INTRODUCTION

Islamic Banking
1

INTRODUCTION
Islam offers alternative business practices and perspectives many of which are universal in
nature and quite similar to conventional ones. However, there are some, which are different
and unique: for example, the principle of partnership and sharing of both profit and loss in
Islamic lending.
Islam requires a proper balance between commercialism and humanitarianism, and between
profit and social responsibility. This balanced approach therefore offers a ready solution to
serious current problems of profiteering, consumer exploitation, irresponsible corporate
governance and environmental degradation.
Islamic business practices maximize all the positive aspects of business: examples include
honest business conduct, reasonable profit, fair competition, high standard of service culture,
endearing business partnership and cooperation, etc. Islamic business ensures a proper
balance between monetary and spiritual profit. It also strengthens economic justice and
enhances business harmony.
It is fascinating that a number of important business principles were introduced by Islam more
than 14 centuries ago: examples include the principle of minimum wage for employees, basic
consumerism principles such as the right of buyers to return purchased goods, the principle
of venture capital, etc.

1.1 Origin of Report:

This report is based on an internship program. IBTRA (Islamic Bank
Training and Research Academy) arranges this internship program to
gather practical knowledge about banking activities. This is followed by
practical experiences in the branches of IBBL. Each intern must carry out a
specific project, which is assigned by the IBTRA. Consequently a report
based on the projects is to be submitted to both the authority of IBTRA and
the University.

My topic for this internship report is General Banking,

Investment and Foreign Exchange Operations of IBBL. Hence I was placed

in the Rajshahi Branch of IBBL.

1.2. Objectives of the Study:

1.2.1.General Objective:
The General Objective of this report is to observe the general banking,
foreign exchange, investment operations of Islami Bank Bangladesh
Limited at Rajshahi Branch.
2

1.2.2. Specific Objective:

The first objective of writing the report is fulfilling the requirements of the
BBA program. In this report, we have attempted to give an overview of
Islami Bank Bangladesh Limited in general. Following are the main
objectives
To familiar the history

and operations of

Islami Banking in

Bangladesh.
To show the investment mechanism and product offerings in different
modes of IBBL.
To

show

overall

investment

proposal,

appraisal

procedures,

documentation system of IBBL and Conventional Banks.

To show the differences with conventional banking regarding
investments aspects
To identify strength and weakness of investments of IBBL.
To identify the problems related to investments faced by IBBL.
To recommend actions that may be necessary to redesign the
investments of IBBL.

1.3. Scope of the Study:

The scope of this paper is limited to the organizational structure,
background, and objectives, functions, and investment performance of
IBBL as a whole. The scope is also limited to different investment schemes,
modes, mechanism, investment proposal appraisal procedures, monitoring
and documentation of IBBL, general banking aspects and foreign exchange
operations.

1.4. Methodology of the Study:

For smooth and accurate study everyone has to follow some rules
&regulations.
3

Mainly I have collected data from two sources. These two sources are as
following:
A. Primary sources The Primary sources of my information are as below:
1. Direct observation
2. Expert opinion
3. Face to face conversation with the officer
4. Face to face conversation with the client
5. Practical desk work.
B. Secondary sources: The secondary sources of my information are as
below:
1. Annual report of Islamic Bank Bangladesh Limited
2. Desk report of the related department i.e. IDFD
3. Other manual information
4. Files & Folders
5. Memos & Circulars
6. Different circulars sent by Head Office and Bangladesh Bank
7. Various Publications on Bank
8. Websites
9. Daily diary (containing my activities of practical orientation in IBBL
maintained by me)
10.

Different reference books of the library

1.5. Analysis of Data:

Two approaches have been mainly used in this report.
1).Conceptual Approach
2). Empirical

Approach

These two approaches are discussed below:

Conceptual Approach:
4

A theoretical section is given in this report to provide an insight to the various

information concerning function of the organization. A background of IBBL is given
to facilitate the understanding of this report. Every single portion is discussed in
order to understand the empirical section.

Empirical

Approach:

This refers to the information that has been directly collected and
interpreted from the survey on Islami Bank Bangladesh Limited. The
interview of the officials of IBBL and the reports and documents are also
been studied to do the report.

1.6. Limitations of the Study:

There are some limitations in my study. I faced some problems during the
study, which are given below:
i.

Lack of time: The time period for this study was very
short. I had only 8 weeks in my hand to complete this
report, which was not enough. So, I could not go in depth
analysis. Sometimes the officials were busy & were not able
to give much time.

ii.

Insufficient data: Some desired information could not be

collected due to confidentiality of business.

iii.

Lack

of

Supervision:

Few

officials

sometimes

felt

disturbed, as they were busy with their tasks. Sometimes,

they didnt want to supervise due to pressure of work load.

Islamic Banking System

History and Present Status of Islamic Banking around the World
The History of Islamic Banking:
The History of Islamic Banking could be divided in to two parts: First when it
still remained an Idea, Second when it becomes a reality-by private initiative in some
countries and by law in others.
Islamic Banking as an Idea:
The scholar of the recent past in early fifties started writing for Islamic Banking
in place of Interest Free Banking. In the next two decades Islamic Banking attracted
more attention.
Early seventies saw the institutional involvement. Conference of the Finance
Ministers of the Islamic Countries was held. The involvement of institutions and
Government led to the application of theory to practice and resulted in the establishment
of the Islamic Banks. Of this process the Islamic Development Bank (IDB) was
established in 1975.
The coming into being of Islamic Banks:
The savings bank established in 1963 at Mit-Ghamar in Egypt was very popular
and prospered initially and then closed down for various reasons. However this
experiment led to the creation of the Nasser Social Bank in 1972 in Egypt. Though the
bank is still active, its objectives are more social than commercial.

