Internship Report

On
“An Analysis of Investment Activities of Al-Arafah Islami
Bank Limited”

Submitted To

Md. Golam Sharoar Hossain

Assistant Professor
Dept. of Business Administration
Stamford University Bangladesh

Submitted By
Md. Mahmudul Hassan Tuhin
ID No: BBA-04012927
Major-Accounting
Program: BBA
Department of Business Administration

Stamford University Bangladesh

Date of Submission: 13th April, 2013

 LETTER OF TRANSMITTAL

Date: 13th April, 2013

To
The Supervisor
Stamford University Bangladesh
Dhaka.

Subject: Submission of Internship Report

Dear Sir,
I am grateful to you for the submission of the report on “An analysis of Investment
Activities of Al-arafah Islami Bank Ltd.” Mouchak Branch in the completion of the
requirement for internship.

This is an excellent opportunity for me to acquaint more closely with the organization. The
association and coordination of all respective officers & staffs with me are full of exciting, re-
discovering and entertainment. During the period of doing this report I have discovered and
gained new & practical feelings, observations and learning.

I have my utmost effort to reflect experience, skill and knowledge, which I acquired at the
time of working at Al-Arafah Islami Bank Ltd. All of my efforts will be successful if the
internship paper can serve its purpose. I have tried my best to explain everything related with
the An analysis of Investment Activities of Al-arafah Islami Bank in this internship paper.

Yours faithfully

Mahmudul Hassan Tuhin

ID: BBA-04012927
Stamford University Bangladesh

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 Student’s Declaration

I hereby declare that the report of internship namely An Analysis of Investment Activities of
AIBL Presented to the department of Bachelor of Business Administration, Stamford
University Bangladesh is out come of the Internship report performed by me under the
supervision of Md. Golam Sharoar Hossain Internship supervisor &Assistant Professor of
Business Administration, Stamford University Bangladesh.

I also declare that this paper is my original worked and prepared for academic purpose which
is a part of the Bachelor of Business Administration (BBA).

Mahmudul Hassan Tuhin

ID: BBA-04012927
Major: Accounting
Department of Business Administration
Stamford University Bangladesh

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 Certificate of Supervisor

This is to certify that Md. Mahmudul Hassan Tuhin, is a student of BBA, ID No: BBA-
04012927 successfully completed his ‘Internship Program’ entitled “An Analysis of
Investment Activities of AIBL” a study on Al-Arafah Islami Bank Limited under my
supervision for the partial fulfillment for the award of BBA degree

He has done his job according to my supervision and guidance. I think this program will help
his in the future to build up his career.

I wish his success and prosperity.

…………………………...........…

Md. Golam Sharoar Hossain

Assistant Professor
Deprt. of Business Administration
Stamford University Bangladesh

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 Acknowledgement

I would like to express my gratitude to all the people that are involved both directly and
indirectly in the preparation of this report. I apologize to the people whose names that I have
not mentioned, and their contribution is highly appreciated by me.

At first I want to express my Almighty Allah who has given me opportunity to go through the
total process of making in this regard. I would like to acknowledge my deepest gratitude to
the honorable supervisor Md.Golam Sharoar Hossain, Assistant Professor , Deprt.of
Business Administration ,Stamford University Bangladesh who has given me suggestions
regarding the preparing of the paper and to go through the process, which has become an
excellent way of understanding the topic of my paper.

I would especially like to thank Md. Asaduzzaman Bhuiyan (VP & Branch Manager) of
Al-Arafah Islami Bank Limited, Mouchak Branch for providing me necessary information of
the bank to complete my report. Moreover thanks to all the employees of AIBL especially
Mr. Mohammad Delowar Hossain (FAVP & 2nd Officer), Fazlul Bari (SPO), Mir Md.
Khairul Enam (PO) Md. Nazmul Kabir (PO) Mohammad Ziaur Rahman(PO) for their
continous guidance and co-operation to complete the report.

My especial thanks to Fazlul Bari (SPO), & Sheikh Md. Mominul Islam (EO) for giving
me time and sharing their thoughts and insights for preparing this report.

At last I am also grateful to my department for giving me the opportunity to work outside for
attaining practical knowledge.

