Part -01 Introduction

1.1Origin of the Report

Bachelor of Business Administration (BBA) program of integrated theoretical and practical method of learning. In fact practical orientation with day to day activities of an organization is one of the most requirement of BBA program. The internship program is an integral part of Bachelor of Business Administration (BBA) program. To fulfill this purpose I was sent to Uttara ranch of !"im an# limited has een given to me a period of $% (Twelve) &ee#s from '( )une to %* +eptem er. ,uring this period I learned how the host organization wor#s with the help of the internal supervisor. The internal supervisor assigned to me one of the pro)ects and shuffled me around to educate me a out the operation of a an#. 1.2Significance This internship report is an important partial requirement of four year BBA graduation program. This is ecause #nowledge and learning ecome perfect when it is associated with theory and practices. By this internship program students can esta lish contracts and networ#ing .-ontracts may help to get a )o in practical life. That is student can train and prepare themselves for the )o mar#et. A poor country li#e Bangladesh has an overwhelming num er of unemployed educated graduates. As they have no internship e"perience they have not een a le to gain normal professional e"perience of esta lishing net wor#ing system. which is important in getting a )o . Therefore. it is o vious that the +ignificance of internship is clearly )ustified as the crucial requirement of four year BBA graduation. 1.3Scope of the Report As I assigned to the !"im an# limited. Uttara ranch. there is enough scope of the study. The report covers the topic An Investment Management of Exim an! "imite#/. To conduct a study on different modes of investment of !"im an# limited. I have gathered valua le information from !"im an# limited. Uttara ranch and I have also got sectors some information from we sites of !"im an# limited. ,espite this topic there are many sectors for wor#ing and analysis. li#e0 An overview of !"im an# limited 1inancial performance of !"im an# limited Investment management of !"im an# limited 1

1.$%enera" o &ecti'e

The prime o )ective of the report is to analyze the In'estment Management of Exim (an! )imite#. 1.$.2. Specific o &ecti'es There are some specific o )ectives are given elow0 To descri e the investment process. dis ursement monitoring and recovery process of !"im Ban# 2td To e"amine the 3erformance of investment of !"im Ban# 2imited. To show mode wise. sector wise and geographical investment allocation of !"im Ban# 2td. To show some findings and ma#e some possi le recommendations. 1.* Metho#o"og+, Research #esign, This report is analytical in nature which riefly analyzes the Analysis of Investment Activities of !"im Ban# 2imited. It has een administrated y collecting secondary data. Annual report of !"im an# limited was the ma)or secondary data sources in this regard. This study has een conducted y collecting data for the period of * years from %((4 to %($%. e"cepting sector wise investment 5 geographical concentration. -oo"s .se# for Ana"+sis, In order to analyze the investment activities of !"im an# limited trend analysis are used and computer software (6icrosoft word and !"cel) are used for reporting purpose So.rces, In order to carry out this study. two sources of data have een used0 Secon#ar+ so.rce, Annual 7eports of %((48%($% of !"im Ban# 2td9 6anuals of A28Arafah Islami Ban# 2imited (Bai86ura aha. Bai86ua))al. Bai8+alam. 6ushara#a) different oo#s &e site of !"im an# limited.

1./ )imitation 2

The main constrain of the study was inefficient of information. which was required for the study .There are various information the an# employees cannot provide due to security and other corporate o ligations.

+ince the personnel were very

usy. they could not provide enough time to me. 2ac# of

opportunity to visit more than one ranch. The function and activities of !"im Ban# 2imited are too vast. so they change their strategy day y day .As a result I can:t collect update information and strategy. The we site of !"im Ban# 2imited is not that much rich with data.

Part,2 An O'er'ie0 of Exim (an! )imite#

2.1 1istorica" ac!gro.n# of E2IM (an! )imite# 4

!;I6 Ban# 2imited was esta lished under the rules 5 regulations of Bangladesh an# 5 the Ban# companies: Act $<<$. on the ' rd August $<<< with the leadership of 2ate 6r. +hah)ahan =a ir. founder chairman who had a long dream of floating a commercial an# which would contri ute to the social8 economic development of our country. >e had a long e"perience as a good an#er. A group of highly qualified and successful entrepreneurs )oined their hands with the founder chairman to materialize his dream. Indeed. all of them proved themselves in their respective usiness as most successful star with their endeavor. intelligence. hard wor#ing and talent entrepreneurship. Among them. 6r. 6d. ?azrul Islam 6azumder ecame the honora le chairman after the demise of the honora le founder chairman. @f its very eginning. !;I6 Ban# Bangladesh limited was #nown as B!;I6 Ban#. which stands for Bangladesh !"port Import Ban# 2imited. But for some legal constraints the an# renamed as !;I6 Ban#. which means !"port Import Ban# @f Bangladesh 2imited. The an# starts its functioning from 'rd August $<<< with 6r. Alamgir =a ir. 1-A as the advisor and 6r. 6ohammad 2a#iotullah as the 6anaging ,irector. Both of them have long e"perience in the financial sector of our country. By their pragmatic decision and management directives in the operational activities. this an# has earned a secured and distinctive position in the an#ing industry in terms of performance. growth. and e"cellent management. 2.3 E2IM (an! )imite# at a %"ance

2egal +tatus. !sta lish Incorporated Activity +tarts Islamic Ban#ing 2isting with ,ha#a +toc# !"change 2isting with -hittagong +toc# !"change Inauguration of 1irst Branch Authorized -apital 3rofit Total Asset +hares 3aid up -apital 7eserve 1und ?um er of !mployees ?o. of Branches 3roposed Branches

3u lic 2imited -ompany $<<< %nd Aune.$<<< 'rd August.$<<< $st Auly.%((B +eptem er. %((C. +eptem er. %((C. 'rd August. $<<<. T=. $(((6illion T= B<CD*C'<C< million T= B$D<'*B(.<C% million T= %%''%*B%44 million T= 4D4.4* 6illion T= *C<.<4 6illion $D%B 3ersons D% (4

01-3ig.re, Exim (an! )t#. at a g"ance.