The first private Islamic Bank, the Dubai Islamic Bank was also set up in 1975
by a group of Muslim businessmen from several countries in Dubai. Two more private
banks were founded in 1977 under the name of Faisal Islamic Bank in Egypt and
Sudan. In the same year the Kuwaiti Government set up the Kuwait Finance House.
However, small scale limited scope for establishing Islamic Banks have been tried
before, one in Malaysia in the mid-forties and another in Pakistan in the late-fifties but
neither survived in 1962 the Malaysian Government set up the Pilgrims Management
Fund to help prospective pilgrims to save and profit.
In the ten years since the establishment of the first private commercial bank in
Dubai, more than 50 Islamic Banks have come into being. Though nearly all of them are
in Muslim countries, there are some in Western Europe as well : in Denmark,
Luxembourg, Switzerland and the UK. Many banks were established in 1983 (11) and
1984 (13).
In most countries the establishments of Islamic banking had been by private
initiative and were confined to that bank. In Iran and Pakistan, however, it was by
government initiative and covered all banks in the country. The Governments in both
these counties took steps in 1981 to introduce Islamic Banking.
Year wise activities in establishing Islamic Banking:
1.
In 1962 -Pilgrims Savings Corporation was established in Malaysia under
Islamic Principle.
2.
In 1963 - Dr. Ahmed A. El-Naggar established an lslamic Bank named
Savings Bank in Mit-Ghamar, 100 K.M. away from Cairo, Egypt.
3.
In 1969 - An Islamic Specialised Bank named Tabung Haji was established
Malaysia.
4.
In 1970 - Foreign Ministers of OIC countries in their meeting decided to form
Islamic Banks in Muslim countries.
5.
In 1971 - Naser Social Bank was established in Cairo, Egypt
6.
In 1973 - (18.12.73) Finance Ministers of OIC countries in their meeting
decided to forman International Islamic Bank.
7.
In 1974 - (August) Finance Ministers of OIC countries signed a charter to
form an International Islamic Bank.
8.

In 1975 - (20.10.75) Islamic Development Bank (IDB) was formed in

Jeddah, K.S.A.
9.
In 1975 - Dubai Islamic Bank was established in Dubai, UAE.
10.
In 1977 (i) Faisal Islamic Bank was established in Sudan
(ii) Kuwait Finance House was established in Kuwait,
11.
In 1977 - International Association of Islamic Banks (IAIB) was formed in
Jeddah, K.S.A.
7

in

12.

In 1978 - Jordan Islamic Bank for Finance and Investment was established
in Jordan

13.
14.

In 1978 - Pakistan declared all Banks as Islamic

In 1983 - (13.03.1983) Islami Bank Bangladesh Ltd. (IBBL) was established
in Dhaka, Bangladesh
In 1983 - Islamic Bank was established in Turkey
In 1983 - Bank Islam Malaysia was Established in Malaysia
In 1983 - General Council for Islamic Banks and Financial Institutions
(GCIBFI) was established in Manama, Bahrain.

15.
16.
17.

18
In 1984 - Iran declared all Banking system Islamic
19.
In 1987-Al Baraka Bank Bangladesh Ltd.(Now ICB Islamic Bank limited) was
established in Dhaka, Bangladesh.
20.

In 1991 - (27.03.1991) The Accounting and Auditing Organization for Islamic

Financial Institutions (AAOIFI),formerly known as Financial Accounting
Organization for Islamic Banks and Financial Institutions, was established as per
decision of the Islamic Development Banks annual meeting of its Board of
governors in Istanbul in March 1987 and finally in accordance with the
Agreement signed by Islamic Financial Institutions on 1 Safar, 1410H
corresponding to 26 February, 1990 in Algiers, Algeria during Islamic
Development Banks annual meeting.
-AAOIFI was registered on 11 Ramadan 1411H corresponding to 27 March,
1991 in the state of Bahrain
as an International autonomous non-profit
making Corporate body.

21. In 1995 (i) AlArafah Islami Bank Ltd. (ii) Social Investment Bank Ltd.
established in Dhaka, Bangladesh.
22. In 1999 EXIM Bank Limited was established in Dhaka, Bangladesh and
converted to full-fledged Islamic bank from July 2004.
23. In 1999 First Security Bank Limited was established in Dhaka, Bangladesh
converted to full-fledged Islamic bank from
01.01.2009.

Was

and

24. In 2001 Shahjalal Islami Bank Limited was established in Dhaka, Bangladesh
25.
In 2002 Islamic Financial Services Board (IFSB) was established in
Malaysia.
In addition to above 11 (eleven) Conventional Banks (Prime Bank Limited, Dhaka Bank
Limited, South East Bank Limited, Premier Bank Limited, Jamuna Bank Limited, The
City Bank Limited, AB Bank Limited, HSBC, Standard Chartered Bank, Bank Al-Falah
Limited and Standard Bank Ltd.) have Islamic Banking operations.
Islamic Banking Shines:
Islamic Banking in Bangladesh started in the year 1983 with the establishment of
Islami Bank Bangladesh Limited as the first Islamic Bank in the South East Asia.
Thereafter, 4 (four) Bangladeshi Islamic Banks were established and 2 (two)
conventional Bank was converted into Islamic Bank. As such there are 7 (seven)
8

fully fledged Islamic Banks in Bangladesh. Moreover, 8 (eight) Bangladeshi

Conventional Banks & 3 (three) Foreign Commercial Banks started islamic
banking operations.
Out of total Deposit in the banking sector as on 30.06.2009 Nationalized
Commercial Banks share was 29.49%, Specialized Banks share was 5.46%,
Private Commercial Banks (excluding Islamic Banks) share was 42.49%, Islamic
Banks share was 15.27% and Foreign Commercial Banks share was 7.29%. As
on 30.06.2008, share of deposit of Nationalized Commercial Banks, Specialized
Banks, Private Commercial Banks (excluding Islamic Banks), Islamic Banks and
Foreign Banks was 31.60%, 5.95%, 40.92%, 13.61% and 7.93% respectively.
Out of total Investment in the banking sector as on 30.06.2009 Nationalized
Commercial Banks share was 22.76%, Specialized Banks share was 7.33%,
Private Commercial Banks (excluding Islamic Banks) share was 44.42%, Islamic
Banks share was 18.53% and Foreign Commercial Banks share was 6.97%. As
on 30.06.2008 share of Investment of Nationalized Commercial Banks, Specialized
Banks, Private Commercial Banks (excluding Islamic Banks), Islamic Banks and
Foreign Commercial Banks was 23.76%, 7.80%, 43.39%, 16.92% and 8.13%
respectively.
Popularity of Islamic Banking is rising worldwide, for its interest-free nature At
Present more than 300 Islamic Banks and Financial Institutions are providing
their banking services under Islamic framework in more than 60 (sixty) countries
of Asia, Africa, Europe and America. Its clients are not only confined to Muslim
countries but are also spread all over the world. Islamic Banking grows at a rapid
pace because of its value oriented ethos that enables it to draw finances from both
Muslims and non-Muslims alike. The current assets of Islamic Financial Services
Industry are estimated approximately at US$ 1,000 billion.
At present there are Islamic Banks in the following countries:
01.
02.
03.
04.
05.
06.
07.
08.
09.
10.
11.
12.
13.
14.
15.

