks accept deposit from large number of customers and then lend a major portion of the accumulated money to those who wish to borrow. In this process banks secure reasonable return to the savers, make funds available to the borrowers at a cost and earn a profit after covering the cost of funds. Banks, besides their role of intermediation between savers and borrowers and providing an effective payment mechanism, have been allowed to diversify into many new areas of better paying business activities
10
2.7 Hierarchy of SJIBL

Managing Director (MD) Deputy Managing Director (DMD) Senior Executive Vice President (SEVP) Executive Vice President (EVP) Senior Vice President (SVP) Vice President (VP) Senior Assistant Vice President (SAVP) Assistant Vice President (AVP) First Assistant Vice President (FAVP) Junior Assistant Vice President (JAVP) Senior Executive Officer (SEO) Executive Officer (EO) First Executive Officer (FEO) Junior Executive Officer (JEO) Assistant Executive Officer (AEO) Senior Officer (SO) Officer
11
2.8 Organagram of SJIBL

Organogram of Banks Head Office up to 2006(Proposed)
Board of Directors Executive Committee of the Board Managing Director VP/SAVP Board Secretariat/ Company Affairs/ Shares Shariah Council Policy Committee of the Board
SVP/VP Human Resources Division
VP/SAVP Training, Research & Development
VP/SAVP Audit & Inspection
SAVP/AVP Public Relations Division
VP/SAVP Common Services Division
SAVP/ AVP Computer and IT Division
VP/SAVP Financial Administration Division
VP/SAVP Intl Trade, Finance and Treasury Division
2.9 Business Activities of SJBL

Shahjalal Islami Bank Limited accepts deposits on the basis of Mudaraba in the following types of accounts, and pays profit, like that of dividend in these accounts, except Alwadia Current Account. The relationship between banker and customer is not debtor-creditor relationship of conventional banks. The depositor is a partner in business with SHAHJALAL ISLAMI BANK LIMITED.
2.9.1 Attractive Deposit and Investment Schemes

Deposit Schemes Investment Schemes Mudaraba Monthly Income Scheme Household Durable Purchase Scheme Mudaraba Multiple Benefit Deposit Housing Investment Scheme Scheme Mudaraba Millionaire Scheme Mudaraba Monthly Savings Scheme Mudaraba Hajj Deposit Scheme Small Business Investment Scheme Car Purchase Investment Scheme Bai-Muajjal (F.O.) Investment Scheme
12
2.9.2 Membership of Different Organization / Chamber

1. Bangladesh Institute of Bank Management (BIBM) 2. The Institute of Bankers Bangladesh (IBB) 3. Bangladesh Association of Banks (BAB) 4. Bangladesh Foreign Exchange Dealers' Association (BAFEDA) 5. Central Shariah Board for Islamic Banks of Bangladesh 6. Islamic Banks Consultative Forum (IBCF) 7. International Chamber of Commerce- Bangladesh 8. Society for Worldwide Inter-bank Financial Telecommunication (SWIFT)
2.10.3 Financial highlights of the Bank

(Taka in Million)
Feature of Shahjalal Islami Bank Limited as on 2005, 2006, 2007, 2008 &2009
SL 1 2 3 4 5 6 7 8 9 Particulars Authorized Capital Paid up Capital Reserve Fund Deposit Total Investment Total Assets Total Income Total Expenditure Foreign Exchange Business a) Export b) Import c) Remittance 2005 2000 936 65 12205 10590 14448 1621 1119 20,099 6295 13114 690 2006 2,000 936 339 18091 15516 21343 2563 1718 33501 11282 18684 3535 2007 2,000 1,872 217 22618 20617 28347 3589 2274 44869 15084 25490 4295 2008 4,000 2246 272 34280 32919 44110 5285 3475 78396 26347 42551 9498 2009 4000 2740 320 47459 43958 58921 7117 5076 79450 29434 39543 10473
2.10.4 Corporate Banking

We provide personalized solutions to all our customers. The Bank distinguishes and identifies corporate customers' need and designs appropriate solutions accordingly.
13
Shahjalal Islami Bank Limited offers a complete range of financing and operational services to its corporate client groups combining trade, treasury, investment and transactional banking activities. We offer accurate solution whether it is project finance, term Investment, import or export deal, working capital requirement. We are pledged bound to render efficient services to satisfy customer needs. Our experience in handling Corporate Banking business covers a wide span of businesses and industries. We hold leverage on our expertise in the following sectors particularly: Textile Spinning, Dyeing / Printing Ready Made Garments Agro processing industry Edible Oil, Consumer and Diversified Industries Industry (Import Substitute / Export oriented) Food & Allied products Paper & Paper Products Engineering, Steel Mills Chemical and chemical products etc. Telecommunications. Information Technology Real Estate & Housing Wholesale trade Project Finance Lease Finance, Hire Purchase, International Banking Transport Pharmaceuticals Export Finance Import Finance
14
2.10.5 Remittance arrangements

Shahjalal Islami Bank Limited (SJIBL) established Taka Drawings Remittance arrangements with Kushiara Financial Services Limited UK one of the largest Remittance Company in London. Since the date of commencement of business with them during the last 10 (ten) months we have handled 17,160 Numbers of remittance successfully. Every working day we are handling around 100 remittances of Kushiara UK. In the meantime we are going to execute deal with Western Union and Placid NK for handling their foreign Remittances. We always try to offer the Best Market Price to the Remittance Company.
Mode of Settlement of Remittance proceeds

1. Cash Payment 2. Account Crediting 3. Issuing Instruments Month / year wise remittance so far received are appended hereunder: Remittance received for the year of 2009 & 2010 Month/Year Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Total USD 1,469,880.00 1,034,900.00 719,940.00 2,724,860.00 2,978,940.00 3,877,940.00 4,409,980.00 1,398,980.00 2,574,980.00 $ 21,190,400.00 GBP 100,000.00 228,000.00 100,000.00 685,000.00 600,000.00 1,713,000.00
Shahjalal Islami Bank Limited ensures disbursement & payments to beneficiaries against remittance under following norms:
Execution of payment to beneficiaries of SJIBL's branches of Dhaka city within same business day. 15
Execution of payment to beneficiaries of Other Dhaka City Bank branches (other than SJIBL branches) within next business day. Execution of payment to beneficiaries of SJIBLs branches outside Dhaka City within next business day. Execution of payment to beneficiaries of branches of other Banks outside Dhaka City within 3 (three) business days. SJIBL notify / contact the beneficiary of the remittance, using the best mode of communications available.
2.10.6 SMS Service

Welcome to the convenience of accessing your banking needs from anywhere anytime. Shahjalal Islami Bank again fulfilled the demand of time in the era of modern banking technology by introducing the Mobile banking i.e. SMS / Push Pull Service. We offer a range of ways for you to access and manage your money. So that you are always in control of your financial transactions, it is fast, secure and economical. Get real-time banking information on your handset. Mobile Banking is a secured & flexible solution that delivers the banking services to its customers through a range of mobile devices using SMS / Push Pull technology. It provides banking services to the registered clients access to account information and realtime transaction capabilities from the mobile phones at a true Anywhere, Anytime, Anyhow convenience. It works using Shot Message Services (SMS) Technology. It works through a set of text message. With SMS, client can perform a wide range of query-based transactions from his/her mobile phone. It also provides pre-defined Alert Message Service. The Service is designed to serve the bank customers by informing the real-time data about their account such as current balance, recent transaction statement, cheque status etc. as SMS reply within about half a minute in response to their SMS query in a defined simple syntax. It can also serve the customers to stop a cheque, receiving statement request and other request / order at the branch for processing through SMS.
16
In todays business environment, with so many deadlines to fulfill appointments to meet and meetings to attend, you are hard pressed for time. Dont you wish you could do all your important activities while traveling from one place to another? As a leading private sector bank in Bangladesh the Shahjalal Islami Bank Limited presents the Mobile banking i.e. SMS / Push Pull service. Services 1. Balance Inquiry 2. Cheque Book Request 3. 4. 6. Cheque Leaf Status FC Rate Information Statement Request by Courier/Post
5. Cheque Stop Payment Instruction 7. Statement request by E-mail 8. Last Three Transaction Statement 9. Help inquiry 10. PIN Change Mobile Number(s) The following Identification Module (SIM) will be used for SMS / Push Pull Service: Banglalink: [Operator] 01919 7 2 57 6 7 SBL SMS
Clients may use any one of the numbers for SMS / Push Pull Service.
2.10.7 SJIBL VISA Card

Card is considered as a new dimension of product resulting from technological development in the banking arena. In line with our affiliation with VISA International for
17
VISA ATMs and POS, the following two products are launched broadening service products of the Bank to the clients: 1. 2. VISA Electron (SJIBL VISA Debit Card - local) VISA Prepaid (SJIBL VISA Prepaid Card)
SJIBL VISA Debit Card: To a customer, My card, my money concept is used for Debit Card. Any accountholder of SJIBL can apply for a SJIBL VISA Debit Card against his/her Al-Wadiah Current Deposit (AWCD), Mudaraba Savings Deposit (MSD) or Mudaraba Short Notice Deposit (MSND) Account. He/she is fully authorized to enjoy the benefits of cash withdrawal from ATMs, liberty of shopping, dining, paying utility bills and having access account information through SMS, etc. round the clock. SJIBL VISA Prepaid Card (Local): SJIBL VISA Prepaid Local Cards are open to the customers even having no account with Shahjalal Islami Bank Limited. Cardholders can have the card against prepayment and have access from anywhere in Bangladesh. SJIBL VISA Prepaid Local Cards are accepted locally at all VISA labeled merchant outlets, ATMs, etc. SJIBL VISA Prepaid Card (International): SJIBL VISA Prepaid International Cards are also open to the customers even having no account with Shahjalal Islami Bank Limited. Cardholders can have the card endorsing US Dollar paying against Travel Quota, Exporters Retention Quota or marking Lien of his/her FC Account. SJIBL VISA Prepaid International Cards are accepted world wide at all the VISA labeled merchant outlets, ATMs, etc. SJIBL VISA Prepaid Card (Dual): The Dual Card is a hassle free product, no need to carry two separate plastic cards for local and international card. Now, with one plastic card the Cardholders can enjoy all the benefits and make transactions locally & globally from their Prepaid card account at all the VISA labeled merchant outlets, ATMs, etc.
18
SJIBL VISA Souvenir Card (Gift Card Local): SJIBL Souvenir Card is a very attractive and stylish product. Like a Gift Card, SJIBL Souvenir Card can be used by anyone wishes to. The intending customer may have the card instantly or may customize the card as required. The SJIBL Souvenir Cards are accepted locally at all the VISA labeled merchant outlets, ATMs, etc. Usage Limit Description Cash withdrawal limit (total) Cash withdrawal limit (amount) Balance checking Mini statement printing PIN change Invalid PIN retry count Card usage limit in ATMs (total) Fees & Charges: Transaction Limit 4 times per day Tk. 20,000 per day 4 times per day 2 time per day 2 times per day 3 times per day 10 times per day
A. VISA Debit Card

Particulars Renewal Replacement PIN Re Primary Supplementary 500 250 400 400 issue 200 200 Transaction Charges (ATM) ON-US (VISA) Free Free Q-Cash 10 10 Others 125 125
B. VISA Prepaid Card

Particulars Issue Reload Replacement PIN Re-issue Transaction Charges (ATM) ON-US Local / Souvenir (Gift) Q-Cash Others (VISA)
19
Non-Customized Customized International / Dual Non-Customized Customized Conversion charge
250 300 1500
200 200 500
250 300 1500
200 200 500
Free Free Free
10 10 10 10
125 125 125 125
2000 500 2000 500 Free For International use, 2 % of withdrawal amount
Note: VAT charges will be added with all fees (other than Transaction charges) For your SJIBL VISA Card, please contact: IT & Card Division Head Office: 4th floor, Jiban Bima Bhaban (Front Block) 58 Dilkusha C/A, Dhaka-1000 Telephone: 9570812, 7160591 (PBX) Ext: 244, Fax: 9570809, 9553562 E-mail: sblcard@shahjalalbank.com.bd, Website: www.shahjalalbank.com.bd
2.10.8 SWIFT Service