2.2 IS)AMI4 (A56I5% 1rom $st of Auly of %((B the an# ecame +hariah Based Islamic Ban# and from then it is rendering an#ing services according to Islamic an#ing principles. 1or smooth operations the Board of ,irectors esta lished a +hariah Board. which decides on the an#ing principles according to which the an# will operate its usiness. 2.3 MISIO5 The an#:s vision and mission are the following0 The an# has chal#ed out the following corporate o )ectives in order to ensure smooth achievement of its goals0 To e the most caring and customer friendly and service oriented an#. To create a technology ased most efficient an#ing environment for its customers. To ensure ethics and transparency in all levels. To ensure sustaina le growth and esta lish full value of the honora le 3roviding efficient customer service 6aintaining efficient customer service 6aintaining corporate and usiness ethics Being trusted repository of customer:s money and their financial adviser 6a#ing its products superior and rewarding to the customers ,isplay team spirit and professionalism +ound -apital ase !nhancement of shareholders wealth 1ulfilling its social commitments y e"panding its charita le and humanitarian activities 2.$ 7ISIO5 The gist of the vision is E-ogether8 -o0ar#s8 -omorro09. !"port Import Ban# of Bangladesh 2imited elieves in togetherness with its customers. in its march on the road to growth and progress with services. To achieve the desired goal. there will e pursuit of e"cellence at all stages with a climate of continuous improvement. ecause. in !;I6 Ban#. they elieve. the line of e"cellence is never ending. Ban#:s 7

strategic plans and networ#ing will strengthen its competitive edge over others in rapidly changing competitive environments. Its personalized quality services to the customers with the trend of constant improvement will e cornerstone to achieve their operational success.

3.3 O(:E4-I7E O3 -1E E2IM (A56. Bangladesh is now an integral part of glo al mar#et. As such there is an urgent requirement for Bangladesh to place the traditional Ban#ing practices in harness with the glo al trades of a free mar#et economy y following international Ban#ing customs. practices and standards. Today clients of a Ban# in Bangladesh are e"posed as well as international mar#ets. They have to stay update with their practice and standards to meet the demands of achieving harmony in the high standards of a free economy. >ence. y getting into oth corporate and retail Ban#ing and rapid innovation and networ#ing the Ban# elieves that it can accomplish its goals. !;I6 Ban# fully appreciates the importance and implication of the rapidly emerging competition in the Ban#ing and finance sector of Bangladesh. It intends financing its customer +uited to his or her place in the mar#et. In this regards !;$6 Ban# emphasizes in its employment the software aspects of human resource capa ility. It also emphasizes competence among its Ban#ing professional to cater to varied customer requirements to the modem time. The core o )ectives are08 To carry on. Transact. underta#e and conduct the usiness of Ban#ing in all its ranches and to transact and do all matters and things incidental there to in Bangladesh and a road. To receive. orrow or raise money on deposits. loan or otherwise. upon such terms as the -ompany may approve and to hive guarantees and indemnities in respect of all de ts and contracts. To esta lish welfare oriented Ban#ing systems. To play a vital role in human development and employment generation. To invest money in such manner as may from time to time e thought proper. To carry on the usiness of uying and selling ullion. gold and other valua le assets 3.$ S-RA-E%IES O3 -1E E2IM (A56 The usiness of Ban#ing consists of orrowing and lending. As in other usinesses. operation must e ased on capital. ut Ban#s employ comparatively little of their own capital in relation to the total volume of their transactions. The purpose of capital and reserve accounts is primarily providing an ultimate cover against losses on loans and investments. 8

3ina" strateg+, Introduction of online Ban#ing services. AT6 cards. etc. is something that the Ban# loo#s forward to introducing as soon as possi le ecause of the current demand in the mar#et place. >ence rapid innovation is definitely a #ey strategy of this Ban# 2.2. 4orporate 4."t.re, This an# is one of the most disciplined Ban#s with a distinctive corporate culture. >ere we elieve in shared meaning. shared understanding and shared sense ma#ing. @ur people can see and understand events. activities. o )ects and situation in a distinctive way. They mould their manners and etiquette. character individually to suit the purpose of the Ban# and the needs of the customers who are of paramount importance to us. The people in the Ban# see themselves as a tight #nit teamFfamily that elieves in wor#ing together for growth. The corporate culture we elong has not een imposed9 it has rather een achieved through our corporate conduct. 2.3. 6e+ 3.nction of E2IM (an!, 2i#e other commercial an#s li#e !;I6 an# performs all traditional an#ing usiness including

introduction of a wide range of caving and credit products. retail an#ing and ancillary service with the support of modern technology and professional management. ut the !"im Ban# Bangladesh 2imited emphasizes its function in e"port and import trade handing and financing of e"port oriented industries will enhance wealth. quotes more employment opportunities helps formation of capital and reduces in alance in the alance of payment in the country. 2.$ Pro#.ct ; Ser'ices 1inanceF Investment9 G -orporate 1inance G Industrial 1inance H 2ease 1inance G >ire 3urchase 1inance G -ommercial Investment G 3ro)ect 1inance G +yndicate Investment 9