Afganistan
Algeria
Albenia
Argentina
Australia
Bahamas
Bahrain
Bangladesh
Brunei
CaymanIslands
Cyprus
Denmark
Djibouti
Egypt
Germany
9

16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.

Guinea
Gambia
India
Indonesia
Iran
Iraq
Jordan
Kazakhstan
KibrisTurkish Republic
Kuwait
Lebanon
Liechtenstein
Luxembourg
Malaysia
Mauritania

31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.

Morocco
Niger
Pakistan
Palestine
Philippines
Qatar
Russia
Saudia Arabia
Senegal
South Africa
SriLanka
Sudan
Switzerland
Thailand
Tunsia
Turkey
U.A.E.
U.K.
S.S.A.
Yemen.

HISTORICAL BACKGROUND OF IBBL

10

Establishment of IBBL
Islami Bank Bangladesh Limited was incorporated as the first Shariah based interestfree Bank in South-East Asia on the 13th March 1983 as a Public Limited Company with
limited liability under the Companies Act, 1913 (At present the Companies Act, 1994).
The first branch of the Bank i.e. Local Office, Motijheel, Dhaka started functioning on
the 30th March 1983. The Bank was ceremonially inaugurated on the 12th August 1983. The
Authorized Capital of the Bank is Tk.10,000 million and Paid-Up Capital is Tk.6,177.60
million. The shareholding of Foreign and Local Shareholders in the Paid-Up Capital is 58.23%
and 41.77% respectively as on 31.12.2009.
Total Shareholders of the bank was 52,164 and total officials of the bank were 9,588 as on 31st
December 2009. The Banks Corporate Headquarter is housed in its own 18-storied modern
building at 40, Dilkusha Commercial Area, Dhaka.
The total Equity of the bank stood at Tk. 23,619.81 million as on 31st December 2009 which
was 11.65% of its Risk-Weighted Assets as against requirement of minimum 10.00%. Bank
had 11 Zonal Offices and 211 Branches and 20 SME Service Centers in the country as on
31.12.2009.

Capital Formation of IBBL

1.

Authorized Capital:

Authorized capital of Islami Bank Bangladesh Limited (IBBL) is

Tk.1,000 Crore divided into 10,00,00,000 Ordinary Shares of Tk.100/each.
2.

Paid up Capital:

Paid up Capital of Islami Bank Bangladesh Limited is Tk.617.76

Crore as on 31.12.2009 (Local Shareholders 41.77% and Foreign
Shareholders 58.23% as on 31.12.2009).
Shares of Islami Bank Bangladesh Limited have been declared
as eligible securities in dematerialized form under central depository
system of CDBL (Central Depository Bangladesh Ltd.) from March
2005. Shares are being transacted / traded in dematerialized form
through CDBL since then.

AT A GLANCE OF IBBL
The bank through its 231 branches (including 20 SME Service
Centers) successfully mobilized Tk.243,653 million deposit from
4,591,463 depositors and deployed Tk.214,616 million as
investment to 455,840 accounts up to 31st December 2009. Growth
rate of Deposit of IBBL in 2009 was 20.55%, as against 21.52%, in
11

2008. Growth rate of Investment of IBBL in 2009 was 19.20%, as

against 24.24%, in 2008. In the year 2009, total income of the bank
was Tk. 25,404 million showing 6.93% growth in 2009 as against
36.90% growth in 2008 and total expenditure was Tk.18,886 million
showing 8.48% growth in 2009 as against 25.06% growth in 2008
resulting in pre-tax profit of Tk. 6,517.66 million showing 2.68%
growth in 2009 as against 67.89% growth in 2008. The Board of
Directors of the bank has recommended 20.00% Stock Dividend and
10.00% Cash Dividend to the shareholders for the year 2009.
Import
During the year 2009 bank opened 38,717 import Letters of
Credit for Tk.161,230 million as against 35,929 Letters of Credit for
Tk. 168,329 million in 2008.
Export
During the year 2009 bank handled 44,291 Export Bills for
Tk.106,424 million as against 32,749 Export Bills for Tk. 93,962
million in 2008 showing 13.00% growth in amount.
Foreign Remittance
In spite of global financial crisis and return of our expatriates to
a good number, the foreign remittance position was
outstanding in 2009. Islami Bank Bangladesh Limited with its
sophisticated software, motivated and efficient employees has
consolidated its position as the market leader in foreign
remittance with 39% growth in 2009 as against 67% growth in
2008. IBBL handled 25.59% of inward foreign remittance of the
country in 2009 as against 11.80% handled by the next
competitor Sonali Bank Ltd. The national growth of remittance
business in 2009 was 18.48%. The total remittance business of
the Bank during the year stood at Tk.194,716 million which
was Tk.54,312 million higher than the total remittance of
Tk.140,404 million received in 2008.