Shahjalal Islami Bank Limited is a member of the society for Worldwide Inter Bank Financial Telecommunication (in abbreviation S.W.I.F.T). SWIFT is the industry-owned co-operative supplying secure, standardized messaging services and interface software to nearly 8,100 financial institutions in 207 countries and territories. SWIFT members include banks, broker-dealers and investment managers. The broader SWIFT community also encompasses corporate as well as market infrastructures in payments, securities, treasury and trade.
2.11 Credit Rating Report

Long Term AA Short Term ST- 2 10 April, 2010
Entity Rating Date of Rating
20
Credit Rating Information and Services Limited (CRISL) has assigned A (pronounced single A) rating in the Long Term and ST 2 rating in the Short Term to the Shahjalal Islami Bank Limited. The above rating has been done in consideration of its significant improvement in asset quality, capital adequacy, and financial performance, operating efficiency as depicted through its financials upto 10 April, 2010 along with other operating performances. Financial Institutions rated A in the long term are adjudged to offer adequate safety for timely repayment of financial obligations. This level of rating indicates a corporate entity with an adequate credit profile. Risk factors are more variable and greater in periods of economic stress than those rated in the higher categories. Bank rated ST-2 in the short term is characterized by high certainty of timely payment, Liquidity factors are strong and supported by good fundamental protection factors. Risk factors are very small.
2.12Net worth of SJIBL

The net worth of Shahjalaj Islami Bank Limited as on 30th June stood at Tk. 960.64 million against 9,358,250 of Tk. 100 each representing a book value of Tk. 102.65 per share.
2.13 SWOT Analysis of SJIBL
21
Strength
Good asset quality Satisfactory business growth Diversified product lines Good profitability Experienced top management Good operating efficiency
Weakness
Negative retained earnings Dependent on fixed deposits Moderate risk management system Limited delegation of power MIS at primary stage Weak in Shariah compliance Limited branch network Limited market share
Opportunities
SME and Agro based business Real time online banking Credit card in duel currency Basel- II compliance to tap advantages from RM system
Threats
Increased competition in the market Market pressure for increasing the SLR Market pressure for dollar crisis
Chapter 3
22
3.1 Introduction
Conceptual Framework
23
Islami Bank is a financial institution whose status, rules and procedures expressly state its commitment to the principle of Islamic Shariah and to the banning of the receipt and payment of interest on any of its operation. For millions of Muslims, banks were
institution to be avoided. Islam is a religion, which keeps Believers from the tellers window. Their Islamic beliefs prevent them from dealings that involve usury or interest (Riba). Yet Muslim needs banking services as much as anyone and for many purposes: to finance new business ventures, to buy a house, to facilitate capital Investment to undertake trading activities and to offer safe place for saving. Muslims are not averse to legitimate profit as Islam encourages people to use money in Islamic ally legitimate ventures not just to keep their funds idle.
However in this fast moving world more than 1400 years after the Prophet (S.A.W) can Muslims find room for the principles of their religion? The answer comes with the fact that a global network of Islamic banks investment house and other financial institution have started to take shape based on the principals of Islamic finance laid down in the Quran and the Prophets traditions some 14 centuries ago. Islamic banking based on the Quranic prohibition of changing interest has moved from a theoretical concept to embrace more than 100 banks operating in 40 countries with multibillion-dollar deposits worldwide. Islamic banking is widely regarded as the fastest growing sector in the Middle Eastern financial services market. Exploding onto the financial scene barely thirty years ago an estimated $US100 billion worth of funds are now managed according to Shariah. The best-known feature of Islamic Banking is the prohibition on interest. The Holy Quran forbids the charging of Riba on money lent. It is important to understand certain principles of Islam that underpin Islamic finance. Muslim scholars accepted the word Riba to mean any fixed or guaranteed interest payment on cash advances or on deposits. The rules regarding Islamic finance are quite simple and can be summed up as follows:
a) The predetermined payment over and above the actual amount of principal is prohibited. b) The lender must share in the profits or losses arising out of the enterprise for which the money was lent. 24
c) Making money from is not Islamically acceptable d) Ggharar (Uncertainty, Risk or Speculation) is also prohibited. e) Investment should only support practices or products that are not forbidden.
3.2 Objectives of Islamic Banking

The objective of Islamic Banking is not only to earn profit but also to do good and welfare to the people. Islam upholds the concept that money, income and property belong to ALLAH and this wealth is to be used for the good of the society. The main objectives of Islamic Banking are as follows: 1. To conduct interest free banking. 2. To establish participatory Banking instead of Banking on debtor-creditor relationship. 3. To invest through different modes permitted under Islamic Shariah. 4. To accept deposits on profit-loss sharing basis. 5. To establish welfare oriented Banking System. 6. To extend operation to the poor, helpless and low income group for their economic enlistment. 7. To contribute in achieving the ultimate goal of Islamic economic system.
3.3 Evolution of Islamic Banking

Islamic Banking comes into reality through a long theoretical exercise of several renowned Islamic scholars and economists. The first attempt to establish an Islamic financial institution took place in Pakistan in 1950. In the modern world, the pioneering role in establishing the first Islamic Bank in 1963 named Mit- Ghamar Saving Bank in Egypt at rural area of Nile Delta. As on today, there are many Islamic financial institutions operating through out the world covering both Muslim and non-Muslim countries of various socio-economic environment.
3.4 Legitimate Business Contracts for Islamic Banks

25
The modes of mobilization in Islamic banks have derived from the overall permissible contracts in Islam. In what follows we fast describe the concept of Aqd or contract form business perspective and then discuss the legitimate forms contracts that can be used in Islamic banks for both deposit collection and their profitable employment. A business contract can be defined as the exchange of a thing of value by another thing of value with mutual consent. There are four element of an Aqd or contract: 1. Contrat(Aqd). 2. Subject Matter (Mabee). 3. Price (Thaman). 4. Prossession of delivery (Qabdh).
3.5 Common practices of Islamic banks in mobilization of funds

The common practices of Islamic banks in the sources of funds may be described as follows:
3.5.1. Current Accounts

All Islamic banks operate current account on behalf of their client individuals and business firms. These accounts are operated for the safe custody of deposits and for the convenience of customers. There is little different between conventional banks as far the operation of current accounts is concerned. There are two dominant views about current account. One is to treat demand deposit as amah (trust). A trust deposit is defined by the Jordan Islamic Banks as cash deposits received by the bank where the bank is authorized to use the deposits at its own risk and responsibility in respect to profit or loss and which are not subject to any conditions for withdrawals or depositing.
3.5.2. Saving Account

All Islamic banks operate saving accounts. It must be pointed out that any return on capital is Islamically justified only if the capital is employed in such a way that it is
26
expected to a business risk. Savings accounts at Islamic Banks Generally operate as follows: 1. Savings accounts are opened with the condition that deposits provide the bank with an authorization to invest. 2. Depositors have the right to deposit and withdraw funds. 3. The profits in savings accounts are calculated on the minimum balance maintained during the month. Depositors participate in the profits of savings accounts with effect from the beginning of the month following the month in which the deposits are made. Profits are not calculated with effect from the beginning of the month in which a withdrawal is made from the account. 4. A minimum balance has to be maintained in order to qualify for a share in profit.
3.5.3. Investment Deposit

Investment deposits are Islamic banks counterparts of term deposits or time deposits in the conventional system. They are also called profit and Loss-Sharing (PLS) Accounts or Participatory Account. However they can be distinguished from traditional fixed term deposits in the following manner: 1. Fixed term deposits in the conventional system operate on the basis of interest while investment accounts in Islamic banks operate on the basis of profit sharing Instead of promising depositors a predetermined fixed rate of return on their investment the bank tells them only the ratio in which it will share the profits with them. 2. While fixed term deposit are usually distinguished from each other on the basis of their maturities investment deposits can be distinguished on the basis of maturity as well as on the basis of purposes as it is possible to give special instructions to the bank to invest a particular deposit in a specified project or trade. The main distinguishing characteristics of investment deposits can be described as follows:
27
1. Deposit holders do not receive any interest. Instead they participate in the share of the profits or losses. 2. Usually these accounts are opened for a specific period e.g. three months, six month, one year or more. 3. The return on investment is determined according to actual profit s from investment operations of the bank and shared in an agreed proportion by depositors according to the amount of their deposits and the period for which the bank holds them. 4. Generally speaking depositors do not have the right to withdraw from these accounts as is customary in time deposits in conventional banks.
3.6 Islamic Financial Vehicles

Islamic banks around the world have devised many creative financial products based on the risk sharing and profit sharing principles of Islamic banking. For day to day banking activities a number of financial instruments have been developed that satisfy the Islamic doctrine and provide acceptable financial returns for investors.
3.6.1. Al-Mudaraba (Profit sharing)

This implies a contract between two parties whereby one party the rabb al mal (beneficiary; owner or the sleeping partner), entrusts money to the other party called the mudarib (managing trustee or the labor partner). Important features of Mudaraba are as follows:
1. The division of profits between the two parties must necessarily be on a proportional basis and cannot be a lump sum or guaranteed return. 2. The investor is not liable for losses beyond the capital he has contributed. 3. The mudarib does not share in the losses except for the loss of his time and efforts.
3.6.2. Murabaha
28
This is the sale of a commodity at a price, which includes a stated profit, which includes a stated profit known to both the vendor and the purchaser. This can be called a cost plus profit contract. The buyer in deferred payments usually pays the price back. Under Murabaha the Islamic bank purchases in its own name, goods that an importer or a buyer wants and then sells them to him at an agreed mark-up. This technique is usually used for financing trade, but because the bank takes title to the goods, and is therefore engaged in buying and selling its profit derives from a real service that entails a certain risk and is thus seen as legitimate.
3.6.3. Musharaka (Profit and loss sharing)

This is a partnership normally of limited duration formed to carry out a specific project. It is therefore similar to a western- style joint venture, and is regarded by some as the purest from of Islamic financial instrument, since it conforms to the underlying partnership principles of sharing in and benefiting from risk. In this case the bank enters into a partnership with a client in whom both share the equity capital and perhaps even the management of a project or deal and both share in the profits or losses according to their equity shareholding.
3.6.4. Ijarah (Lease financing)

Another popular instrument is leasing which is designed for financing an asset or equipment. It is a manfaah (benefit) or the right to use the asset or equipment. The lessor leases out an asset or equipment to the client at an agreed rental fee for a pre-determined period pursuant to the contract.
3.6.5. Ijara Wa Iktina (Hire Purchase)

Equivalent to the leasing and installment loan, hire- purchase, practices that put millions of drivers on the road each year. These techniques as applied by Islamic banks include the requirement that the leased items be used productively and permitted by Islamic law.
3.6.6. Muqarada
29
This technique allows a bank to flat what are effectively Islamic bonds to finance a specific project. Investors who buy muqaradah bonds take a share of the profits of the project being financed, but also share the risk of unexpectedly low profits or even losses.
3.6.7. Bai-Salam
A buyer pays in advance for a specified quality of a commodity, deliverable on a specific date at an agreed price. This financing technique, similar to a futures or forwardpurchase contract is particularly applicable to seasonal purchase but it can also be used to buy other goods in cases where the seller needs working capital before he can deliver.
3.6.8. Istisna (Purchase order)

This is a sale and purchase agreement whereby the seller undertakes to manufacture or construct according to the specification given in the agreement. It is similar to bai salam the main distinction being the nature of the asset and method of payment. Istisna generally covers those things which are customarily made to order and advance payment of money is not necessary as required in bai salam. The method of payment in istisna is flexible.
3.6.9. Bai-Muajjal
The terms Bai and Muajjal have been derived from Arabic words Bai and Ajl. The word Bai means purchase and sale. The word Ajl means fixed time or a fixed period. Bai-Muajjal means sale for which payment is made at a future fixed date or within a fixed period. In short, it is a sale on credit. Bai-Muajjal may be defined as a contract between a buyer and seller under which the seller sells specific goods to the buyerat an agreed fixed price payable at a certain fixed future date in lump sum or within a fixed period by fixed installments.
3.6.10. Hire Purchase under Shirkatul Melk