G 7etail Investment G 6ortgage InvesrmentG 2oan against +hare and +ecurities !"change9 ?on 7esident 1oreign -urrency ,eposit Account(?1-,) 1oreign -urrency ,eposit Account +avings +cheme0 6onthly +avings +cheme(6oney Irower) 6onthly Income +cheme(+teady 6oney) ,ou le the deposit in C years (+uper +avings) $( years deposit8more than triple (6ultiples +avings) !ducation +avings +cheme 2.*6e+ 3eat.res of (an!ing Ser'ices A. 4omp.teri<e# (an!ing S+stem The head office and other ranches have een provided with the state if the art computer hardware as well as software to carry on day8today accounting and routine wor#s efficiently and quic#ly. The !"im an# limited is already moved to the ne"t state of automation through introduction of on line an#ing all ranches. (. A-M (an!ing !"im Ban# 2imited has implemented successfully Automated Teller 6achine (AT6).Through AT6F,e it card. customer can avail the facilities li#e withdraw money. alance inquiry. 4. (ranch 5et0or!s !"im Ban# 2imited its wor#ing at $B%.Iulshan Avenue with the named Iulshan ranch on %D +eptem er $<<< was the first5 main ranch of !"im Ban# limited and has een operating throughout the country. The head office of the an# started its wor#ing at its own premises /+J63>@?J/ 3lot ?o.+!(1)8<.7aad ?o.$B% Iulshan Avenue.,ha#a8$%$%.,uring the time the an# has esta lished total D% ranches over the country and made a smooth networ# inside the country. That isK ,ivision ,ha#a ,ivision -hittagong ,ivision +ylhet ,ivision =hulna ,ivision 7a)shahi ,ivision 7angpur ,ivision Barisal ,ivision ?o. @f Branch '* %( < ' % % $ Total

D%

10

=. Others @nline Ban#ing +6+ Ban#ing 6oney Iram

(OAR= O3 =IRE4-OR9S O3 E2IM (A56 11

S". 5o. $.

5ame Of the =irectors Mr. M#. 5a<r." Is"am Ma<.m#er(-hairman. Board and !"ecutive -ommittee)

%. '. B. *. C. D. 4. <. $(. $$. $%.

Mr. Mohamma# A #.""ah A"ha& M#. 5.r." Amin Mr. M#. 3ai< >""ah Mrs. 5asima A!hter Mr. Mohamme# Shahi#.""ah Mr. A.6.M. 5.r." 3a<a" (." ."(-hairman of Audit -ommittee) Mr. ?. a+er 6a ir Mr. M#. 1a i .""ah Mr. A #.""ah A"-?ahir Shapan Mr. An&an 6.mar Saha Mr. M#. A #." Mannan

3.3 1ierarch+ of >ttara (ranch

Assistant Vice President (Manager)

12

Frist Assistant Vice President & Operation Manager

Senior Principle Of Principle Officer ficer Executive Officer Management Traieene Officer Officer Traieene Officer Supporting Stuff
3ig, 1ierarch+ - of E2IM (an! )imite# @>ttara (ranchA

13

Part-3 -heoretica" (ac!gro.n#

3.1 =i'ision of Exim an! )imite# 14

The function of !"im an# 2imited into three sections is0

!ivision !ivision

#eneral $an%ing !ivision

nvestmen t !ivision

Foreign Exc"ange !ivision

A ove these three sections of !"im an# 2imited do their services .!ach of this section services for satisfying their clients. 3.2 In'estment #i'ision Investment operation is the vital operation. which can greater share of total revenue. &ell planned and appropriate investment policy frame wor# is a 3re8requisite for achieving the goal of the implementation. Investment is the action of deploying funds with the intention and e"ception that they will earn a positive return for the owner . 1unds may e invested in either real assets or financial assets. &hen resources are used for purchasing fi"ed and current assets in a production process or for a trading purpose . then it can e termed as investment . +pecific e"amples of financial investments are 0 deposits of money in a an# account . the purchase of 6udara a savings onds or stoc# in a company . +ince Islam condemns hoarding savings and a %.*L annual ta" (za#at) is imposed on savings . the owner of e"cess savings . if he is una le to invest in real assets . has no option ut to invest his savings in financial assets . The special feature of the investment policy of the an# is to invest on the asis of profit8loss sharing system in accordance with the tents and principles of Islamic shariah . an# i.e