Achievements/Awards/Recognitions:
Credit Rating Agency: Credit Rating Information and Services Ltd.
(CRISL)
12

Surveillance Rating : AA (High Safety) for long term which

means High quality,
higher safety, high credit quality, corporate
entity, sound credit profile, no significant problem and modest risk
and ST-1(Highest Grade) for short term which means Highest
certainty of timely payment, short term liquidity & internal fund
generation is very strong, access to alternative sources of fund and
safety is almost like risk free Government short term obligations.
IBBL got the 2nd prize National Export Fair for its Pavilion of
Service Organization in 1985.
The Global Finance, a reputed U.S.A based quarterly
Financial Magazine, awarded IBBL as the Best Bank/Islamic
Financial Institution of the country for the years 1999, 2000, 2004,
2005, 2008 and 2009.
The Institute of Chartered Accountants of Bangladesh
(ICAB), awarded IBBL as the Certificate of Appreciation as a
token of recognition of the Presentation of the companys
published accounts and reports for the year 2001.
The Bank-Bima Patrika, a Fortnightly Magazine, awarded
IBBL as the Best Islami Banking Award-2007.
The Institute of Cost and Management Accountants of
Bangladesh (ICMAB), awarded IBBL as the Best Corporate
Award-2007 (First Position, Local Sector).
Membership of Different Organization / Chamber
Local:
1. Bangladesh Institution of Bank Management (BIBM)
2. The Institution 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. International Chamber of Commerce- Bangladesh
Foreign:
1. International Association of Islamic Banks (IAIB), Jeddah, K.S.A.
2. Accounting and Auditing Organizations for Islamic Financial Institutions (AAOIFI),
Manama, Bahrain.
3. General Council of Islamic Banks & Financial Institutions (GCIBFI), Manama, Bahrain
(IBBL is a member of its Executive Council)
4. Society for Worldwide Inter-bank Financial Telecommunication (SWIFT)

Local Sponsors:

13

 Mohammad Abdur Razzak Laskar (Late)

Mofizur Rahman (Late)
Barrister Tamizul Haque
Mohammad Younus (Late)
Mohammad Shafiuddin Dewan (Late)
Mohammad Bashiruddin
Mohammad Hussain (Late)
Nashiruddin Ahmed (Late)
Mohammad Mosharraf Hossain
Mohammad Malek Minar (Late)
Zakiuddin Ahmed
M.A.Rashid Chowdhury
Engineer Mustafa Anwar
Mohammad Abdullah
Serajuddowla
Shah Abdul Hannan (Repr. of Ibn Sina Trust)
A. K. M. Nazir Ahmed (Repr. of Bangladesh Islamic Centre)
Prof. Mohammad Sharif Hussain (Repr. of Islamic Economics
Research Bureau)
Mohammad Nuruzzaman (Late)
Abul Quasem
A.K. Fazlul Haque
Engineer Muhammad Dawood Khan
14

 Moulana Mohammad Abdul Jabbar (Late) (Repr. of Baitush

Sharaf Foundation Ltd.)
Foreign Sponsors:
Islamic Development Bank, K.S.A
Kuwait Finance House (K.S.C.), Safat, Kuwait
Jordan Islamic Bank, Jordan
Islamic Investment and Exchange Corporation, Doha, Qatar
Bahrain Islamic Bank, Bahrain
Islamic Banking System International Holding SA, Luxembourg
Al-Rajhi Company for Currency Exchange and Commerce,
K.S.A(Present name: Al-Rajhi Company for Industry & Trade)
Sheikh Ahmed Salah Jamjoom, K.S.A.
Sheikh Fouad Abdul Hameed Al-Khateeb (Late), K.S.A.
Dubai Islamic Bank, Dubai, U.A.E.
The Public Institution for Social Security, Kuwait
Ministry of Awqaf Islamic Affairs, Kuwait
Ministry of Awqaf Islamic Affairs, Kuwait (Present name: Kuwait
Awqaf Public Foundation, Kuwait)

15

16

What is Islamic Bank?

Islami bank is a financial Institution that operates with the objective to
implement and materialize the economic and financial principles of Islam
in the banking area.
The organization of Islamic conference (OIC) defines an Islamic bank
as a financial institution whose statutes, rules and procedures expressly
state its commitment to the principals of Islamic Shariah and to the
banning of the receipt and payment of interest on any of its operation.
According Islamic banking Act 1983 of Malaysia Islamic bank is a
company, which carries on Islamic banking business. Islamic banking
business means banking business whose aims and operations do not
involve any element which is not approved by the religion of Islam.
It appears from the above definitions that Islamic banking is system of financial
intermediation that avoids receipt and payment of interest in its transactions and conducts its
operations in a way that it helps achieve the objectives of an Islamic economy. Alternatively,
this is a banking system whose operation is based on Islamic principles of transactions of
which profit and loss sharing (PLS) is a major feature, ensuring justice and equity in the
economy. That is why Islamic banks are often known as PLS-banks.

Fundamental Philosophy of Islamic Banking:

In Islam, the social, political economical sectors of human life are not separate;
but these are considered as different interdependent parts of our social system.
So in Islamic society, the basic philosophies of Islamic Economic & Banking are
Tawhid, Khilafat, Justice & Akhirat.

Tawhid:
The basic spec of Tawhid is that Allah is only one; He is creator, owner, planner,
controller and all in all. He is the creator of not only people but also all things of
the world and out of the world. Man is an important creature and they have given
importance on other creatures in the world and all are created only for the people.

17

Khilafat:
Allah is the Principal (creator) and people are the Agent (khalifa) of the Principal in
the world. Agent is dependent on the Principal, he is responsible to obey Him
(Allah) and he has to do something for Him (Allah) as agent. The followings are
the precedence of khilafat---

(i)Brotherhood:
In Islamic sense, all people are equal in case of honor, right and importance
through their creation and thus it creates an Universal Brotherhood.

(ii) Trusteeship:
In Islamic sense, people are not the absolute owner of wealth. Only Allah is the
absolute owner of the wealth. People are only the trustee of the wealth. He is the
user of wealth, but he cannot use it in any way in anywhere; he has to use it in
the way of Allah, i.e., he cannot creates its misuse.

(iii) Independent:
People are the choicest creation of Allah in the world. So, he (people) is the
honorable creation and he has most importance on other on other creatures in
the world. In this sense, he is independent in think, trust and naturally in some
works; but he should mind it that he is the agent of Allah and he is responsible &
liable to explain his conducts.

(iv) Moderation in Consumption:

Allah is only the creator of all things. Man cannot make product; but he can
change or moderate the structure of the products which are created by Allah and
thus he can creates consumption more and more.

Justice:
In Islamic sense, Justice is the fulfillment of all needs of all human being to
maintain responsible earning for all. If anyone fails to earn for his physical or
mental weakness, his family and government shall maintain him. The followings
are the evidences of Justice---

(I ) Mutual Consultation:
Islamic society is leadership based, so all the problems of our muslim society are
solved through mosque based mutual consultation. Maximum of our Mosque and
Madrasha are established and operated through mutual consultation. So, in
Economic and Banking sectors, mutual consultation can help to solve our financial
problems.