Shirkat means partnership. Shirkatul Melk means share in ownership when two or more persons supply equity to purchase an asset own the same jointly and share the benefit as
30
per agreement and bear the loss in proportion to their equity, the contract is called Shirkatul Melk contract.
3.6.11. Quard-Al-Hasan
It is a virtuous loan. Through this mode, Bank provides loan to its customer for a certain period, which bears no profit/loss/compensation.
3.6.12. Direct Investment

Islamic Bank without the help/assistance of any client may directly invest its fund/capital in share, securities, business and industry. Profit and loss in this business is exclusively, the internal matter of the Bank. The concepts of equity and morality are at the root of Islamic banking .In Islam moral and equitable values from an integral part of the rules of law governing contractual and financial relations to such an extent that the relationship, which exists between equity law and relation, is an organic rather than supplementary relationship. The importance of Islamic banking has increased dramatically over the past 10 years. The main differences between Western and Islamic style banking is the concentration on people and their businesses rather than on accounts it is a much more grass roots banking according to one expert.
Chapter 4
31
Investment Schemes
The word omes from the Latin word credo meaning I believe. It is a lenders trust in a persons/firms/companys ability or potential ability to command goods or services of another in return for promise to pay such goods or services at some specified time in the future. The making of loans and advances has always been prominent profitable function of the Bank. Sanctioning credit to customers and others out of the funds at its disposal is one of the principal services of a modern bank. The investment facilities extended by Shahjalal Islami Bank Limited, Dhaka Main Branch can be classified by following ways: 1. Bai-Muajjal (F.O.) Investment Scheme. 2. Small Business Investment Scheme. 3. Housing Investment Scheme. 32
4. Car Purchase Investment Scheme. 5. Household Durable Investment Scheme. 6. Bank Guarantee (Non funded).
4.1 Bai-Muajjal (F.O.) Investment Scheme

Depositors may even be in need of money to purchase required products/goods for their personal/family use or to meet urgent family requirements. In such a situation, they require investment facility against their deposit with the Band. Shahjalal Islami Band Limited (SJIBL) is also providing such investment facility to its depository customers as part of financial obligation (FO). To address this investment facility it is necessary to have a policy guideline for investment against deposits considering the same as cash equivalent security.
4.1.1. SJIBL depository schemes:

SJIBL has introduced the following depository schemes for its customers: 1. Monthly Deposit Scheme (MDS). 2. Millionaire Scheme (MS). 3. Multiple Benefit Deposit Scheme (MBDS). 4. Monthly Profit Scheme (MPS/ Monthly Income Scheme (MIS). 5. Mudaraba Term Deposit Scheme (MTDR). 6. Double Benefit Scheme (DBS)
4.1.2. Mode of Investment:

The investment facility under the scheme will only be provided as per Bai-Muajjal mode.
4.1.3. Features of the scheme:

The features of the scheme will be as mentioned below: 1. Revolving/Term. 2. Repayable at a time or by installments 3. In case of term facility maximum repayment period will be one year with renewal option. 33
4. In case of term facility maximum repayment period will be three years. 5. Profit will be charged at such a rate so that the spread of profit (spread between the rate of profit on deposit and rate of profit on investment) will be minimum 3.00%. 6. The deposit A/C or the deposit instrument will be kept under lien/ pledge with our Bank as security.
4.1.4. General Terms & Conditions for the Investment Facility:

1. The investment facility will be provided only against SJIBL deposit schemes mentioned above. 2. Depository account holder(s)/ family will only be eligible to avail such facility. 3. In case of Monthly Deposit Scheme (MDS) and Millionaire Scheme (MS), after two years of account opening such facility will be provided. 4. In case of Millionaire Scheme (MS) the investment facility will not be allowed when the account is opened in the name of child/ dependent. 5. In case of Monthly Profit Scheme (MPS)/ Monthly Income Scheme (MIS) monthly profit will be adjusted to the respective investment account. 6. Maximum investment facility will be allowed up to 90% of the principal amount only in every case. 7. In case of renewal / enhancement of the facility. It is to be ensured that the instrument is valid up to the proposed expiry of the facility. 8. In case of renewal, outstanding of the facility should have to be within the approved limit.
4.1.5. Discretionary power of the Branch:

The Branch Managers are authorized to approve investment facility under the BiaMuajjal (FO) Investment Scheme to the tune mentioned below: Designation of the Branch Manager SEVP Ceiling for approving facility per single client (But not exceeding 90% of the principal Deposit) Tk. 200.00 lac (Taka two Corer) only.
34
EVP SVP VP SAVP AVP FAVP JAVP
Tk. 175.00 lac (Taka One corer and seventy five lac) only. Tk. 150.00 lac (Taka One corer and fifty lac) only. Tk. 125.00 lac (Taka One corer and twenty five) only. Tk. 75.00 lac (Taka Seventy five lac) only. Tk. 75.00 lac (Taka Seventy five lac) only. Tk. 50.00 lac (Taka Fifty lac) only. Tk. 25.00 lac (Taka Twenty five lac) only.
1. All Branch Managers are hereby advised to send monthly statement of the investment facility as per the attached annexere-B and to ensure compliance of the guidelines enunciated therein. 2. Any investment facility beyond the respective limit of the Branch and set guidelines, the proposals must be forwarded to Head Office for approval as per the following instructions.
4.1.6. Procedure for forwarding Investment Proposal to HO:

1. The investment proposal for new investment / renewal / enhancement to be forwarded. 2. The investment proposal to be forwarded with the following supporting papers / documents: Client(s) application for the investment / renewal / enhancement. The signature of the client(s) in the application to be verified clearly by the branch official. In case of renewal / enhancement, the statement of the existing facility duly signed by the branch official to be provided. In case of facility against Monthly Deposit Scheme (MDS) and Millionaire Scheme (MS), the statement of the deposit account duly signed by the branch official to be provided. In case of facility against MBDS/MIS/MPS/MTDR, clear photocopy (both side) of the block(s) to be provided. In case of account being operated jointly:
35
In case of joint account being operated by either or survivor: If facility asked jointly, application and discharging of the instrument have to be done jointly. If facility asked singly and the accountholders are alive, authority (for allowing facility to the applicant and allowing the bank to adjust the facility through encashment of the instrument incase of default without notification) is required from other accountholder(s) and discharging of the instrument to be done jointly. If facility asked singly and only one accountholder is alive, application and discharging of the instrument to be dont by the alive accountholder. Incase of joint account can be operated by any one. Facility asked singly or jointly, ant one could do application and discharging of the instrument.
4.1.7. Security against the investment facility:

Incase of Monthly Deposit Scheme (MDS) and Millionaire Scheme (MS), the deposit account will be marked lien till full and final adjustment of the liability. Incase of facility against MBDS/MIS/MPS/MTDR, the deposit account will be pledged till full and final adjustment of the liability. Bai-Muajjal Agreement and other charged documents to be executed as per the nature of the investment are as follows:
4.2 Small Business Investment Scheme

.Keeping this dire issue in view, Shahjalal Islami Bank Limited has introduced an investment scheme titled as Small Business Investment Scheme for the small businessmen and self-employed persons. The scheme will facilitate committed small industries & business enterprises and self employed persons who want to promote &
36
propagate their business further with magnitude & direction. They may avail finance from the Bank to promote their business under easy terms and conditions set froth in the scheme for the purpose. The salient features and necessary guidelines of the Scheme are as follows:

1. Hire Purchase under Shirkatul Meelk (HPSM) 2. Lease 3. Bai-Muajjal-Commercial-TR 4. Bai-Muajjal (Term)
4.2.2. Target groups:

1. Small Businessmen like Wholesaler, Retailer, Small Manufacturer/Producer and Trader etc. 2. Self-Employed Person like Doctors/Engineers/Professionals etc. 3. Small & Cottage Industries. 4. Other existing & new small business, micro & small industries and commerce.
4.2.3. Location to cater the facility:

The investment will be provided through all the Branches of the Bank.
4.2.4. Command Area:

The investment under the Scheme shall be made to the prospective investment clients located within Municipal Areas or within a radius of 10(ten) Kilometers form the branch. However, in justifiable circumstances, Management may extend the command area up to a radius of 20 Kilometers. If any branch intends to make investment to make investment to the client beyond the command area by ensuring proper supervision, follow-up & recovery, they may approach the Head Office for prior approval, giving full justification.
4.2.5 Ceiling of Investment:
37
1. The amount of investment shall be TK 50,000/- to 10,00,000/- (Taka fifty thousand to Taka ten lac). However, investment to the tune of maximum TK 5,00,000/- (Taka five lac) only shall be given preference against single client exposure under the scheme. Investment may be extended beyond the ceiling at the discretion of the Management. 2. At the first step, investment to the tune of maximum TK 5, 00,000/-(Taka five lac) only is allowed. 3. Maximum ceiling of the investment will be TK 3, 00,000/- (Taka three lac) only for any region other than Dhaka & Chittagong Metropolitan Area. However, investment may be extended beyond the ceiling at the discretion of the Management. 4. Bank investment-Client equity ratio where applicable shall be 60:40. It is to be noted that more than one investment should not be allowed to the same person i.e. no investment should be allowed in the name of sister concerns or allied concerns.
4.2.6. Tenure of Investment:

1. In case of HPSM, Lease: Maximum tenure will be 3 years i.e. 36 months, but and Bai-Muajjal (Term) Initially investment maximum tenure will be 2 years allowed as grace period to the deserving client) 2. In case of Bai-Mujjal : Maximum tenure will be 1 year i.e. 12 months and .
commercial-TR renewable on satisfactory performance
4.2.7. Rate of Profit/Rent and Fees:

Rate of profit/Rent is 15.00% p.a. Fees are as follows: Application Fee of TK 100/- (non refundable); Processing Fee of TK 500/- (non refundable);
38
4.2.8. Supervision Charge:

Supervision charge will be @ 2.00% per annum. The same will be debited at a time on Banks principal investment at the time of disbursement. The Branch will maintain the Supervision Charge in Sundry Deposit Account under the Head and title Supervision Charge under Small Business Investment Scheme. Salary of the Relationship Officer(s) will be paid from the Supervision Charge so far realized from the investment clients under the Scheme. But at the beginning of the Scheme, where supervision charge is not available or is not sufficient to pay the Relationship Officers salary, Branch may pay the same to the debit of Suspense A/CSalary & Allowances (SBIS) of the Branch which shall be adjusted in due course from the Head of Supervision Charge under Small Business Investment Scheme.
4.2.9. Risk Fund:

Risk fund will be @ 1.00% per annum. The same will be debited at a time on Banks principal investment at the time of disbursement. The Branch will maintain the Risk Fund in Sundry Deposit Account under the Head and title Risk Fund under Small business Investment Scheme. After collection of the same total balance of Risk Fund should be transferred to the Head Office, FAD through IBCA under the Head- Risk Fund A/C-Small Business Investment Scheme on monthly basis. The fund is intended to cover the loss of the Bank due to genuine inability of the client or his/her successors for reason(s) beyond his/her control to adjust the investment. Any disbursement/payment/adjustment from the Risk Fund shall be made only after obtaining prior approval from Head Office.
4.2.10. Calculation of Profit, Supervision Charge & Risk Fund A/C:
39
SL No. 1.
Particulars Profit/Rent
Rate p.a. 15%
Procedure of Calculation i) ii) To be charged at time (mark-up basis) for Bai-Muajjal-TR investment To be charged monthly in respect of HPSM, Lease and Bai-Muajjal (Term) investment on the basis of reducing balance method.
2. 3. Total
Supervision Charge Risk Fund
2% 1% 18%
To be charged annually on the outstanding principal. To be charged annually on the outstanding principal.
4.2.11. Security:
General Security for each case: 1. Hypothecation of Stock/Equipments. 2. The stock/equipments should be duly and properly insured to cover the risks of probable hazards. 3. 01 (one) post dated master cheque in favor of SJIBL covering the investment. 4. Post dated cheque against each installment/deal. 5. Trust Receipt(s) duly executed by the Client along with delivery order(s) for each deal (in case BMTR). 6. Personal guarantee of the client, spouse and adult son(s) & daughter(s), if any of the client Specific Security for the investment not exceeding TK 2, 00,000/-
40
Personal guarantee from two persons having good financial means & standing and acceptable to the Bank; Personal guarantee of the landlord or written consent of the landlord; Written consent of the Market Committee/Owners Committee, if there is any such committee (for small businessman only); An agreement, if possible, among the Bank. The Client, the Landlord and the Market Committee/Owners Committee (if there is any such committee) with such conditions inter alia that until the liability with the Bank is adjusted, the Possession Agreement/Agreement with the Client shall not be terminated. In case of such termination, Bank will have a first charge on the assets of the Client (for small businessman only); Deposit of rental deed having minimum rental advance of TK 1, 00,000/- or deposit of original possession deed duly executed Memorandum of Deposit of Title Deeds. Specific Security for the investment exceeding TK 2, 00,000/Registered mortgage of immovable property owned by the client(s) or by a third party acceptable to the bank having: Forced sale value of double the amount of investment under the Bai-MuajjalCommercial-TR facility In case of HPSM, Lease and Bai-Muajjal (term) investment, forced sale value of collateral security should not be less than 1.50 times of the Banks investment. Any other security to be deemed necessary for supporting the propose facility to be approved on priority basis.
4.3 Housing Investment Scheme