Mo#es of in'estment (ai-M.ra aha 15

Meaning The terms MBai/ and M6ura aha/ have een derived from Ara ic words 6ura aha/ and MBai/. The word Bai means purchase and sale and the word 6ura aha means a in cash/ Bai86ura aha means sale for which payment is in cash or in future fi"ed date or within a fi"ed period. In short. it is a sale on cash. Mo#e of In'estment of Exim (an! &hen money is deposited in the !"im Ban#.the an#.in tern.ma#es investments in different forms approved y the Islamic +hariah with the intension toearn profit.?ot only a an# ut also an individual or organization can use Islamic mode of investment to earn profits for wealth ma"imization.+ome particular mode of investment of !"im Ban# are discussed elow0 In'estment =efinition Bai86ura aha may e defined as a contract etween a uyer and a seller under which the seller sells certain specific goods (permissi le under Islamic +hariah and the 2aw of the land). to the uyer at a cost plus agreed profit paya le in cash or on any fi"ed future date in lump8sum or y installments. The profit mar#ed8up may e fi"ed in lump8sum or in percentage of the cost price of the goods Important 3eat.res of (ai-M.ra aha $) It is permissi le for the client to offer an order to purchase y the an# particular goods deciding its specification and committing him to uy the same from the an# on 6ura aha. i.e. cost plus agreed upon profit. %) It is permissi le to ma#e the promise inding upon the client to purchase from the an#. that is. he is to either satisfy the promise or to indemnify the damages caused y rea#ing the promise without e"cuse. ') It is permissi le to ta#e cashFcollateral security to guarantee the implementation of the promise or to indemnify the damages. Bai86ua))al Bai86ura aha Bai8+alam Izara ill aia (-ommercial) Izara ill aia (+taff) Nuard

16

B)

It is also permissi le to document the de t resulting from Bai86ura aha y a guarantor. or a

mortgage. or oth li#e any other de t. 6ortgageFIuaranteeF-ash security may e o tained prior to the signing of the agreement or at the time of signing the agreement. *) +toc# and availa ility of goods is a asic condition for signing a Bai86ura aha agreement. Therefore. the an# must purchase the goods as per specification of the client to acquire ownership of the same efore signing the Bai86ura aha agreement with the client. (ai-M.a&&a" Meaning The terms MBai/ and M6ua))al/ have een derived from Ara ic words A)al and Bai. The word Bai means purchase and sale and the word A)al means a fi"ed time or a fi"ed period/ Bai86ua))al means sale for which payment is made at a future fi"ed date or within a fi"ed period. In short. it is a sale on credit. =efinition Bai86ua))al may e defined as a contract etween a uyer and a seller under which the seller sells certain specific goods (permissi le under Islamic +hariah and the 2aw of the -ountry). to the uyer at a agreed fi"ed price paya le at a certain fi"ed future date in lump8sum or within a fi"ed period Buyer. Important 3eat.res of (ai-M.a&&a" $) It is permissi le for the client to offer an order to purchase y the an# particular goods deciding its specification and committing him to uy the same from the an# on Bai86ua))al i.e. deferred payment sale at fi"ed price. %) It is permissi le to ma#e the promise inding upon the client to purchase from the Ban#. that is. he is to either satisfy the promise or to indemnify the damages caused y rea#ing the promise without e"cuse. ') B) It is permissi le to ta#e cash F collateral security to guarantee the implementation of the promise or It is also permissi le to document the de t resulting from Bai86ua))al y a guarantor. or a mortgage to indemnify the damages. or oth li#e any other de t. 6ortgageFIuaranteeF-ash security may e o tained prior to the signing of the Agreement or at the time of signing the Agreement. *A +toc# and availa ility of goods is a asic condition for signing a Bai86ua))al agreement. therefore. the an# must purchase the goods as per specification of the client to acquire ownership of the same efore signing the Bai86ua))al agreement with the client. (ai B Sa"am 17 y fi"ed installments. The seller may also sell the goods purchased y him as per order and specification of the

Meaning The terms MBai/ and M+alam/ have een derived from Ara ic words Bai and +alam. The word MBai/ means Msale and purchase/ and the word +alam means MAdvance/. MBai8+alam/ means Advance +ale and 3urchase. =efinition Under this mode Ban# will e"ecutive purchase contract with the client and ma#e payment against purchase of product. which is under process of production. Bai8+alam contract will e e"ecuted after ma#ing any investment showing price. quality. quantity. time. place and mode of delivery. The profit is to e negotiated. The payment as the price of the goods is made at the time of Agreement F on the spot and the delivery of the goods is deferred. Important 3eat.re of (ai-Sa"am $) Bai8+alam is a mode of investment allowed y Islamic +hariah in which commodityFproduct can e sold without having the said commodityFproduct either in e"istence or physicalFconstructive possession of the seller. %) ') B) *) Ienerally. industrial and agricultural products are purchased in advance under Bai8+alam mode of It is permissi le to o tain collateral security from the seller client to secure the investment. It is also permissi le to o tain mortgage andFor personal guarantee from a third party as security. Bai8+alam on a particular commodityFproduct or on a product of a particular field or farm cannot e investment.

affected. M>S1ARA6A =efinition of M.shara!a, 6ushara#a is a contract of partnership etween two or more parties in which all the partners contri ute capital. participate in the management. share the profit in proportion to their capital or as per pre8agreed ratio and ear the loss. if any. in proportion to their capitalFequity ratio.

Some Important 3eat.res of M.shara!a, i. -apital should e specific 18

ii. iii. iv. v. vi. vii. viii.