(ii ) Care of others:

18

Our prophet Hazrat Muhammad (S.M.) said that, the man, who eats absolutely;
but his neighbors are then hungry is not Mumin (Believed in Allah). From this
hadith it is clear to us that, all people are responsible to care each other. In
Islamic society, as the head of the family is responsible for the members, the
government is also responsible for the citizens of the country. Also in Islamic
economics and banking, this concept is too much applicable.

(iii) Treating wealth and income as a mean not an end:

Islam provides the principles of balanced distribution. In this case, it provides
zakat, quard-e-hasana etc. The principal of the family is responsible to maintain
all the members of the family and the government is also responsible to maintain
all the people of his country. So it creates family and social good relationship.

(iv) Productive Effort:

Islam does not like the idleness; but promote to productivity. Islamic Banking
System also promotes the productive activities for economic and social welfare
providing investment. So, it is also an important philosophy of Islamic Banking.

Akhirat:
The last philosophy of Islamic Economic & Islamic Banking is Akhirat. In this life,
all the people will have to responsible and liable for there all activities of the
world. So, on depending this trust and concept, Islamic Banking System is
operated and all the people relating to banking business work their activities in
justice.

Shariah Council:
Shariah Council of the Bank is playing a vital role in guiding and supervising the
implementation and compliance of Islamic Shariah principles in all activities of the Bank since
its very inception. The Council, which enjoys a high status in the structure of the Bank,
consists of prominent ulema, reputed banker, renowned lawyer and eminent economist.
Members of the Shariah Council meet frequently and deliberate on different issues confronting
the Bank on Shariah matters. They also conduct Shariah inspection of branches regularly so as
to ensure that the Shariah principles are implemented and complied with meticulously by the
branches of the Bank.

Powers and functions of shariah council of IBBl:

a)

Functions of the Council are to offer views on matters related to the

bank from time to time. The council may require and paper from the
bank and examine the same to see whether it is according to Islamic
principles. A salaried officer designated as Murakib with sufficient
19

knowledge about all schools of Islamic thoughts may be appointed of

recommendation of the Council to ensure
b)

compliance of the Shariah principle in each and every easy of the

bank and he will be responsible to the council.

c)

The shariah Council will assist the Board of Directors by advising

them on matters relating to Shariah. Their recommendations on
Shariah principles must be respected by the Board of Director as it is
committed to run the Bank, strictly in accordance with Shariah.

d)

The opinions of the majority of members are taken as the opinion of

the Council provided that the said opinion is supported by Council.

e)

The Council maintains its secretariat and a properly equipped library

at the Head Office of the bank where it keeps proper records of all its
proceedings and decisions.

f)

The Council may, whenever it thinks necessary, constitute subcommittee or subcommittees.

OBJECTIVE OF ISLAMI BANK:

Islamic Bank Bangladesh LTD introduce this Islamic Banking system over the conventional
banking system with some huge and vast mission and objective. Some of them are mentioned
here with the conformation of the officials as like

To conduct interest free banking.

Ensure equity and justice in the field of all economic activities.

To establish participatory banking instead of banking on debtor creditor relationship.

To invest through different modes permitted under Islamic Shariah.

To accept deposits on profit-loss sharing basis.

To establish a welfare-oriented banking system.

To extend co-operation to the poor, the helpless and the low-income group for their
economic uplift.
To play a vital role in human development and employment generation.
To contribute towards balanced growth and development of the country through
investment operations particularly in the less developed area.
To contribute in achieving the ultimate goal of Islamic economic system.
20

Functions of Islamic Bank:

1. To mobilize deposits
2. To disburse investments
3. To handle foreign exchange and foreign business
4. Remittance: To remit money to home and abroad through T.T, D.D,
Pay-Order, Travelers Cheque, etc.
5. Other services: E.g. Locker service, to receive different types of bills
of clients, to issue Guarantees and counseling etc.
Besides, Islami Bank Bangladesh Limited (IBBL) conducts social welfare
activities through Islami Bank Foundation.

Mission of Islamic Bank:

To establish Islamic banking through the introduction of welfare oriented
banking and also ensure equity and justice in the field of all economic
activities, achieve balanced growth and equitable development through
diversified investment operations particularly in the priority sectors and
less development areas of the country. To encourage social-economic
upliftment and financial services to the low -income community
particularly in the rural areas.

Vision of Islamic Bank:

Islamic bank vision to always strive to achieve superior financial
performance is considered a leading Islamic bank by reputation and
performance.
To establish and maintain the modern banking technology, to
ensure the soundness and development of the financial system
based on Islamic principles and to become the strong and
efficient

organization

with

highly

motivated

professionals,

working for the benefit of people, based upon accountability,

21

transparency and integrity in order to ensure the stability of

finical systems.
Try to encourage savings in the form of direct investment.

Organizational structure of IBBL:

BOARD OF
DIRECTOR
S

SHARIAH
COUNCIL
E C

M D
D M D

E V P

S V P

V P

A V P

S P O

P O
22

M C

S O

OFFICER

Full meaning:
EC- Executive Committee

PROBATIONAR
Y OFFICER
MC- Management Committee

MD- Managing Director

DMD-Deputy Managing Director

EVP- Executive Vice President

SVP- Senior Vice President

VP- vice President

AVP- Assistant Vice President

SPO- Senior Principle Officer

PO- Principle Officer

SO- Senior Officer

What is Riba and its characteristics:

The word used by the Quran concerning interest is Riba. The literal meanings of
Riba are money increase, increase of anything or increment of anything from its
original amount (Maududi 1979, p.84). However, all increases are not considered
as Riba in Islam. Money may increase in business activities as well. This increase
is not at all considered as Riba. The increase, instead of being prohibited (Haram),
is approved (Halal) in Islam. Islam prohibits only those increases that are charged
on the loan with a prefixed rate.