Shahjalal Islami Bank Limited has designed the scheme titled, Housing Investment Scheme for different income groups to provide them with a peaceful abode. The salient features of the scheme are as follows:
41
Hire Purchases Shirkatul melk (HPSM).
4.3.2. Target groups:

1) In-Service Defense Officers; 2) University & College confirmed teachers; 3) Qualified Engineers, Doctors & established professionals; 4) Permanent Officials/Executive of Government, Semi Government, Autonomous Bodies & Reputed private Organizations; 5) Officials of Reputed Multinational Companies, International Financial Organization, Donor Agencies; 6) Officials of local established & reputed public Limited Companies; 7) Wage earner; 8) Banks existing reputed & credit worthy clients; 9) Businessmen with assured cash flow.
4.3.3. Location of the facility

Initially the scheme shall be implemented in Dhaka, Chittagong, Sylhet, Khulna, Rajshahi & Narayangonj cities of the country.
4.3.4. Ceiling of Investment

Maximum investment limit will be Tk. 75.00 Lac depending on the clients repayment capability and actual cost of the construction/apartment under following norms: Purchase of readymade New Apartment/House/Flat: 70% of Total Cost. Purchase of readymade Old Apartment/House/Flat: Construction of new house: 50% of Total Cost. 60% of Total Cost.
42
However investment to the extent of 30% of the cost of the apartment or cost of construction (excluding the value of land) or cost price of readymade house (land & building) shall be given preference.
4.3.5. Tenure of Investment

Repayment period will be from 1 year to maximum 20 years on case to case basis, under prudential judgment of approving authority. Investment proposals with repayment period of 5 years shall get first preference and that up to 10 years shall get 2nd preference. For New Apartment/House ready Old Apartment/House- not over 15 years Construction Renovation/Extension Taking over House Building Investment Moratorium Period 3 months Nil 3 months Nil Nil Investment Period Up to 20 years Up to 10-12 years Up to 20 years Up to 5 years Remaining investment period with existing financer or 15 years which ever is lower.
4.3.6. Rate of Profit:

The rate of return (mid rate) will be 16.5% p.a. repayable & recoverable on a monthly basis and the rate to be determined by the bank judging the money market situation from time to time. Rebate @ 1% for regular & timely payment will be allowed at the discretion of the Bank.
4.3.7. Fees:
Application Fee of Tk. 500/- (non refundable) Processing Fee of Tk. 5,000/- (non refundable) Documentation Fee (non refundable) @ 1% of the investment amount payable after sanction but before disbursement (one time) Risk fund @ 1% of the investment amount payable after sanction but before disbursement (one time)
43
4.3.8. Security:
Registered Mortgage of the related property along with Registered Irrevocable Power of Attorney authorizing the Bank to dispose of the property including land where construction will be the made flat or apartment to be purchased without intervention of the court.
4.3.9. Recovery of Banks Investment:

Repayment will be allowed only on monthly installment basis.
4.4 Car Purchase Investment Scheme

Car Purchase Investment Scheme was previously known as Car purchase on Installment Scheme. The revised policy, terms & conditions etc are as under:
4.4.1. Purpose of the Scheme:

1. Facility investment to purchase car to the professionals and businessmen. 2. Facilitate to develop life standard of limited income honest people. 3. Playing valuable role in the socio-economic development of the country through improvement of life style of the honest & socially accepted people.
4.4.2. List of Purchasable cars under the scheme:

The following brand new and reconditioned cars (without registered) will only be purchased under the scheme: 1. Private Car. 2. Microbus. 3. Jeep.
4.4.3. Eligibility of the investment client:

44
The permanent employees working in the following organizations aged between 20 to 55 years are eligible to avail investment facility under the scheme: 1. Government Organizations. 2. Semi-Government & Autonomous Organizations. 3. Banks and Financial Institutions. 4. Senior teachers of University & Government College. 5. Executives/Officers working in any Multi-national Companies or in ant renowned Non-governmental Organizations. 6. Except above the following persons will also be entitled for the facility under the scheme: a. The genuine businessmen having valid trade license, vat certificate and TIN. b. Acceptable persons to the Banks Management having strong Net Worth. c. Different professionals like Doctors and Engineers.
4.4.4. Ceiling of Investment:

The highest ceiling of the scheme will be as under: 1. In case of New Car the maximum selling will be Tk. 40.00 lac (Taka forty lac) 2. In case of Reconditioned Car the maximum selling will be tk.30.00 lac.
4.4.5. Criteria for Fixing Investment amount:

1. In case of service holder, the amount of the investment will be fixed in such a manner that the monthly installment against the investment shall not exceed 20% of net salary of the client. 2. In case of businessman and other clients, the amount of the investment will be fixed in such a manner that the monthly installment against the investment shall not exceed 10% of average net monthly income/profit of the client. 3. In special case the Bank may relax the above-mentioned conditions depending on certainty of the capability to repay the installment by the client.
45
4.4.6. Period of Investment:

1. In case of New Car the maximum investment period will be 05 (five) years. 2. In case of Reconditioned Car the maximum investment period will be 04 (four) years.

1. Hire Purchase/Hire Purchase under Shirkatul Meelk. 2. Lease/Ijara.
4.4.8. Clients Equity:

1. In case of New, Minimum margin will be 10 %. 2. In case of Reconditioned, Minimum margin will be 20%.
4.4.9. Disbursement Procedure:

In respect to availability of required documents & information for approved of the Investment facility and subsequent realization of the clients equity in full, the car by issuing Purchase Order/Pay Order/Draft favoring the Branch will purchase the car by issuing Purchase Order/Pay Order/Draft favoring the supplier and handover the same to the client within 03 (three) working days.
4.4.10. Repayment Procedure:

The repayment of monthly installment shall be deposited latest by 10 th day of every month. The repayment to be started from the next month of disbursement made on behalf of the client.
4.4.11. Pre-Payment of the Investment:

The client may adjust his/her outstanding investment partially or fully before the expiry.
46
4.4.12. Securities:
1. The owner ship of the car will be in the name of the Bank. After full and final adjustment of the facility, the car will be transferred in the name of the client. 2. 1st class comprehensive insurance of the car is to be done for full investment period. 3. In addition to completion of all charge documents, the client will provide an undertaking that (s) he will pay monthly installments regularly. 4. Each client will have to provide personal guarantee of two persons. The following persons will be able to provide personal guarantee: a. First Class Govt. Gazette Officer. b. Bank Officers not below Principal Office. c. Senior teachers of University/Government of College having high net worth. d. Professionals like Doctors, Engineer having high net worth and minimum five years experience. e. Businessmen having high net worth and acceptable to the Bank.
4.4.13. Profit, Charges & Risk Fund:

Description Rate of Profit Service Charge Risk Fund : : : @ 16.50% p.a. (Mid Rate). @ 1.00% (to be realized one time before disbursement). @ 1.00% (to be realized one time before disbursement). It may be mentioned here that the client will get rebate@ 1.00% equivalent to the Risk Fund deposited by the client before taking disbursement of the investment facility, if the client pays all installment regularly as per schedule. It is also to be noted that there will be no Margin, no Service Charge and no Risk Fund in case of the Employee of Shahjalal Islami Bank Limited and Profit Rate to be determined by the Bank from time to time.
47
4.4.14. Other Conditions:

1. The purchase car under the scheme cannot be used for rental purposes 2. The concerned Branch Manager and 2nd Officer/Operation Manager will be responsible for Investment and recovery of the same. 3. Branch Manager should verify the photographs of the client and guarantors.
4.4.15. Sanctioning Authority:

Managing Director shall approve all proposals under the scheme.
4.5 Household Durable Investment Scheme

Household Durable Investment Scheme (HDIS) was previously known as Household Durable Purchase Scheme
4.5.1. Purpose of the Scheme

1) Facilitate investment to purchase household durables to the different low & medium income honest businessman/professionals. 2) Socio-economic improvement of the country through improvement of life style of the low & medium income people.
4.5.2. Household Items

Household Items means the following items: Air-Conditioner/Air Cooler Crockerys Knitting Electrical/Electronic goods Computer Machine Furniture and Fixtures IPS/UPS/Stabilizer/FAX/CellPhone. Washing Machine Non-Commercial Generator.
(Home Useable)
48
Oven Photo Copier Deer Fridge CD/VCD/DVD Player Water Cooler Camera Two-in-One Water Purifier Water Pump Different Kitchen Kits
Refrigerator Three-in-One Room Heater Typewriter Ornaments for marriage
Any other different household items.
4.5.3. Eligibility of the client

In case of service holder minimum service length requirement is 3 years which may be relaxed for the client having banking service; In case of businessmen minimum business experience requirement is 5 years that may be relaxed on special consideration.
4.5.4. Age
The age of the client will be in between 20 to 55 years. Highest limit of the age may be relaxed on special consideration.
4.5.5. Ceiling of Investment

Maximum celling of the investment will be Tk. 5.00 lac per client. Size of the investment will be fixed as such the monthly installment against the investment would not exceed 25% of clients monthly salary/income. However, the condition may be relaxed by the Management of the Bank depending on the capability to repay the installment of the client.
4.5.6. Basic feature of the Scheme

Type of Investment: Bai-Muajjal TR/Hire Purchase under Shirkatul Meelk. Period of Investment: Maximum 03 (three) years. Clients Equity: Minimum 25%. Preference will be given in case of highest equity. 49
Profit & Charges:

Rate of Profit Service Charge Risk Fund : : : @ 16.00% p.a. or the rate to be determined by the Bank from time to time. @1.00% p.a. on approved limit to be realized upfront. @1.00% to be realized at the time of disbursement.
4.5.7. Repayment Procedure

Monthly Installment basis, the repayment to be started from the next month after disbursement and shall be deposited latest by 10th day of the respective month.
4.5.8. Disbursement Procedure

Payment to be settled by issuing Pay Order favoring the vendor on realization of the clients equity in full, well ahead of disbursement.
4.5.9. Pre-Payment of the Investment

The client may adjust his/her outstanding investment partially or fully before the expiry.
4.5.10. Guarantors for the facility

Personal guarantee from two persons having good financial means & standing and acceptable to the Bank are needed. The Branch shall verify the guanines of the guarantors. At the time of selection of guarantor, the following information to be followed: In case of Govt. Officer/Executive, of equal or higher rend. In case of an Officer of private firms the guarantee of his/her employee, acceptable to the Bank.
50
In case of businessmen, Gazette Govt. Official or an Officer or genuine established businessmen, acceptable to the Bank. Age limit of the guarantors must be between 20 to 55 years.
4.5.11. Securities
i. ii. iii. iv. v. vi. In case of HPSM, the ownership of the item(s) shall be in the name of the Bank. In case of Bai-Muajjal TR, Trust Receipt and Bai-Muajjal agreement is must. Necessary charge document duly singed by the client. One post dated master Cheque, Covering the facility amount (with profit) Post-dated cheques against each monthly installment. A declaration to be obtained from the client to the effect that he/she will adjust the monthly installment on time as per schedule of the facility.
4.5.12. Sanctioning Authority