!qual share is not a must ?ature of capital may e money or valua les Active participation of partners 7atio of profit prefi"ed Oariation in share of profit permissi le 3articipation and sharing profit 5 loss 3artners retains the ownership and right to manageme

=efinition of I&arah 1uqaha ()urists) have defined I)araha as ownership of a enefit for consideration. This is also #nown as lease or >ire contract. Al8I)arah is an Ara ic term. This has een derived from the Ara ic term PU)rP or PU)ratP which means QconsiderationQ or QreturnQ or QwagesQ. According to Islamic +hariah ()urisprudence). I)arah is a contract etween two parties 8 the lessor and the lessee. where the lessees (>irer or 6usta)ir) have the right to en)oyFreap a specific enefit against a specified considerationFrentFwages from the lessor 8 the owner (6ua))ir). R."es for I&arah It is condition that the su )ect ( enefitFservice) of the contract and the asset (o )ect) should e #nown comprehensively. $. It is a condition that the assets to e leased must not e a fungi le one (perisha le or consuma le) which can not e used more that once. or in other words the asset(s) must e a non8fungi le one which can e utilized more than once. or the useF enefitFservice of which can e separated from the assets itself. %. It is a condition that the su )ect ( enefitFservice) or the contract must actually and legally e attaina leFderiva le. It is not permissi le to lease something. the handing8over of the possession of which is impossi le. If the asset is a )ointly owned property. any partner. according to e ma)ority of the )urists. may let his portion of the asset(s) to co8owner(s) or the person(s) other than the co8owners. >owever. it is also permissi le for a partner to lease his share to the other partner(s). '. It is a condition that the lessee shall ensure that he will ma#e use of the asset(s) as per provisions of the Agreement or as per customsFnormsFpractice. if there is no e"pressed provision. B. The lease contract is permissi le only when the assets and the enefitFservice derived from it are within the category of Q>alalQ or at least Q6o ahQ as per Islamic +hariah. 19

*. The lessor is under o ligation to ena le the lessee to the enefit from the assets y putting the possession of the asset(s) at his disposal in usea le condition at the commencement of the lease period.

20

Part -0$ In'estment Process ; =is .rsement Stage

Investment0 Investment has different meaning in finance and economics .1inance investment is putting money into something with the e"pectation of gain the upon through analysis has a higher degree of security for principle amount . as well as security of return. within an e"pected period of time. The ma#ing of loans and advances has always een prominent profita le function of the an#. The o )ective of invest

21

management is to ma"imize the performing asset and the minimization of the non performing asset as well as ensuring the optimal point of loan and advance and their efficient management. 3actors Re"ate# 0ith In'estment 7is# Time Interest 7ate +ecurity or collateral @perating !"pense 2egal -onsideration Inflation 1inance -harge Importance of in'estment Investment plays a vital role in national economy in the following ways8 It provides wor#ing capital for industrialization. It helps to create employment opportunities. It rings social equity. -ash generating occur for it successful performance. !conomic sta ilization 7aise standard of living Business cycle can run well only y the help of lending system.

$.$ In'estment Management Investment management is a dynamic field where a certain standard of long8rang planning is needed to allocate the fund in diverse field and to minimize the ris# and ma"imizing the return on the invested fund. -ontinuous supervision. monitoring and follow8up are highly required for ensuring the timely repayment and minimizing the default. Actually the Investment portfolio is not only constituted the an#:s asset 22

structure ut also a vital factor of the an#:s success. The overall success in investment management depends on the an#s investment policy . portfolio of investment. monitoring. supervision and follow8up of the loan and advance. !"im an# 2imited Therefore. while analyzing the investment management of !;I6 an# 2td. it is required to analyze its investment policy. Investment procedure and quality of Investment portfolio. $.* In'estment Management In the feature. Investment principles include the general guidelines of providing credit y ranch manager or Investment officer. In !"im an# 2imited they follow the following guidelines while giving loan and advance to the client. Investment advancement shall focus on the development and enhancement of customer relationship. All credit e"tension must comply with the requirements of instructions. other rules and regulation as amended from time to time. 2oans and advances shall normally e financed from customer deposit and not out of temporary funds or orrowing from other an#s. The an# shall provide suita le credit services for the mar#ets in which it operates. It should e provided to those customer who can ma#e est use of them. The conduct and administration of the loan portfolio should contri ute within defined ris# limitation for achievement of profita le growth and superior return of an# capital. Interest rates of various investment categories will depend on the level of ris# and types of security offered. an#:s 6emorandum and Article of Association. Ban#ing -ompany:s Act. Bangladesh an#:s

Princip"es of "en#ing criteria

It should e clearly understood that the criteria F principles are not infle"i le laws 5 are given as guidelines for protecting credit. In a practical competitive world. ris#s are defined. accepted and credit is often granted even though a personal does not strictly with some of criteria. Princip"es of Safet+ 23

The first lending principle is safety. The very e"istence of a an# depends upon the safety of its advances. +afety should not e sacrificed for profita ility. +o utmost care should e e"ercised to ensure that the funds go to the right type of orrower. are utilized in such a way that they remain safe and the repayment comes in the normal course. Princip"e of )iC.i#it+

2iquidity means the availa ility of an# funds on short notice. The liquidity of an advance means it repayment on demand on due date or after a short notice. Therefore. the an#s must have to maintain sufficient liquidity to repay its depositors and trade off etween the liquidity and profita ility is must. Princip"es of p.rpose

The an# should not invest money for any purposes for which a orrower may e free from all ris#s ut if the funds orrower are employed for unproductive. 3urpose li#e marriage ceremony. pleasure trip etc or speculative activities. the repayment in the normal course will ecome uncertain. 4haracter ;A i"it+ of the (orro0er