Muslim scholars equate interest with Riba. In the Shariah, Riba technically refers to the
premium that must be paid by the borrower to the lender along with the principal amount as
a condition for the loan or for an extension in its maturity (Chapra 1985, p.64). In other
words, Riba is the predetermined return on the use of money. In the past there has been
dispute about whether Riba refers to interest or usury, but there is now consensus among
Muslim scholars that the term covers all forms of interest and not only excessive interest
(Khan 1985, p.52).
23

Imam al Rajhi describes, During the era of Jahiliah people invested their
money and charged Riba on a monthly basis, though the invested amount
remained unchanged. Money so invested was called back at the time of
repayment. In case of the borrower being unable to pay back, the lender
extended the period of repayment enhancing the amount to be paid on
and above the principal amount. Abu Bakr al Jasas writes, During the
period of Ignorance the lender and borrower came to an agreement that
the borrower would pay back within a specified period the principal
amount along with the agreed upon excess. Ibne Hajar Askalani says,
Excess goods or money charged on and above principal amount is Riba.
Thus, any prefixed extra amount charged on a specific amount of money
or goods lent out is called Riba.

The most important characteristic of

Riba is that it is the positive and definite result of money when changed.
In other words, when money begets money, without being exchanged for
goods or services, it is called Riba.

Its basic characteristics are:

It must be related to loan
A prefixed amount of money to be paid when due
A time is fixed for the repayment
All these elements for repayment are taken as conditions for loan.

Difference Between Riba and Profit:

There are persons who try to equate Riba with profit. In effect, they are
fundamentally different from each other as can be seen from the following:
Riba

Profit

1. When money is charged, its 1. When money is used in trading

imposed positive and define result (for e.g.) its uncertain result is
is Riba

profit.
24

2.

By

definition,

Riba

is

the 2.

By

definition,

profit

is

the

premium paid by the borrower to difference between the value of

the lender along with principal production

and

the

cost

of

amount as a condition for the production.

loan.
3. Riba is prefixed, and hence 3. Profit is post-determined, and
there is no uncertainty on the part hence its amount is not known
of either the givers or the takers until the activity is done.
of loans.
4. Riba can not be negative, it can 4. Profit can be positive, zero or
at best be very low or zero.

even negative.

5. From Islamic Shariah point of 5. From Islamic Shariah point of

view, it is Haram.

view, it is Halal.

Difference between Conventional Banking and Islamic Banking:

Conventional Banks

Islamic Banks

1. The functions and operating modes

1. The functions and operating modes

of conventional banks are based on of Islamic banks are based on the

manmade principles.

principles of Islamic Shariah.

2. The investor is assured of a

2.

predetermined rate of interest.

sharing between provider of capital

In

contrast,

it

promotes

risk

(investor) and the user of funds

(entrepreneur).
25

3.

It

aims

at

maximizing

profit

3. It also aims at maximizing profit

without any restriction.

but subject to Shariah restrictions.

4. It does not deal with Zakat.

4. In the modern Islamic banking

system, it has become one of the
service-oriented

functions

of

the

Islamic banks to collect and distribute

Zakat.

5. Leading money and getting it back

5.

with

business is the fundamental function

interest

is

the

fundamental

Participation

in

partnership

function of the conventional banks.

of the Islamic banks.

6. Its scope of activities is narrower

6. Its scope of activities is wider when

when compared with an Islamic bank.

compared with a conventional bank.

It

is,

in

effect,

multi-purpose

institution.

7. It can charge additional money 7.

The

Islamic

banks

have

no

(compound rate of interest) in case of

provision to charge any extra money

defaulters.

from the defaulters.

8. In it very often, banks own interest

8. It gives due importance to the

becomes prominent. It makes no public interest. Its ultimate aim is to

effort to ensure growth with equity.

ensure growth with equity.

9.

9.

For

interest-based

commercial

For

the

Islamic

banks,

banks, borrowing from the money

comparatively

market is relatively easier.

money from the money market.

26

difficult

to

it

is

borrow

10. Since income from the advances

10. Since it shares profit and loss, the

is fixed, it gives little importance to

Islamic banks pay greater attention

developing

to developing project appraisal and

expertise

in

project

appraisal and evaluations.

11.

The

greater

conventional
emphasis

evaluations.

banks
on

give

11. The Islamic banks, on the other

credit- hand, give greater emphasis on the

worthiness of the clients.

viability of the projects.

12. The status of a conventional 12. The status of Islamic bank in

bank, in relation to its clients, is that

relation

of creditor and debtors.

partners, investors and trader.

13.

conventional

bank

has

to

guarantee all its deposits.

to

its

clients

that

of

13. Strictly speaking, and Islamic

bank cannot do that.

27

is

AN OVERVIEW OF ISLAMI BANK BANGLADESH LIMITED OF RAJSHAHI

BRANCH, RAJSHAHI.

Location of Rajshahi Branch:

Rajshahi Branch of IBBL, Rajshahi district in started its operation in 04
December 1985 at the Natore Road, Rajshahi. The office building of the
branch is on the Dainik Brata Compelx, 269 alupatty Rajshah.

Establishment of Rajshahi Branch:

Rajshahi Branch as one of an Model branch of IBBL was established on
04 December 1985 and in this time it started its operation as a branch of
IBBL. After is establishment till to date it has passed 26 years of its
operation.

28

Geographical area Rajshahi Branch

Internship spot

Organizational Structure of Rajshahi branch:

29

The management of Rajshahi branch are given bellows:-

S.V.P

S.P.O

P.O

S.O

Provitional officer

OFFICER

A.O

SVP-Senior Vice President

SPO-Senior Principle Officer
PO- Principle Officer
SO- Senior Officer
AO-Assistant Officer

AT A GLANCE OF RAJSHAHI BRANCH

Location of Rajshahi Branch:

30

Rajshahi Branch of IBBL, Rajshahi district in started its operation in 04

December 1985 at the Natore Road, Rajshahi. The office building of the
branch is on the Dainik Brata Compelx, 269 alupatty Rajshah

Deposit: The total deposit of Rajshahi branch as on 30.04.2010 is

1895.305 million.

Investment: The investment mechnism of the bank are 3 calagories.

(i)
(ii)
(iii)

Share mechnism
Lgara / Rent mechnism
Bai (buying & selling) mechnism.

The total invesment as on 30.04.2010 is TK. 3306.385 million.