Head Office shall approve all proposals under the scheme.
4.5.13. Supervision & Recovery

All the investment facilities under the scheme will be supervised investment in nature. Supervision of end-use, constant follow-up and timely recovery of investment under the Scheme should be given utmost importance. Branch must ensure proper supervision & follow-up of investment in all respects by its official(s) including the Branch Incumbent initially, so that recovery percentage under the Scheme remains at a desired level. Induction of clients, verification and investigation of the clients and guarantors, supervision, monitoring, follow-up and investment will be made by the different agency will be published later on. But, initially, branches will start the scheme by the existing manpower.
4.6 Bank guarantee

51
A bank guarantee has special significance in the business of banking as a means to ensure safety of funds lent to the customers. In case, the borrower is unable to provide the security of tangible assets, or the value of asset falls below the amount of the loans, and the borrowers personal security is not considered sufficient, an additional security is sought by the banker in the form of a guarantee given by a third party.
4.6.1. Nature of the Scheme

It is a non-funded investment. The bank does not pay money to the party. The bank only issues a letter of guarantee to the party.
4.6.2. Terms and Condition

1. The banks legal advisor must verify all security documents. 2. When the principal debtor defaults in fulfilling this obligation or promise the liability bestow on guarantor. 3. Bank reserves the right to cancel the terms and conditions partly or wholly at its direction without assigning any reason whatsoever.
4.6.3. Profit
The bank can earn profit by issuing the letter of guarantee by following two ways: 1. The bank get service charge for the letter of guarantee. 2. The bank can invest the security money to earn more profit.
52
Chapter 5
53
Documentation for Investment Clients & Securities
An Islamic Bank is a financial institution that operates with the objective to implement and materialize the economic and financial principles of Islam in the banking region. The main function of an Islamic Bank is to extend investment facilities to its valued clients through compliance of Islami Shariah and banning of the receipt & payment of any interest in any of its operations. The investment facilities are given against mainly two types of securities. These are: 1. Movable: MTDR/MIS/DBS, Goods, commodities, etc. 2. Immovable: Land, Building, etc.
5.1 Document & Security

Before rendering investment facilities to its clients, bank has to create charges over the securities through a number of agreements, papers that are called documents. Security is a cover against an investment facility, which may be encashed at the time of default by a client. It is also meant to be an insurance against an emergency. The customer should own it.
54
Primary Security: Goods/commodities for which a bank allows investment is called primary security. These may be the stocks, machinery, etc. Collateral Security: Any security other than primary security to be obtained to secure the investment is deemed as collateral security. These may be land, land with building, MTDR/MIS/DBS, Shares, etc. Personal Security: It is the guarantee of a respective third party.
5.2 Modes of charging security

1. 2. 3. 4. 5. 6. Pledge Hypothecation Mortgage Assignment Lien Set-off
5.2.1. Pledge:
Pledge is the Bailment of goods as security for payment of a debt or performance of a promise. Bailment is the delivery of goods by one person to another for some purpose, under a contract that the goods shall be returned or otherwise disposed of according to the direction of the persons delivering them, when the purpose is accomplished. The features of pledge are as follows: Goods bailed/pledged must be movable property. Ownership remains with pledgor (borrower) Possession retains with pledgee (Bank)
5.2.2. Hypothecation:
Hypothecation is a charge against property for an amount of debt where neither ownership nor possession is passed to the creditor. Features of Hypothecation are: Charge against a property for an amount of debit. Goods remain in the possession of the borrower. Equitable charge to the bank under document Letter of Credit. 55
Borrower binds himself to give possession of the hypothecated goods to the Bank when called upon to do so. It is a floating charge. It is rather precarious.
5.2.3. Mortgage:
A Mortgage is a transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced, an existing or feature debt and the performance of an engagement, which may give rise to a pecuniary liability. The transferor is called Mortgageor and the transferee is called Mortgagee. The principle money and the interest of which payment is secured for the time being are called Mortgage money and the instrument by which the transfer is effect called Mortgage deed.
5.2.4. Assignment:
An Assignment means a transfer by one person of a right, property or debt to another person. The person who assigns is Assignor and to whom is called Assignee. The features of pledge are as follows: It must be writing. It must be signed by the assignor. It must be absolute. Not by way of charge only. Notice is mandatory.
5.2.5. Lien:
Right of the creditor in possession of goods or securities belonging to a debtor to retain them until a debt due from the letter is paid. Before lien the following conditions must be fulfilled: Goods must be in the possession of the creditor in the ordinary course of the business. Lawful debt. 56
Must not be any contract to the contrary. Features of general lien are as follows: Right for a general balance. Does not have the right to sell the property. Simply the right to retain.
5.2.6. Set-off:
It means the total or partial merging of a claim of one person against another by counter claim by the later against the former. It is combining of accounts between a debtor and creditor so as to arrive at the net balance payable to one or the other. Ingredients of setoff are as follows: Mutual debt is for sums certain. Debts to be due immediately. Debts in same right. No agreement to the contrary. Letter of set-off or notice is required.
5.3 Steps of documentation

The bank should lodge the document with accuracy for effective charge and control over the security. The proper and correct documentation is essential from the point of view of the safety of bank interest. Three main things should be looked into while keeping a security against an investment facility: 1. 2. 3. Is the document genuine? What are its contents? Are the statements in the document true?
57
For proper and correct documentation, a bank official has to follow some steps given below: 1. 2. 3. 4. Prepare a list of required documents. Verify the legal capacity of the executor. Affix properly valued stamp or type on a duly stamped paper. Execution: In presence of Manager/Responsible Officials of the Bank/Branch In one sitting with indelible ink. Any correction, alteration etc. must be authenticated with full signature. Correctly dated. If several pages, executor(s) must put their full signature in all pages. 5. 6. Witness. Registration
5.4 Different types of investment and documents there agains:

Type of Investment Bai-Muajjal(Revolving) Commercial
Documents
TR Demand Promissory Note Letter of Revival Letter of Disbursement Letter of Continuity Letter of Arrangement Letter of Undertaking Letter of Authority Trust Receipt (Criminal case) Purchase Schedule Letter of Hypothecation Letter of Disclaimer (if applicable) Bai-Muajjal Agreement Balance Confirmation Memorandum of Deposit of Title Deed (Security of landed property)
58
Letter of Guarantee (Security belonging to 3rd party or personal guarantee) Any other Documents Deemed Necessary to Bai-Muajjal (Real Estate) Protect the Interest of the Bank Demand Promissory Note Letter of Revival Letter of Disbursement Letter of Arrangement Letter of Undertaking Letter of Authority Bai-Muajjal (Real Estate) Agreement Balance Confirmation Memorandum of Deposit of Title Deed (Security of landed property) Letter of Guarantee (Security belonging to 3rd party or personal guarantee) Any other Documents Deemed Necessary to Hire purchase (Real estate/Machinery/Car/Household) Protect the Interest of the Bank Demand Promissory Note Letter of Revival Letter of Disbursement Letter of Arrangement Letter of Undertaking Letter of Authority Hire Purchase Agreement Balance Confirmation Memorandum of Deposit of Title Deed (Security of landed property) Letter of Guarantee (Security belonging to 3rd party or personal guarantee) Any other Documents Deemed Necessary to Ijara (Lease) Protect the Interest of the Bank Demand Promissory Note Letter of Revival Letter of Disbursement Letter of Arrangement Letter of Undertaking Lease Agreement Letter of Authority Balance Confirmation
59
Memorandum of Deposit of Title Deed (Security of landed property) Letter of Guarantee (Security belonging to 3rd party or personal guarantee) Any other Documents Deemed Necessary to Bank Guarantee (Revolving) Protect the Interest of the Bank Demand Promissory Note Letter of Revival Counter Guarantee Letter of Authority Balance Confirmation Memorandum of Deposit of Title Deed (Security of landed property) Letter of Guarantee (Security belonging to 3rd party or personal guarantee) Any other Documents Deemed Necessary to Murabaha (Revolving) Letter of Protect the Interest of the Bank Credit Demand Promissory Note Letter of Revival Letter of Disbursement Letter of Arrangement Letter of Undertaking Letter of Authority Murabaha Agreement L/C Application and Arrangement Balance Confirmation Memorandum of Deposit of Title Deed (Security of landed property) Letter of Guarantee (Security belonging to 3rd party or personal guarantee) Any other Documents Deemed Necessary to Murabaha (Revolving) Post Import Protect the Interest of the Bank TR Demand Promissory Note Letter of Revival Letter of Disbursement Letter of Arrangement Letter of Undertaking Letter of Authority Trust Receipt (Criminal case)
60
Murabaha Agreement Balance Confirmation Memorandum of Deposit of Title Deed (Security of landed property) Letter of Guarantee (Security belonging to 3rd party or personal guarantee) Any other Documents Deemed Necessary to Murabaha (Revolving) Post Import Protect the Interest of the Bank Pledge Demand Promissory Note Letter of Revival Letter of Disbursement Letter of Arrangement Letter of Undertaking Letter of Authority Letter of Disclaimer (if applicable) Murabaha Agreement Balance Confirmation Memorandum of Deposit of Title Deed (Security of landed property) Letter of Guarantee (Security belonging to 3rd party or personal guarantee) Any other Documents Deemed Necessary to Protect the Interest of the Bank Back to back Letter of Credit Demand Promissory Note Letter of Revival (Revolving) Letter of Disbursement Letter of Arrangement Letter of Undertaking Letter of Authority Murabaha Agreement L/C Application and Arrangement Letter of Lien Balance Confirmation Memorandum of Deposit of Title Deed (Security of landed property) Letter of Guarantee (Security belonging to 3rd party or personal guarantee) Any other Documents Deemed Necessary to Bai-Salam (Revolving) Protect the Interest of the Bank Demand Promissory Note Letter of Revival 61
Letter of Disbursement Letter of Continuity Letter of Undertaking Letter of Arrangement Bai-Salam Agreement Letter of Lien Balance Confirmation Memorandum of Deposit of Title Deed (Security of landed property) Letter of Guarantee (Security belonging to 3rd party or personal guarantee) Any other Documents Deemed Necessary to Protect the Interest of the Bank
5.5 Different types of securities and formalities there against

Name of Securities Stocks Formalities a. Letter of Hypothecation of stocks duly insured, covering all possible risks under banks mortgage to be obtained. b. 1st charge on assets and book debts of the company to be created with the Registrar of Joint Stock Company within Machinery 21 days from the date of disbursement. a. Letter of Hypothecation of machinery duly insured, covering all possible risks under banks mortgage to be obtained. b. 1st charge on assets and book debts of the company to be created with the Registrar of Joint Stock Company within Vehicle 21 days from the date of disbursement. a. The Car/Vehicle will be registered in the name of the bank at clients cost. b. The car shall be covered under comprehensive insurance policy with reputed insurance company. c. The Registration/Blue Book, Fitness Certificate etc. for MTDR/MIS/DBS the vehicle shall always be kept up to date at clients cost. a. Pledge of MTDR/MIS/DBS.
62
b. Marking of Lien on MTDR/MIS/DBS and issuing register c. Letter of Lien Shares d. Letter of Authority for encashment as and when required a. Pledge of Share Certificate. b. Proper Lien to be marked with the issuing authority of the share and to be duly acknowledged by Securities Landed Property Exchange Commission (SEC). a. To be obtained all original documents. b. To be vetted by the Panel Lawyer of the Bank. c. Deed of Mortgage and Irrevocable Power of Attorney to be drafted by the Panel Lawyer of the Bank. c. Deed of Mortgage and Irrevocable Power of Attorney to be registered in the Office of the Sub Registrar. e. Deed of Agreement for further charge on the mortgaged property to be executed by the mortgagor in consultation with Banks Panel Lawyer.
5.6 Custody of documents

The document should be entered in Document Execution Register. A separate packet/file should be prepared for each investment facility. All documents should be kept in fire proof safe in strong room.
63
CHAPTER 6
Investment Risk Management
64
6.1 Investment Guidelines