The primary responsi ility of the leading an#er is !no0 +o.r c.stomer an# his .sinessD. &hile considering the character and of a orrower. the following point must e #ept in mind. ,o #now your customer alreadyR &as he respectively introducedR If he was previously customer of another an#. why has he come to Islami Ban# Bangladesh 2td. Try to previous an# statementR >ave you made the account opening inquires required y the an#R &hat are the usiness its ownershipR &hat is the customer:s ac#ground and financial trac# recordR -ustomer:s honesty 5 integrity and personal sta ilityR >ow has the customer managed his financial circumstances in the pastR

The ranch manager should have the answer of the a ove queries and should e to )udge his a ility to use the investment facilities to his advantage. Advance should e granted only to those orrowers in whom the ranch manager has full confidence. Princip"e of Sec.rit+

24

The security offered y a orrower for an advance is insurance to the an#er. It serves as the safety value for an unforeseen emergency. +o another principle of sound investment is the security of investment. The security accepted y a an#er to cover a an# advance must e adequate. readily mar#eta le. easy to handle and free from any encum rance. Princip"e of Profita i"it+

Ban#ing is essentially a usiness. which aims at earning of a good profit. The wor#ing funds of a an# are collected mainly y means of deposit from the pu lic and interest has to e paid on those deposits. So.rces of Repa+ment After the ranch manager has ensured that the investment will e a profita le propositioning for the an#. he should then turn his attention to the cash flow situation of the orrower. Princip"e of 5ationa" Interest The a ove development of an#ing has reached a stage where a an#er is required to identify his usiness with national policies. Ban#ing Industry has significant role to play in the economic development of a country. +o. the savings of the people which are mo ilized y an#s must e distri uted to those sectors which require development in the country:s planning program. In'estment processing of Exim (an! Ienerally a an# ta#es certain steps to deliver its proposed investment to the client. But the process ta#es deep analysis. Because an#s invest depositors fund. not an#s: own fund. If the an# fails to meet depositors demand. then it must collapse. +o. each an# ma#es its loan dis ursement decision through successfully passing the following crucial steps0 Se"ection of the c"ient,

>ere. orrowers approach to any of the ranch of !"im Ban# 2imited. Then. he tal#s with the manager or respective credit officer .+econdly. an# considers five -:s of the client. After successful completion of the discussion etween the client and the an#. an# selects the client for its proposed investment. It is to e noted that the clientFcustomer must agree with the an#:s rules 5 regulations efore availing investment. Ienerally. an# analysis the following 3i'e 49s of the client0 4haracter, Borrowers integrity. honesty and intention to repay the loan money. 4apacit+, Borrowers usiness a ility. especially profit ma#ing a ility. 4apita", !nough capital to cover the usiness ris#. 4on#ition, &hether the applicants usiness is favora le in the economy or not. 4o""atera", Borrowers a ility to produce additional securities. 25

App"ication stage

At this stage. the an# will collect necessary information a out the prospective client. 1or this reason. an# informs the prospective client to provide andFor fill duly respective information which is crucial for the initiation of loan proposal. Ienerally. here. all the required documents for ta#ing loan have to prepare y the client himself. ,ocuments that are necessary for getting investment of !"im Ban# 2imited are prescri ed elow0 Trade 2icense photocopy (for proprietorship)9 A ridged pro forma income statement9 Attested copy of partnership deed (for partnership usiness)9 3rior three ((') years: audited alance sheet (for )oint stoc# company)9 Attested copy of the 6emorandum of Association (6@A) 5 Articles of Association (A@A) for the )oint stoc# company9 Attested copy of the Ta" Identification ?um er (TI?)8 including final assessment9 Tenders of the proposed assets (in case of >3+6)9 ,etailed summary of the sundry de tors and creditors (including oth time 5 schedule)9 +ummary of the personal mova le 5 immova le assets9 and others. Appraisa" stage

At this stage. the an# evaluates the client and hisFher usiness. It is the most important stage. Because. on the asis of this stage. an# usually goes for sanctioning the proposed credit limitFproposal. If anything goes wrong here. the an# suddenly stops to ma#e payment of loan. In order to appraise the client. !"im Ban# 2imited provides a standard 18$CDB 1orm (Appraisal 7eport) to the client for gathering all the information. >owever. the following contents are presented from that appraisal report0 -ompany:sF-lient:s Information. @wner:s Information. 2ist of 3artnersF,irectors. 3urpose of InvestmentF1acilities. ,etails of 3roposed 1acilitiesF-redit. Brea# up of 3resent @utstanding. @ther 2ia ilities of the -lientFIroup. 26

3revious Ban#er:s Information. ,etails of +isterFAllied -oncerns. Allied ,eposit as on. BusinessFIndustry Analysis. 7elationship Analysis. Asset82ia ility position of the client as per Audited Balance +heet. &or#ing -apital Assessment. 7is# Irade. Insurance -overage. Audit @ servation. +ecurity Analysis Sanctioning stage

At this stage. the an# officially approves the investment proposal of the respective client. In this case client receives an#:s sanction letter. !"im Ban# 2td. sanction letter contains the following elements0 -redit 2imit. 6ode 5 amount of 2oan. 3urpose of loan. 3eriod of loan. Interest 7ate. +ecurities. =oc.mentation stage

At this stage. usually the an# analyses whether required documents are in order. In the documentation stage. !"im Ban# 2imited chec#s the following documents of the client0 Ta" 3ayment -ertificate. +toc# 7eport. Trade 2icense (renewal). OAT certificate 2ia ility statement from different parties. 7eceiva le from different clients. @ther assets statement. 27