Foreign Exchange:
The total export of Rajshahi branch is .98 million. The total import of
Rajshahi branch is 379.30 million. The total remittance is 121.55 million of
the Rajshahi Branch.

31

General
Banking
Department

32

Types Of Accounts in IBBL

Accounts are opened under the following two modes:

1. Al-Wadeeah ( Current Account)

2. Al-Mudaraba (Deposit Account)

1. The word Al-Wadeeah has been derived from the Arabic word Wadayn which means to
keep/to deposit/to give up/Amanat. As per Shariah , Amanat means to keep something
(goods/money/others) to any reliable person/institution for safe and secured preservation of
the same keeping its ownership unchanged and which will be returned to the owner of the
fund on demand as it is/in original shape. In case of Amanat Bank/any other institution
cannot use, invest and amalgamate the funds without the prior permission of the owner of the
Amanat.

33

 The depositor can deposit any amount in this account

The depositor can withdraw any amount by cheque
No profit is allowed in this account
The depositor shall also not bear any loss
Cheques, bills etc collected in this account against commission
Govt. excise and incidental charge realize from this a/c as per rule.

2. Mudaraba principle:
The word Mudaraba derived from the Arabic word Darb/Darabun. Literally it means
movement to earn profit (munafa). It is a form of partnership where one of the contracting
parties called the Shahib-al-mal provides a specified amount of capital and acts like a
sleeping or dormant partner, while the other party called the Mudarib (entrepreneur), provides
the entrepreneurship and management for carrying on any venture, trade, industry or service
with the objective of earning profit. The Mudarib is
required to work with honesty and sincerity and to exert the maximum possible care and
precaution in the exercise of the functions.

Mudaraba Deposit Products

Short Notice Account
Savings Account
Term Deposit Account
34

 Savings Bond
Special Savings (Pension)
Monthly Profit Deposit
Muhor Savings
Waqf Cash
Hajj Savings
Foreign Currency Deposit

DEPOSIT:
Islami Bank is one of the greatest growing banks in Bangladesh. In every aspect Islami
banking concept and as 1st introducer of this banking system in Bangladesh Islami bank plays
a superior position in the whole banking sector in Bangladesh. In that stream of flows total
deposits achieved by IBBL at Tk. 200343 Million as on 31.12.08 as against Tk. 166325
Million of the preceding year registering an increase of Tk. 34018 Million i.e. (18.11 percent
as compared to the growth rate of 16.70 percent of the Banking Sector during 2007.) Total
number of depositors of IBBL increased to 3,802,709 as on 31 st December 2007 from
3,207,131 of the preceding year, registering an increase of 19 percent.

35

250000

200000

150000
Column2
100000

50000

0
2005

2006

2007

2008

2009

Trend of Deposit

Different Types of Account Holders

Anyone can open an account with the banker if he is not incapable of entering into a valid
contract and the banker is satisfied of his bonafide and is willing to enter into the business
relations with him. There are certain types of accounts in regard to which the banker should
take note of the relative laws and exercise pre-cautions in order to safeguard its interest.
Some types are:

A/c opened by minors

Government

Joint (two or more persons)

Public bodies

Firms

Agents

Co-operative societies

Executors
36

 Administrators

Receivers

Trustees

Non-Residents

Liquidators

37

GENERAL PRACTICE AT REGARDING ACCOUNTS

Account Opening Register
After fulfilling all the requirements for opening account necessary entries are given in the
account opening register. There are several registers for several accounts as MSA, AWCA
and MTDR etc. Date of opening, name of the account holder, nature of the business,
address, initial deposit and introducers information are recorded in that register. New
accounts number is given from the list of new numbers provided by the computer
department.
Check Book
Checkbook is issued to the new customer after seven days of opening account. Two
separate checkbooks are given for current and saving accounts. AWCA accounts check
book consists 25 and 50 leafs, while MSA account checkbook has 10 leafs. There has a
check book issue register in this regard; where check book number, leaf number, date issue
etc. information are kept on the register. All the necessary numbers are the sent to the
computer department to give entry in the program.
Incidental Charges
Taka 10 or 50 = each for twice a year is debited from customers AWCA account for
rendering service to him. Taka 50 = each is debited from customers account for providing
him solvency certificate.
Profit
Profit is the price of product, which is determined by the market forces. Every bank offers
a competitive price to attract depositors.

Account opening
This section opens account. It receives account opening application from the interested
applicants, examines and scrutinizes the applications and then selects final customers.
Selection of customers is very much important as the success and failure of the bank is
largely dependent on the valued customers

Account Opening Process

The following formalities must be maintained by the customer for opening of

different types of account.

Individual
i.

Genuine & acceptable introduction

ii.

Attested photograph of the account operators/A/c holders

iii.

Certificate from the Chairman/ Commissioner/ Gazetted Officers or any

responsible person

iv.

Verification of introducers signature

v.

Admittance of the signature(s) of opener/ operators A/c

vi.

Transaction profile

vii.

Obtain KYC

viii.

Declaration/Undertaking

Joint Account
i.

All item for individual account holder as stated above

ii.

Two or more persons can open an account

iii.

Authorized person can operate the account

iv.

Authority is automatically revoked by death, insanity or bankruptcy

v.

Stoppage of payment by any one of the account holders

Sole Proprietorship
In case of opening an account by a sole-proprietor of a firm, he/she should sign the
account opening form and furnish his specimen signature showing his representative
character.
i.

All items for individual account holder as stated above.

ii.

Valid trade license or attested photocopy thereof issued by the competent

authority

iii.

Membership certificate from local business association/Chamber of

Commerce

Partnership Firm
A banker should not open an account in the name of a partnership unless one or more of
the partners apply to him to do so. Except where the partner, making an application for
the opening of an account in the firms name, is deprived of the power, which fact is
known to the banker, there can be no legal objection to a banker opening an account in the
name of the firm at request. Failure, however, to make proper enquiries by referring to the
partnership agreement or any other record in writing which maybe available before
opening of account on behalf of a firm in a partners name may lead a banker in trouble.

i.

All items for individual account holder as stated above.

ii.

Valid trade license or attested photocopy thereof issued by the competent

authority

iii.