This section details fundamental Investment Risk Management Policy that has been formulated for adoption in SHAHJALAL ISLAMI BANK LIMITED as per recommendation made by the Focus Group of Bangladesh Bank. The guidelines contained herein outline general principles that are designed to govern the implementation of more detailed Investment procedures and risk grading systems within the Bank. SHAHJALAL ISLAMI BANK LIMITED has formulated a detailed INVESTMENT GUIDELINES, which clearly identifies the business/industry sectors that should constitute the majority of the banks Investment portfolio, indicates the type of Investments that are permitted; such as Working Capital, Trade Finance, Term Investment etc. details the banks Single Customer/Group Limit as per Bangladesh Bank guidelines, specifies industry sector exposure cap to avoid over concentration in any one industry sector, outlines Industries or Investment activities that are discouraged, states the facility parameters (e.g., maximum size, maximum tenor, and covenant and security requirements) & policies regarding management of Cross Boarder Risk.
6.2 Investment Assessment & Risk Grading

6.2.1. Investment Assessment
Prior to sending any proposal to Head Office (Investment Approval/Risk Management Unit, Investment Division, Head Office) a thorough Investment Risk assessment should be conducted and the results of this assessment should be presented in a Investment Memorandum that originates from the BRANCH RETAIL/CORPORATE MARKETING UNIT (Relationship Manager/Account Officer (RM), and is approved by Investment Approval/Risk Management (IRM) unit at Head Office. The RM is the owner of the customer relationship, and to be held responsible to ensure the accuracy of the entire Investment Memorandum submitted for approval. Relationship Managers to be familiar
65
with the banks Investment Guidelines and should conduct due diligence on new Customers, principals, and guarantors. It is essential that Relationship Managers know their customers and conduct due diligence on new clients, principals, and guarantors to ensure such parties are in fact who they represent themselves to be. Investment Guidelines contains the detail Investment Memorandum designed for use at SHAHJALAL ISLAMI BANK LIMITED covering the following Risk area:
Customer Analysis. The majority shareholders, management team and group or affiliate companies should be assessed. risks mitigated. Industry Analysis. The key risk factors of the Customers industry should be assessed. Any issues regarding the Customers position in the industry, overall industry concerns or competitive forces should be addressed and the strengths and weaknesses of the Customer relative to its competition should be identified. Supplier/Buyer Analysis. Any customer or supplier concentration should be addressed, as these could have a significant impact on the future viability of the Customer. Historical Financial Analysis. An analysis of a minimum of 3 years historical financial statements of the Customer should be presented. Where reliance is placed on a corporate guarantor, guarantor financial statements should also be analyzed. The analysis should address the quality and sustainability of earnings, cash flow and the strength of the Customers balance sheet. Specifically, cash flow, leverage and profitability must be analyzed. Projected Financial Performance. Where term facilities (tenor > 1 year) are being proposed, a projection of the Customers future financial performance should be Any issues regarding lack of management depth, complicated ownership structures or inter-group transactions should be addressed, and
66
provided, indicating an analysis of the sufficiency of cash flow to service debt repayments. Investments should not be granted if projected cash flow is insufficient to repay debts. Account Conduct. should be assessed. Adherence to Investment Guidelines. Investment Memorandums should clearly state whether or not the proposed Memorandum is in compliance with the banks Investment Guidelines. The Banks Head of Investment or Managing Director should approve Investment Memorandums that do not adhere to the banks Investment Guidelines. Mitigating Factors. Mitigating factors for risks identified in the Investment assessment should be identified. Possible risks include, but are not limited to: margin sustainability and/or volatility, high debt load (leverage/gearing), overstocking or debtor issues; rapid growth, acquisition or expansion; new business line/product expansion; management changes or succession issues; customer or supplier concentrations; and lack of transparency or industry issues. Investment Structure. The amounts and tenors of financing proposed should be For existing Customers, the historic performance in meeting
repayment obligations (trade payments, cheques, Profit and principal payments, etc)
justified based on the projected repayment ability and Investment purpose. Excessive tenor or amount relative to business needs increases the risk of fund diversion and may adversely impact the Customers repayment ability. Security. A current valuation of collateral should be obtained and the quality and priority of security being proposed should be assessed. should be assessed. Investments should not be granted based solely on security. Adequacy and the extent of the insurance coverage
67
Name Investment. Investment proposals should not be unduly influenced by an over reliance on the sponsoring principals reputation, reported independent means, or their perceived willingness to inject funds into various business enterprises in case of need. These situations should be discouraged and treated with great caution. fundamentals, supported by a thorough financial and risk analysis Rather, Investment proposals and the granting of Investments should be based on sound
6.2.2 Risk Grading

Risk grading is a key measurement of a Banks asset quality, and as such, it is essential that grading is a robust process. All facilities to be proposed for sanction at Where SHAHJALAL ISLAMI BANK LIMITED should be assigned a risk grade.
deterioration in risk is noted, the Risk Grade assigned to a Customer and its facilities should be immediately changed. Customer Risk Grades should be clearly stated on Investment Memorandums. As per recommendations of the Focus Group Risk Grade Matrix is provided in the Investment Guidelines for adoption at SHAHJALAL ISLAMI BANK LIMITED.
6.3 Approval Authority

The authority to sanction/approve investment facility is clearly delicate: 1. Investment approval authority must be delegated in writing from the MD & Board (as appropriate), acknowledged by recipients, and records of all delegation retained in IRM. 2. MD/EC/Board must review delegated approval authorities annually. 3. The Investment approval function should be separate from the marketing/relationship management (RM) function. 4. The role of Investment Committee is restricted to only review of proposals i.e. recommendations or review of banks Investment portfolios. 5. Approvals must be evidenced in writing, or by electronic signature. Approval records must be kept on file with the Investment Memorandums.
68
6. Executives within the authority limit delegated to them by the MD must authorize all Investment risks. The pooling or combining of authority limits should not be permitted. 7. Investment approval is centralized within the IRM function. All large Investments must be approved by the Head of Investment and Risk Management or Managing Director/EC/Board or delegated Head Office Investment executive. 8. The aggregate exposure to any Customer or borrowing group must be used to determine the approval authority required. 9. Any Investment proposal that does not comply with Investment Guidelines, regardless of amount, should be referred to Head Office for Approval. 10. MD/Head of Investment Risk Management must approve and monitor any crossborder exposure risk. 11. Any breaches of Investment authority should be reported to MD, Head of Internal Control, and Head of Investment Division. 12. It is essential that executives charged with approving Investments have relevant training and experience to carry out their responsibilities effectively. minimum, approving executives should have: At least 5 years experience working in corporate/commercial banking as a relationship manager or account executive. Training and experience in financial statement, cash flow and risk analysis. He should be a thorough working knowledge of Accounting. He must be a good understanding of the local industry/market dynamics. Successfully completed an assessment test demonstrating adequate knowledge of the following areas: o o o o o Introduction of accrual accounting. Industry / Business Risk Analysis Causes for availing Investment Facilities Financial reporting and full disclosure Financial Statement Analysis As a
69
o o o o o Cash Flow Analysis Projections
The Asset Conversion/Trade Cycle
Investment Structure and Documentation Investment Management. 13. A monthly summary of all new facilities approved, renewed, enhanced, and a list of proposals declined stating reasons thereof should be reported by IRM to the MD.
6.4 Segregation of Duties

Banks entire Investment Functions have been segregated in the following manner as per Focus Group recommendations: Investment Approval/Risk Management Relationship Management/Marketing Investment Administration and Monitoring Retail/Corporate Marketing Unit Investment Administration and Monitoring Unit
Branch Investment Division is segregated as below:
Head Office Investment Division is segregated as follows: Investment Approval/Risk Management Investment Administration and Monitoring Unit
The detail responsibilities of the executives/officers under the above units have been mentioned in the Investment Guidelines.
70
6.5 Internal Audit

SHAHJALAL ISLAMI BANK LIMITED has a segregated internal audit/control department charged with conducting audits of all departments. An audit is usually carried out annually, and ensures compliance with regulatory guidelines, internal procedures, and Investment Guidelines and Bangladesh Bank requirements.
6.6 Preferred Organizational Structure and Responsibilities

Investment approval at SHAHJALAL ISLAMI BANK LIMITED is centralized within the IRM function. All Memorandums are approved by the Head of Investment Approval/ Risk Management /Managing Director/CEO/EC/Board or delegated Head Office/Branch executive
6.6.1. Preferred Organizational Structure

The following chart represents the preferred management structure:
M H e a d o f C ( C R r e
( M
a g in
ir e c t o r
r e d it M ) it A d m
is k
HM e a a n d a go ef mC oe rn p t o r a tO e t h e r D i r e c t R e p o r t s / C o m m e r c i a l B a n k ( Ii nn gt e r n a l A u d i t , e t c . ) M ( R e a n a g e M ) m e n t /
in
a y r e p o r t t o M D / C E
s e p a r a t e l yM O )
i s t rR a e t i l oa nt i o n s h i p a r k e t in g v a lB u s in e s s D
r e d
it
p r o
v e lo p m
n t
( in c lu d e s r e g io n a l c r e d i t c e n t r e s if a p p lic a b le )
M o n it o r in g / R e c o v e r y (i n c l u d e s r e g i o n a l r e c o v e r y c e n t r e s i f )a p p l i c a b l e
8.6.2. Key Responsibilities
71
The key responsibilities of the above functions are as mentioned in the Investment Guidelines and individual Office Orders.
6.7 Approval Process

The the approval Investment process must reinforce should the rest segregation with the of RM Relationship within the Management/Marketing from the approving authority. The responsibility for preparing Memorandum RETAIL/CORPORATE UNIT at BRANCH. Investment Memorandums should be
recommended for approval by the RM team based on branches and forwarded to the INVESTMENT APPROVAL/RISK MANAGEMENT UNIT at Head Office and approved by individual executives. The recommending or approving executives should take responsibility for and be held accountable for their recommendations or approval. There is limited delegation of approval limits in favor of the Managing Director and some executives of the bank: The following diagram illustrates the approval process at SHAHJALAL ISLAMI BANK LIMITED: Investment Memorandum Recommended By RM / Marketing (BRANCH)
Investment Approval/ Risk 1 Management Unit
Head of Investment (HOI)
Managing Director
Executive Committee/Board
72
Memorandum forwarded to HEAD OFFICE for approval/decline HOI advises the decision as per delegated authority to BRANCHES Managing Director advises the decision as per delegated authority to HOI 1. Managing Director presents the proposal to EC/Board. 2. EC/Board advises the decision to HOI.
6.8 Appeal Process

Any declined Investment may be re-presented to the next higher authority for reassessment/approval. However, there should be no appeal process beyond the Managing Director.
6.8.1. Investment Administration

The Investment Administration and Monitoring function is critical in ensuring that proper documentation and approvals are in place prior to the disbursement of Investment facilities. For this reason, it is essential that the functions of Investment Administration and Monitoring is strictly segregated from Relationship Management/Marketing in order to avoid the possibility of controls being compromised or issues not being highlighted at the appropriate level. Investment Administration procedures is in place to ensure the following:
Disbursement:
Security documents are prepared in accordance with approval terms and are legally enforceable. Standard Investment facility documentation that has been reviewed by legal counsel should be used in all cases. Exceptions should be referred to legal counsel for advice based on authorization from an appropriate executive in IRM. Disbursements under Investment facilities are only be made when all security documentation is in place. CIB report should reflect/include the name of all the lenders with facility, limit & outstanding. All formalities regarding large Investments &
73
Investments to Directors should be guided by Bangladesh Bank circulars & related section of Banking Companies Act. All Investment Approval terms have been met.
Custodial Duties:
Investment disbursements and the preparation and storage of security documents should be centralized. Appropriate insurance coverage is maintained (and renewed on a timely basis) on assets hypothecated/pledged as security. Security documentation is held under strict control, preferably in locked fireproof storage.
Compliance Requirements:
All required Bangladesh Bank returns are submitted in the correct format in a timely manner. Bangladesh Bank circulars/regulations are maintained centrally, and advised to all relevant departments to ensure compliance. All third party service providers (valuers, lawyers, insurers, CPAs etc.) are approved and performance reviewed on an annual basis. Bangladesh Bank circular outlining approved external audit firms are accepted.
6.8.2. Investment Monitoring