Aungy#ar ?ama. Three ((') years net income 5 usiness transactions. 3erformance report with the an#. Account +tatement 1orm of the an#. 3articulars of the 3roposal. 3articulars of the 3roperties. @utstanding lia ility position of the an#. -IB (-redit Information Bureau) 7eport. =is .rsement stage

At this stage. an# decides to pay out money. >ere. the client gets hisFher desired fund or goods. It is to e noted that efore dis ursement a Msite plan/ showing the e"act location of each mortgage property needs to e physically verified. Monitoring ; Reco'er+ stage an# can o tain monthly stoc# report from the client in case of micro

At this final stage of investment processing of the !"im Ban# 2td. an# will contact with the client continually. for e"ample8 investment. >ere. the an# will #eep his eye on over the orrower. If needed. an# will physically verify the client:s operations. Also if an# feels that anything is going wrong then it tries to recover its fund from the client.

28

Part-*, Ana"+sis

,eposit Analysis Jear %((4 ,eposit (1igure *44''.(C in million Irowth rate %((< D'4'*.BC %(.'$L %($( <B<B<.B( %%.%'L %($$ $(D44$.%$ $$.<4L %($% $B('C<.CC %'.$BL 29

Interpretation0 The graph show that the total deposit of !"im an# increase gradually. here the growth rate of deposit is fluctuating year y year.In%((< the growth rate was %(.'$. %($$ is $$.<4L5in%($% it was%'.$BL.If the amount of deposit increase in this way the an# can use more proportion of deposit for loan 5advance.

-ren# of in'estment Jear Investment(figure in million) %((4 *'C'D.C4 %((< C4C(<.<$ %($( <'%<C.C* %($$ <<C<<.C' %($% $$4%$<.<<

30

Interpretation0 The supplied illustration provides information that the amount of investment of the $$4%$<.<< million. an# was progressively increased.In%((4 the investment was *'C'D.C4 million5 in%($% it will reach into

4apita" a#eC.ac+ Ratio Jear -apital Adequacy 7atio %((4 $(.D<L %((< $$.$4L %($( <.<*L %($$ $(.44L %($% $(.<BL

31

Interpretation0 -apital adequacy 7atio determines the capacity of the an# in terms of meeting the lia ilities 5 other ris# such as credit ris# operational ris# etc. The -apital adequacy 7atio is fluctuating year y year in %((4 it was $(.D<L 5 in%($% it was$(.<BL.

In'estment Income Jear Amount(figure in million) %((4 C*D*.'4 %((< 4$BD.$$ %($( <C(C.$4 %($$ $'$%%.DD %($% $D%C<.'%

32

Irowth 7ate

''.($L

%'.<(L

$D.<$L

'C.C$L

'$.*<L

Interpretation0 The data e"hi it that each year their income increasing as much as investments increase. The growth rate of investment income is fluctuating.. in %($( the growth rate was$D.<$L which was lower 5 in %($% it was was'$.*<L

In'estment as a E of tota" #eposit Jear Invest as A L of total ,eposit %((4 <'.$BL %((< <%.<%L %($( <4.%4L %($$ <%.B%L %($% 4B.%%L

33

Interpretation0 The chart demonstrates that the investment deposit ratio tediously change from %((4to %($%.In %($( investment deposit ratio was higher than other year that is <4.%4L 5 lower is <(.<$L in current year %($%.

Industry investment scheme Jear Amount(figur e in million %((4 %(CDD.' C '%.C*L (.$DL *.BBL $B.B(L 34 %((< %DB%4.4B %($( %D'4$.%$ %($$ %4<*B.< ''4%<.' %($%

Interpretation0 The graph show that the amount of Industry investment scheme is fluctuating year y year. @n the other hand the growth rate of Industry investment scheme is also fluctuating year y year. In%((< the growth rate was '%.C*L. in %($( is (.$DL 5in%($% it was$B.BL.

3rovision held against classified investment Jear Amount(figur e in million) Irowth 7ate %((4 'C<.4 < B$.%BL %((< *%%.B' %($( *'<.% $ '.%$L %($$ '<<.BB %*.%%L

35

Interpretation0 1rom the analysis it has seen that 3rovision held against classified investment was gradually increasing %((4 to %($( 5 in %($$ it was decrease on the other hand the growth rate 3rovision held against classified investment is fluctuating last B years.

6ode wise investments 6ode of investment $.Bai86ua))al %.Bai86ura aha '.Bai8salam B.Izara aia(commercial) 36 Ta#a (figure in Investment(L) %($$ '4.C*L $4.*BL '.$DL '4.B4L Ta#a (figure in Investment(L) million)%($% B*B(B.*< %$B'C.D' ''C4.$4 B'((D.(' %($% '<.'4L $4.*<L %.<%L 'D.'(L million)%($$ 'C<<$.'B $DDBC.B$ '(''.%' ill 'C4%*.C4

*.

Izara

ill 4<B.BD %(<.B< <*D((.*%

(.<'L (.%%L $((L

$(CC.(* '4'.(* $$BCC*.(B

(.<%L (.''L $((L

aia(staff) C.Nuard Total

Interpretation0 1rom this figure it has seen that. in %($$ 5 %($% e"im an# distri utes its investments schemes according to different modes. Among the different modes in%($$ e"im an# concentrate at Bai86uazzal that is '4.C*L 5 in %($% also concentrate at Bai86uazzal that is '<.4'L.