Thanks for all from core my heart

Mahmudul Hassan Tuhin

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 Executive Summary

Al-Arafah Islami Bank Limited is a bank based on Islamic shari’ah having largest branch
network (102 Branches) among the private sector in Bangladesh. It was established on the
18th June 1995. AIBL authorized capital is Tk. 5, 000 million and paid-up capital is Tk. 4,
677.28 million. To execute this I logically arrange the report as chapter wise that includes
introductory part, overview of the company, Theoretical background Investment process &
Disbursement stages, Findings and Recommendation parts. In introductory part I describe the
way and the method in which I collect all the necessary data in preparing the report. In order
to collect the secondary data different related materials like AIBL Annual Report 2011, AIBL
website etc has been used. In theoretical background part I tried to give the definitions of the
terms that are related to the investment division. In investment process and disbursement
stage I describe the application stage, sanctioning stage, disbursement stage etc. In the year
2007 the investment was TK 17, 423.19 million and 2011 it stands at Tk. 53, 582.96 million.
The investment amount increases year by year. The bank makes investment in various sector
but they make maximum invest in industry development and lowest in travel sector. They
measure all risk components before the investment. The bank monitors the investments
regularly to protect the loss of investment. In analysis part, I showed the actual trend of
investment, Mode wise investment, and sector wise investment etc over the last five years.
From the study we get some findings about the Islamic banking. AIBL invest following the
Islamic shari’ah and to monitor this they also have a shai’ah council. Among the different
modes they invest highly in Bai- Murabaha then the other modes. The income from the
investment was increasing significantly in every year. It was Tk. 1,701.40 million in 2007
and it increased by Tk. 4, 143.30 million in 2011. On the basis of findings it can be
recommended for AIBL by which they can achieve their mission, vision, and objective such
as- to improve bank’s financial position, I recommended them to monitor their investments,
to provide more investment agriculture sector, reduce the overdue. The Bank is trying to
increasing its investment quality by following Islamic rules strictly.

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 Acronyms
AIBL Al-Arafah Islami Bank Ltd
A/C Account
AVP Assistant Vice President
BB Bangladesh Bank
Br Branch
CIB Credit Information Bureau
DA Document against Investment
FAD Financial Administration Division
F. Ex Foreign Exchange
HDS Share Holder Durable Scheme
HO Head Office
HPSM Shirkatul Melk
IBBL Islamic Bank Bangladesh limited
IBCA Inter Branch credit Advice
IBDA Inter Branch debit Advice
IBG Islamis Bank General Account
IRA Investment Risk Analysis
LO Local Office
MMPDS Mudaraba Monthly Profit Deposit Scheme
MTDR Mudaraba Term Deposit Receive
MSB Mudaraba Saving Bond Scheme
MMS Mudaraba Mohor Saving Account
MPI Muidaraba Post Import
NSB Nationalized Commercial Bank
OIC Organisation of Islamic Countries
PO Payment Order
P&T Postage & Telegram
SPO Senior Principle Officer
SVP Senior Vice President
TDR Term Deposit Receipt
TIN Taxpayer identification Number

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 Table of Contents
CLAUSE CONTENTS PAGE NO.
Title Page
Letter of Transmittal ii
Declaration iii
Certificate of Supervisor iv
Acknowledgement v
Executive Summary vi
Acronyms vii
Part-1 Introduction
1.0 Origin of the study 01
1.1 Statement of the research problem 01
1.2 Objective of the study 01
1.3 Methodology of the Study 02
1.4 Definitions of terms used in the study 03
1.5 Limitations of the study 04
Part-2 Scenario of ‘An Analysis of Investment Activities in Banking 05-06
sector in Bangladesh
Part-3 An overview of Al-Arafah Islami Bank 07
3.1 Background of the Bank 07
3.2 Corporate Information 07
3.3 Organization Structure 09
3.4 Number Branches 11
3.5 Number of Employees 11
3.6 Vision Statement 11
3.7 Mission Statement 11
3.8 Principal Activities 12
3.9 Modes of Investment 12
3.10 SWOT Analysis 22
3.10.1 Identification of Strengths, Weaknesses, Opportunities and 23
Threats
3.10.2 Draw Conclusion 25
3.10.3 Prepare Action plan 25
Part- 4 About Investment 26-34
4.1 Investment 26
4.2 Factors Related with Investment 26
4.3 Importance of Investment 26
4.4 Investment Management Of AIBL 26
4.5 Investment Principles of AIIBL 27
4.6 Principles of Sound Lending 27

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 4.7 Investment procedure of AIBL 30
4.8 Investment processing of AIBL 30
4.9 Application Stage 31
4.10 Appraisal Stage 32
4.11 Sanction stage 32
4.12 Documentation stage 33
4.13 Disbursement stage 34
4.14 Monitoring stage 34
Part- 5 Analysis and Findings 35-49
5.1 Mode wise Investment 35
5.2 Sector wise Investment 36
5.3 Geographical Investment allocation 37
5.4 Deposits Analysis 38
5.5 Investment Deposit Ratio 39
5.6 Growth rate of Investment 40
5.7 Industry Investment Scheme 41
5.8 Transport Investment Scheme 42
5.9 Small enterprise Investment Scheme 43
5.10 Debt Ratio 44
5.11 Provision for unclassified Investment 45
5.12 Provision for Classified Investment 46
5.13 Investment Income 47
5.14 Return on invest in securities 48
5.15 Non-performing Investment 49
5.16 Major Findings 49
Part-6 Recommendation and Conclusion 51
Recommendation 52
Conclusion 52
Part-7 Bibliography 53
Appendix 54

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