To minimize Investment losses, monitoring procedures and systems should be in place that provides an early indication of the deteriorating financial health of a Customer. At a minimum the following are looked into: Past due principal or Profit payments, past due trade bills, account excesses, and breach of Investment covenants. Investment terms and conditions are monitored, financial statements are received on a regular basis, and any covenant breaches or exceptions are referred to IRM and the RM team for timely follow-up. Timely corrective action is taken to address findings of any internal, external or regulator inspection/audit.
74
All Customer relationships/Investment facilities are reviewed and approved through the submission of an Investment Memorandum at least annually.
6.8.3. Investment Recovery

The Recovery Unit (RU) of Investment Administration and Monitoring Unit should directly manage accounts with sustained deterioration (a Risk Rating of Sub Standard (6) or worse). The RUs functions are as follows: Determine Account Action Plan/Recovery Strategy Pursue all options to maximize recovery, including placing customers into receivership or liquidation as appropriate. Ensure adequate and timely Investment loss provisions are made based on actual and expected losses. Regular review of grade 6 or worse accounts. The management of problem Investments must be a dynamic process and the associated strategy together with the adequacy of provisions must be regularly reviewed. A process should be established to share the lessons learned from the experience of Investment losses in order to update the Investment guidelines.
6.9 Tools for Appraisal Credit

In addition to formal credit appraisal, the credit officers of Shahjalal Islami Bank Limited try to judge the possible client based on some other criteria. These criteria are called the Cs of good and bad loans. These Cs are described below: 1. Character: Make sure that the clients have outstanding integrity. 2. Capacity: Make sure that the clients have capability to repay the loan. 3. Conditions: Understand the business and economic conditions. 4. Capital: Make sure that the clients have appropriate level of investment. 5. Collateral: Make sure that there is a second way out of a credit but do not allow that to drive the credit decision. 6. Complacency: Do not rely on past history to continue.
75
7. Carelessness: Remember that documentation, follow-up and consistent monitoring are essential to high quality loan portfolios. 8. Communication: Share credit objectives and credit decision-making both vertically and laterally within the bank. 9. Contingencies: Understand the risk, particularly the downside possibilities and structure and price. 10. Competition: Dont get swept away by what others are doing.
6.10 CIB Report from Bangladesh Bank

It stands for Credit Information Bureau report. CIB is a department run by Bangladesh Bank to help the all banking and financial institution by providing the latest report on the customers, who enjoy credit facilities more than 10 Lac Taka. According to Bangladesh Bank order no bank can provide only credit facilities more than Tk. 10 Lac, without having CIB report from Bangladesh Bank.
CIB Inquiry Forms

i ii iii CIB-1A (For Individual / Institution) CIB-2A (For owner information if borrower is institution) CIB-3A (Information of group/related business concern)
CIB Reporting Forms

i ii iii iv v CIB-1 (Borrowers Information- Borrowers only) CIB-2 (Borrowers Information- Owners only) CIB-3 (Borrowers Information- Group only) CIB-4 (Credit Exposure Matrix) CIB-5 (Guarantor Information)
76
Chapter 7
Analysis & Discussion

77
7.1 Introduction of the Topic

Shahjalal Islami Bank Limited is firmly committed to implement and materialize the economic and financial principles of Islam in the Banking Arena through creation of economic activities. The very essence of Islamic mode of banking is to remove the disparity through establishing equity justice in trade, commerce and industry sector, building up socio-economic infrastructure, creating opportunities for employment, boosting up income generation which ultimately helps alleviation of poverty from the society. It will also contribute to the socio-economic enlistment with sustained economic growth of the country in perpetuity.
7.2 Investment portfolio of SJIBL

Total Investment of the Bank stood at Tk. 43,958 million as on.2009 as against Tk. 32,919 million of 2008 registering an increase of Tk. 11039 million, i.e.33.53% growth.
Graphical Presentation of the data:

Trend of Investment from 2005 to 2009
50000 In Million Taka 40000 30000 20000 10000 0 2005 2006 2007 Year 2008 2009 10590.27 15515.79 20616.61 32918.77 Total Investment 43958.26
78
7.3 Mode wise Investment portfolio of SJIBL

Sl. No. 1. 2. 3. 4. 5. 6. 7. 8. Mode of investment Murabaha Bai-Muajjal Hire Purchase & Ijara Investment against L/C Bill Purchased / discounted Investment against scheme deposits Quard Others Total Taka in Million 8,261.10 19,855.00 10,520.72 17.32 3,588.62 810.61 132.55 771.59 43,958.26 Percentage of Total Investment 18.79% 45.17% 23.93% 0.04% 8.16% 1.84% 0.30% 1.76% 100.00%
Graphical Presentation of the data:
Investment Portfolio of 2009

2% 0% 2% 0% 8% 24% 19%
Investment Portfolio of 2009
Murabaha Bi-mujjal Hire-purchase &Ijara Investment Against L/C Bill Purchased & discounted Investment Against scheme deposits Quard Other Investment
45%
79
7.4 Deposit & Investment position of SJIBL

Total deposit of Shahjalal Islami Bank Limited is Tk. 47,459.23 million as on 2009. The 5 (Five) years comparisons between deposit and investment position of SJIBL are as follows:
Diposit & Investment position

50000 45000 40000 35000 In Million Taka 30000 25000 20000 22618.18 20616.61 18090.65 15515.79 Diposit Investment 34279.74 32918.77 47459.23 43958.26
15000 12204.63 10590.27 10000 5000 0 2005 2006 2007 Year 2008 2009
7.6 Investment and Provision
Provision on Investment is made on the basis of period end review by the management and as per instructions contained in Bangladesh Bank. The classification rates are given below: General provision on Investments General provision on small enterprise General provision on consumer finance General provision on special mention account Specific provision on substandard investment Specific provision on doubtful investment Specific provision on bad/loss investment
General Provision on Off-Balance Sheet Items
@ 1% @ 2% @ 5% @ 5% @ 20% @ 50% @100%

@ 1%
80
7.7 Sector-wise Classification of Investment

Sector Agriculture & Fishing Cotton & Textile Garment Cement Pharmaceuticals Real Estate Transport IT Non Banking FI Steel & Engineering Paper Products Others Total As at 31 December 2009 Amount Composition 386,832,694 0.88% 6,738,801,367 15.33% 5,274,991,285 12% 224,187,130 0.51% 747,290,432 1.70% 4,663,971,461 10.61% 1,367,101,908 3.11% 74,729,043 0.17% 1,916,580,167 4.36% 2,268,246,253 5.16% 391,228,520 0.89% 1641164245 45.27% 43,958,260,71 100% 1
As at 31 December 2008 Amount Composition
348,939,001 7,617,404,227 2,768,468,865 279,809,576 803,218,077 2,422,821,742 793,342,445 88,880,689 2,679,588,177 1,188,367,729 220,555,784 1370737726 10590270159
1.06% 23.14% 8.41% 0.85% 2.44% 7.36% 2.41% 0.27% 8.14% 3.61% 0.67% 41.64% 100%
Graphical presentation of data:

Sector-wise Investment
Agriculture & Fishing Cotton & Textile Garment 6%2% 2% 9% 7% 0% 5% 18% 3% 1% 21% Cement 26% Pharmaceuticals Real Estate Transport IT Non Banking FI Steel & Engineering Paper Products Others
81
7.8 Geographical Location-wise of Investment

Division
Dhaka Chittagong Sylhet Rajshahi Khulna Braisal Total
As at 31 December 2009 Amount Composition 37,699,484,666 85.76% 4,742,618,025 10.79% 765,780,202 1.74% 176,463,651 0.40% 573,595,829 1.30% 318,338 0.0007% 43,958,260,711 100.00%
As at 31 December 2008 Amount Composition 28,047,658,121 85.20% 4,266,024,283 12.96% 467,311,021 1.42% 17,688,230 0.05% 120,092,013 0.36% 0.00% 32,918,773,668 100.00%
G e 5 7g ,ra9p ,h ic a l L o c a tio n -w is e In v e s tm e n t o 3 5 5 829

1 7 6 ,4 6 3 , 6 5 1 765,780,202 4 , 7 4 2 ,6 1 8 ,0 2 5 318,338 Dhak a C h it ta g o n g S y lh e t R a js h a h i K h u ln a B a ris a l 3 7 ,6 9 9 , 4 8 4 , 6 6 6
82
7.9 Grouping of Investment as per Classification Rules of Bangladesh Bank

Status Unclassified Substandard Doubtful Bad or Loss Special Mention Account(SMA) Total As at 31 December 2009 Amount Composition 43,361,530,26 98.64% 0 73,210,220 0.17% 445,000 0.001% 339,579,000 0.77% 183,496,231 0.42% 43,958,260,71 1 100% As at 31 December 2008 Amount Composition 32,770,910,66 99.55% 8 8,878,000 0.03% 0.00% 134,365,000 0.41% 4,620,000 0.01% 32,918,773,66 8 100%
G ro u p in g o f In v e s tm e n t a s p e r C la s s ific a tio n ru le s o f B a n g la d e s h B a n k
U n c la s s ifie d 0% 0% 99% 1% 1% S p e c ia l M e n t io n A c c o u n t (S M A ) D o u b t fu l B ad or Los s 0% S u b s t a n d a rd
83
7.10 Performance of SJIBL

(Amount in Taka)
SL # 1 2 3 4 5 6 7 8 9 Paid up Capital
PARTICULARS
2009 2,740,095,600 5,429,972,779 1,546,690,779 58,920,895,401 47,459,231,493 43,958,260,711 14,475,137,526 92.62% 0.94%
2008 2,245,980,000 4,069,092,335 1,122,699,335 44,109,502,922 34,279,739,993 32,918,773,668 10,771,113,500 96.03% 0.44%
Total Capital (Core + Supplementary) Capital Surplus/(deficit) Total Assets Total Deposit Total Investment (Loans & Advance) Total Contingent Liabilities and Commitment Investment Deposit Ratio (%) Percentage of Classified Investment against Total Investment Profit after Tax and Provision Amount of Classified Investment Provisions kept against classified Investment Provisions surplus (deficit) Cost of Fund Profit Earning Assets
10 11 12 13 14 15
1,070,568,293 413,234,220 118,099,403 98,703,709 11.07% 53,131,793,268
817,709,533 143,243,000 28,009,403 20,801,366 16.84% 39,889,424,692
84
16 17 18 19 20 21 22
Non-Profit Earning Assets Return on Investment in Securities (ROI) Return on Assets (ROA) Income from Investment in Securities Earning Per Share Net Income Per Share Price Earning Ratio
5,789,102,133 11.74% 2.08% 409,019,391 39.07 39.07 9.79
39,889,424,692 16.84% 2.22% 192,717,942 29.84 29.84 8.55
7.11 Monthly Statement of Investment Facilities, Dhaka Main Branch

Sl 1. 2. 3. 4. 5. 6. 7. 8. 9. Name of The Clients Hussain Mohammad Ershad M. Imam Hossain Gazi Shahjahan Bricks Mamun Enterprise M/S. Shahed Book Asma Hider Clera International M/S. Parbata Agency Star Cable Network Type 0f Investment HIDS Car Staff Car Bai-Muajjal Bai-Muajjal Bai-Muajjal Bai-Muajjal (F.O) Bank Guarantee Bank Guarantee Bank Guarantee Limit of The Investment 14.40 20.00 20.00 1.00 15.00 25.06 30.00 32.00 Amount in taka (Lac) Outstanding Securities Investment held 12.33 7.76 23.27 18.96 3.83 25.06 30.00 32.00 14.40 12.00 52.85 40.00 8.65 15.00 12.50 23.50 28.00
85
10 . 11 . 12 . 13 . 14 . 15 . 16 . 17 . 18 . 19 . 20 .
M/S. Ma Enterprise M/S. Enaco Accessories M/S. Desh Printer M/S. Colour Design Limited Ashik Enterprise New Padma Traders Zakir Hossain AKM Fazlul Haque Md. Aminuzzaman Asia Khatun Md. Nzeem H. Sattar
IDBP IDBP IDBP IDBP IDBP IDBP FO HDS (Car) HDS HDS HDS
28.74 14.14 11.59 0.91 0.83 8.00 9.00 0.60 0.50 1.50
33.40 14.14 11.59 1.05 0.96 200 9.00 0.60 0.51 1.50 Total= 227.87
90% 0f Bill Value 90% 0f Bill Value 90% 0f Bill Value 90% 0f Bill Value 90% 0f Bill Value 90% 0f Bill Value 10.00 13.00 110.00 0.67 1.50 Total= 404.84
Investment Vs Securities of Dhaka Main Branch
Securities Held
Outstanding Investment 0 100 200 300 400 500
In Million Taka
86
Funded Investment of the Bank is Tk. 137.31 million as on 31st Dec, 2009 and Nonfunded Investment of the Bank is Tk 90.56 million.
7.12 Investment Position of Dhaka Main Branch