Ieographical investment allocation ,ivision Ta#a (figure in million)%( $% $.,ha#a %.-hittago ng '.=hulna B.7a)shahi 4C$B(.C %B'*C.( $$C%.C '$B'.4 D'.'*L %(.DBL .<<L %.C4L -ompositi on %($% Ta#a (figure in million)%( $$ DB$<C.*B $<C'$.4( $$%<.<' %BC4.4< DB.B%L $<.D(L $.$'L %.B4L 37 -ompositi on %($$

*.Barisal C.+ylhet D.7angpur Total

$<<.B $BD4.* <D%.' $$DB*'.'

.$CL $.%CL .4%L $((L

$$*.<C $'<D.'4 D*<.$$ <<C<<.<$

(.$$L $.B$L (.DCL $((L

Interpretation0 1rom this figure it has seen that. in %($$5%($% e"im an# provides most of the portion of investment in ,ha#a ,ivision. whereas they provide a small portion in Barisal ,ivision .The an# provides more loan 5 advance in te"tile and garments sector. 1or this reason the an# contri ution to ur an area is more than rural area. 4"assifie# in'estment -lassified investmen t Ta#a (amoun t )%($$ <.< $%(.B %C<.$ in million +u standard ,ou tful BadF2oss %.B4L '(.$BL CD.'4L Investment(L ) of total%($$ Ta#a (amoun t )%($% $4<.* $44.( $(4%.4 in million $%.<4L $%.4DL DB.$*L Investment(L ) of total%($%

38

Interpretation0 1rom the graph it seen ma)or portion of a ove is that.

classified investment is ad and loss category. In %($$ their su standard is 'L. in %($% it was increased to $'L. ,ou tful is increased from %($$ to %($%. In %($$ dou tful is '(L ut it decreased in %($% to $'L.

Ma&or 3in#ings !"im an# committed to provide an#ing services that is purely ased on Islamic shariah transparent 5 efficient in this competitive environment. 1rom this report I get some positive and negative findings. The findings are necessary for an# to ta#e corrective measure. +o we disclose the findings ellows8 In every year the deposit amount 5 investment amount increase gradually. Among the different modes e"im an# limited highly concentrate in Bai86uazzal. Among the different sectors e"im an# limited investment highly in industry sector. It has seen that e"im an# limited is providing more investment facilities in ur an area the rural area. In the classified loan the amount of MBad 5 loss/ was D$.**L in %($(. which was increased *<.DCL in the year %($$. !"im Ban# 2td needs to focus to minimize its MBad 5 2oss/ The Investment as a L of total deposit is fluctuating year y year. 39

The trend of -apital adequacy 7atio is fluctuating year y year. The 3rovision held against classified investment is increasing over the year accept %($$. The Investment Income of e"im an# limited is increasing year y year ut growth rate is fluctuating.

Recommen#ation They should give more attention in increasing their deposit in different accounts. !"im an# limited should attention highly to hold their position in industry sector investment9 moreover they should try to improve their position for near future competition. 1rom the geographical allocation it has seen that e"im concentration at Barisal 5 rangpur division. Ban# should #eep maintain capital adequacy ratio in a managea le level. ecause if the capital adequacy ratio will increase. the profit will decrease. -lassified investment is changea le from %((D to %($$ and should give concentration to control this. an# limited give less

concentration at Barisal5 rangpur ut more concentration at ,ha#a9 they should give

40

It has seen that the policy and strategy for credit ris# management are effective for managing credit ris#. +o an# should focus to maintain its current performance. Ban# should #eep their present recovery percentage trend and try to improve it. As it has seen that e"im an# limited Investment Income were more than dou le y last ' years .it convey good sign .they should try to retaining their position.

4onc".sion !"im an# is today:s one of the leading private Islami an# in our country. After the esta lishment it rought lots of new product and services for its clients and the progress of !"im an# is really satisfactory in our an#ing environment. The service provide y the young energetic official of the !"im an# 2imited is very satisfactory. As a Islam an# e"im an# has to follow the rule of Bangladesh an# despite the fact that these rule sometime restrict the foreign usiness to some e"tent .!"im an# is one of the most potential Islami an#s in the an#ing sectors. 3roviding credit to clients is a core usiness of !"im an#. It is also the pioneer in offering world class creditFloan facilities for the people of Bangladesh. It has D% ranches in ur an. su ur s and rural areas in the country. This ma#es possi le for the an# to reach to all type of potential clients. 1undamentally most of the revenue comes from credit department of the an# so it is very essential that !"im an# has well structured Investment department. In this report I have illustrated different aspects of !"im an# Investment department and try to find out the pro lems and the process to solve the pro lems. Although the an# has a very highly structured Investment policy they need to e careful a out future challenges and o stacles. ecause eventually they have to deal with future usiness in this changing world. +o their policy should e upgraded and modified in order to face the challenges. 41

(i "iograph+ Boo# 2awrence. ) Iitman(%((') 3rinciple of 6anagement 1ainance/.$( th edition

3rospectors Annual 7eport.!"im Ban# 2imited.(%((D8%($$) Bangladesh Ban# .Iuidline to fill in the Ban#ing .+tatistic ,epartment Bangladesh an# ( an#ing supervision and 7egulatory ,epartment

&e sites www.e"im an#.com www. angladesh8 an#.org. d

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