Total deposit of the branch is Tk. 30, 28, 07,428.89 with the number of 2,159 accounts as on April 24, 2008. Total liability of the branch is Tk. 33, 60, 34,373.96. Total investment of the branch is Tk. 20,349,306.66. Total income is Tk. 90, 22,414.50 against the total expenditure of Tk. 1, 06, 89,089.31. The bank is still in loss of Tk. 16, 66,674.81.
Investment Vs Deposits of Dhaka Main Branch
350 300 250 In Million 200 Taka 150 100 50 0 Deposits Investment
87
Chapter 8
Findings
88
Findings
While working on Shahjalal Islami Bank Limited, Dhaka Main Branch, I have attained a newer kind of experience. After collecting and analyzing data I have some findings. These findings are completely my personal view to research work. Shahjalal Islami Bank Limited has lack of strong supervision for which loans are defaulted. Shahjalal Islami Bank Limited also hasnt proper monitoring system. In terms of repayment large loan has performed better than small sized loan. This bank started on-line service newly. As a resulted customers are not getting the full service by the on-line service. Sometimes they have to face problem with on-line account. Branches are very much enthusiastic to provide more service to the clients. General Banking Division is an efficient department. They are very much prompt to give decision to their valued client. Head Office Credit committee sits regularly on weekly basis. They never keep any things pending. Lack of good cooperation is identified among the work procedures and among the employees of the bank, which results in lengthiness and ineffective service. The employees of the bank cannot provide effective and efficient services to the customers because of lack of computer facility. The number of human resources in the Computer section is really insufficient to give services to huge number of customers. The investment of the branch is too low in comparison to the total deposits of the branch. The Bank has given less emphasis on long-term financing. Shahjalal Islami Bank Limited has also shortage of efficient management information system.
89
Chapter 9
Recommendatio n
90
Recommendation
Activities of Investment department, of Shahjalal Islami Bank Ltd. are almost as same as other private Islami banks. Because the total procedures are operate by the guidelines of Shariah, Bangladesh Bank and international rules and regulations. So the internal policy, service, internal decoration etc create mostly the difference among all those banks. For the improvement of the service the following measures should be taken: 1. The first action that deserves immediate attention is the promotion of the image of Shahjalal Islami bank Ltd. as PLS banks. Strategies have to be carefully devised so that the image of Islamic character and solvency as a bank is simultaneously promoted. To this end, Pilot schemes in some much selected areas should be started to test innovative ideas with profit-loss-sharing modes of financing as major component. It should clearly demonstrate by their actions that its banking practices are guided by profitability criterion thereby establishing that only Islamic banking practices ensures efficient allocation of resources and provide true market signals through PLS modes. Shahjalal Islami bank Ltd should continuously monitor and disseminate through various means the impact of their operations on the distribution of income primarily between the bank and the other two parties: the depositors and the entrepreneurs, and then on different income groups of the society. 2. Internal computer network of Shahjalal Islami Bank Limited, Kawran Bazar Branch is open ended. So any employee from any department can get all type of data any time. Even it is also possible to delete any data from any computer without being noticed. So this surely reduce safety ness to data. So there should some password system and restriction in those shared file system. 3. Bank should give more emphasize during the time of giving loan. Because some times they do not get it back from the customers on due time. As a result they might face some uncertain situation that is not expected by them.
91
4. The banks policy is to maintain separate file for every new loan transaction. So every day lot of files is created but due to small storage, this is difficult for them to maintain all those files in certain order. It has also had an impact in service activities. So the storage should be somehow extended and decorated properly for quick and affective service. Documentation is very much important. 5. Shahjalal Islami Bank Limited can improve its allocative efficiency be satisfying social welfare conditions in the following manner. First, they should allocate a reasonable portion of their investible funds in social priority sectors such as agriculture (including poultry and fishery), small and cottage industries and export-led industries like garment, shrimp cultivation. Secondly, when the percentage shares of allocation of investible funds are determined among the sectors of investment financing, profitability of projects should be the criterion for allocating investment funds. 6. Shahjalal Islami Bank Limited will have to adapt their functioning in line with modem business practices, though improvement and expansion of the range of dealing in the banking sector. Thus, it is necessary for them to provide comprehensive banking and investment services to clients and simultaneously to take advantage of modem technological breakthroughs in areas such as electronic communication, computerization etc. 7. The Bank should not sanction any loan to those clients, whose necessary information is not fully disclosed to the bank. 8. For information, which is needed for credit appraisal, the bank should not depend only on the client but also should try to explore the other sources of information for its authentication. 9. The bank should try to increase its advance-deposit ratio. So to ensure that fund does not necessarily remain idle. 10. Shahjalal Islami Bank Limited must rationalize portion of loans and advances to different sector for risk diversification. The bank also should go for long-term investment, which will diversify the risk.
92
11. The bank should apply the relationship-banking concept where each credit officer will be assigned to deal with some specific clients. It will be easier to monitor, follow-up and build relation with every individual client. 12. Shahjalal Islami Bank Limited should never invest by borrowing from call money market. Because any time the cost of fund may surpass the return on investment. 13. Investment Division of SJIBL should conduct real field studies to analyze the lending risk before the final decision is taken. 14. Employees, compensation package with fringe benefits should be increased to boost up the spirit and overall motivational level. Because highly motivated personnel can only provide high level of performance. 15. All Islamic banks should come forward to help each other and adopt a perspective plan say for 20 years for gradual Islamization of the banking system of Bangladesh. To actualize this mission, they should set-up immediately and Apex Research Academy and Training Institute designed with modem tools Books and other accessories. 16. Bangladesh bank must impose all kinds of banks to appoint their own representative in the port. The representative must check the shipment goods released with the packing list to ensure that everything is going on accordingly. 17. Government should think actively for the promotion of Islamic banking in Bangladesh considering its pro-development role. It should amend existing financial laws, acts and regulations to create favorable environment conducive to smooth operation of Islamic banks. Steps need to be taken to in act Islamic Banking Act. Government should also allow establishment of Islamic insurance and other subsidiary companies in order to facilitate their operation. Bangladesh Bank should develop some Islamic Monetary and Saving instruments and create separate window for transactions with the Islamic banks and a full-fledged Islamic banking Department for analyzing, supervising, monitoring and guiding purpose, thereby facilitating Islamic banks for their smooth development in Bangladesh.
93
Chapter 10
Conclusion
94
Conclusion
Shahjalal Islami Bank Ltd, Dhaka Main branch is one of the most potential Islami banks in the Islami banking sector. It has a large portfolio with huge assets to meet up its liabilities and the management of this bank is equipped with the expert bankers and managers in all level of management. So it is not an easy job to find out the drawbacks of this branch. But the branch needs more employees for its substantial growth. I would rather feel like producing my personal opinion about the ongoing practices in Dhaka Main Branch. Shahjalal Islami Bank limited is a leading Private Islami bank in Bangladesh with superior customer bases that are loyal, faithful, worthy towards the bank. The service provided by the young energetic officials of the Shahjalal Islami Bank Limited is very satisfactory. As an Islami bank SJIBL has to follow the rules of Bangladesh bank despite the fact that these rules sometime restrict the foreign business to some extent. During my internship in this branch I have found its Investment department to be very efficient; therefore this department plays a major role in the overall profitability of the branch and to the Bank as a whole. The Bank's drive towards market leadership as well as quality in choosing business will continue in the coming years although competition is intensified with the opening of more financial institutions. The Bank is optimistic that the volume of business will increase in future through pragmatic and market friendly policies; The Bank shall continue to explore new fields of investment and take steps to open new Branches for Banking. We shall endeavor to adopt customer-oriented policies and introduce new techniques that will help to earn profit and increase greater confidence of the existing/ prospective customers.
95
Chapter 11
Bibliography
96
Bibliography
References Book:
1. Dr. A. R. Khan; Bank Management. 2. P. N. Varsheny; Banking Law and Practice.
Reports:
1. Prospectus of Shahjalal Islami Bank Limited. 2. Annual Report 2009 of Shahjalal Islami Bank Limited. 3. Brochures of Shahjalal Islami Bank Limited.
Web Sites:
1. www.shahjalalbank.com.bd 2. www.bangladesh-bank.org 3. shahjalajislamibank@gmail.com 4. sblho@shahjalalbank.com.bd
97

Internship Repor1

Enviado por

Dados do documento

Descrição original:

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

Internship Repor1

Enviado por

Direitos autorais:

Formatos disponíveis

Analysis over General Banking of Shahjalal Islami Bank Ltd

Analysis over General Banking of Shahjalal Islami Bank Ltd

1.1 Introduction of the topic:

1.2 Rational of the study:

1.3 Objective of the Report:

1.3.2. Specific Objective:

1.4 Scope of the Report:

Analysis over General Banking of Shahjalal Islami Bank Ltd

1.6 Sources of data collection

1.6.2 Secondary sources:

Analysis over General Banking of Shahjalal Islami Bank Ltd

Other published documents Investment Scheme.

Analysis over General Banking of Shahjalal Islami Bank Ltd

Analysis over General Banking of Shahjalal Islami Bank Ltd

2.1 Introduction of the Organization

2.2 Shahjalal Islami Bank Limited at a glance:

Analysis over General Banking of Shahjalal Islami Bank Ltd

Analysis over General Banking of Shahjalal Islami Bank Ltd

2.3 Mission of SJIBL

2.4 Vision of SJIBL

2.5 Objectives of SJBL

Analysis over General Banking of Shahjalal Islami Bank Ltd

2.6 Departments of SJIBL

2.6.1 General Banking Department

Analysis over General Banking of Shahjalal Islami Bank Ltd

2.6.2 Foreign Exchange Department

2.6.3 Investment Department

Analysis over General Banking of Shahjalal Islami Bank Ltd

2.7 Hierarchy of SJIBL

Analysis over General Banking of Shahjalal Islami Bank Ltd

2.8 Organagram of SJIBL

SVP/VP Human Resources Division

VP/SAVP Training, Research & Development

VP/SAVP Audit & Inspection

SAVP/AVP Public Relations Division

VP/SAVP Common Services Division

SAVP/ AVP Computer and IT Division

VP/SAVP Financial Administration Division

VP/SAVP Intl Trade, Finance and Treasury Division

2.9 Business Activities of SJBL

2.9.1 Attractive Deposit and Investment Schemes

Analysis over General Banking of Shahjalal Islami Bank Ltd

2.9.2 Membership of Different Organization / Chamber

2.10.3 Financial highlights of the Bank

2.10.4 Corporate Banking

Analysis over General Banking of Shahjalal Islami Bank Ltd

Analysis over General Banking of Shahjalal Islami Bank Ltd

2.10.5 Remittance arrangements

Mode of Settlement of Remittance proceeds

Analysis over General Banking of Shahjalal Islami Bank Ltd

2.10.6 SMS Service

Analysis over General Banking of Shahjalal Islami Bank Ltd

2.10.7 SJIBL VISA Card

Analysis over General Banking of Shahjalal Islami Bank Ltd

Analysis over General Banking of Shahjalal Islami Bank Ltd

A. VISA Debit Card

B. VISA Prepaid Card

Analysis over General Banking of Shahjalal Islami Bank Ltd

Non-Customized Customized International / Dual Non-Customized Customized Conversion charge

250 300 1500

200 200 500

250 300 1500

200 200 500