Two or more person can form a partnership firm by partnership deed.

(Registered notarized)

iv.

Clear mandate for operating the a/c from the partners regarding name of the
persons to draw cheques and borrow money, to overdraw, to mortgage or
to sell properties owned by the firm

v.

In case of insolvency of the firm: Operation should be stopped after

receiving notice of insolvency of the firm

vi.

Insolvency of the partner: If the balance is in debit, the a/c must be

closed and the debt should be proved to the receiver. If the a/c is in credit
the other partners may continue the account. Any cheque previously drawn
by the partners maybe paid on the confirmation of the partners.

vii.

Death of a partner: If the account is in credit, then other partners may be

allowed to continue the same but the bank should take fresh mandate from
other partner but if the account is in debit then the account must be closed
to determine the liability of the deceaseds estate.

Private Limited Company

A company registered under the Companies Act, 1913 has a legal entity apart from its
shareholder. Private Company means a company which by its articles:

 Restricts the right to transfer the shares if any;

Limits the number of its members 2 to 50
Prohibits any invitation to the public to subscribe for the shares, if any or
debentures of the company.

When a current account is to be opened for a private limited company the banker will have
to obtain the following requirements:
i.

All terms for individual account holder as stated above

ii.

Copy of memorandum and articles of association duly certified by the

Secretary/Director of the company

iii.

Certificate of incorporation

iv.

Certified copy of resolution of the board of Directors regarding opening of

a/c, the execution of papers and conduct of the account.

v.
vi.

List of Directors under the signature of the Chairman

Copies of latest financial statement/ Transaction profile.

Public Limited Company

Any seven or more persons associated for any lawful purpose, any subscribing their
names to a memorandum of association and otherwise complying with the requirements of
the Act (13A) in respect of registration, from an incorporated company. When an account

is to be opened in the name of a Public limited Company the following formalities are to
be observed:

i.

All terms for individual account holder as stated above

ii.

Certified copies of memorandum and article

of association are to be

submitted
iii.

Certificate of incorporation

iv.

Certified copy of commencement of business for inspection and return in

case of a newly floated company

v.
vi.

List of Directors under the signature of the Chairman to be furnished

Certified copy of a resolution of the Board or Directors regarding opening
of the bank a/c execution of the papers and conduct of the account to be
furnished

Trust Account:
A trustee is a person entrusted with the work of the management of a property under a
trust created by the owner thereof for the benefit of another or of another and the owner
section 3 of the Trust Act 1882 defines trust & a trustee as, A trust is an obligation
annexed to the ownership of property and arising out of confidence reposed in and
accepted by the owner, or declared and accepted by the owner or declared and accepted by
him, for the benefit or another or of another and the owner, the persons who reposes or
declares the confidence is called the trustee.
i.

All terms for individual account holder as stated above.

ii.

Trustee is a person entrusted with the work of a management of a property

under a trust deed.

iii.

Discharges his duties as per trust deed

iv.

Attested photo is required

Mudaraba Savings A/c (MSA A/c)

i.

Nationality certificate from Ward Commissioner/ UP Chairman or Passport

(photocopy) of every signatories of the A/c

ii.

KYC form for individual

iii.

Introducers of any current account/ Savings account holder

iv.

Two copies attested photographs of a/c operators

v.

Nominees one copy photographs attested by a/c operators

Mudaraba Special Savings (Pension) MSS A/c

i.

KYC Form for individual

ii.

Introducers of any current account/ Savings account holder.

iii.

One copies attested photographs of a/c operators.

iv.

Nominees one copy photographs attested by a/c operators

v.

Nationality certificate from Ward Commissioner/ UP Chairman or Passport

(photocopy) of every signatories of the A/

Closing Of An Account
It could be closed either by a banker or by the customer itself.
Banker If the customer does not have transaction with the bank for more than a year it
may categorized as irregular. And if the customer does not have transaction for 10 years,
the customer will be sent a letter.
Customer If the customer intentionally wants to close the account he/she has to write an
application forwarding the Manager with reasons behind the closure of the account.

Types of Deposit & Their Corresponding Provisional Profit

Serial
no

Particular of Deposit

01.

Mudaraba Hajj Deposit

Final
Profit
for
2008

Fina
l
Profi
t for
200
9

Provisio
nal
Profit
for 2010

a. Above 10 Years

10.35 10.0
9

8.5

b. Below 10 Years

9.90

9.72

8.2

02.

Mudaraba Waqf Cash

Deposit

10.35 10.0
9

8.5

03.

Mudaraba Special Savings

(Pension)
a. MSS 10 Years

9.90

9.72

8.2

b. MSS 05 Years

9.50

8.21

6.9

a. MMS 08 Years

9.90

9.72

8.2

B. MMS 05 Years

9.50

8.24

6.9

04.

05.

Mudaraba Muhor Savings

Mudaraba Saving Bond

06.

07.

08.

09.

a. MSB 08Years

10.80 9.35

8.00

b.

10.50 8.51

6.90

a. SND for client

4.20

4.17

3.00

b. SND for bank

1.95

MSB 05Years

Special Notice Deposit

Mudaraba Term Deposit

a. MTDR 36 months

10.10 9.25

8.00

b. MTDR 24 months

9.30

8.32

7.00

c. MTDR 12 months

9.00

7.55

6.00

d. MTDR 06 months

7.70

6.91

5.50

e. MTDR 03 months

7.40

6.61

5.00

a. MSA for client

6.10

5.65

4.00

b. MSA for bank

2.69

Mudaraba Savings
Deposit

Mudaraba Monthly Profit

Deposit Scheme
a. MMPDS 05Years

10.70 9.28

7.50

b. MMPDS 03Years

10.10 8.42

6.50

Cash Section

A bankers transactions are mainly of three types. They include:

 Cash
Transfer &
Clearing
The cash section of any bank plays very significant role in general banking department
because, it deals with most liquid assets. Basically cash department is the most vital and
sensitive department of the branch which deals with all kinds of transaction in cash. All
cash receipts and payments are made through this department. The IBBL (Foreign
Exchange Branch) is equipped with electronic machinery with fully computerized system
which delivers quick service to its valued customers. This section receives cash from
depositors and pay cash against cheques, draft, Pay order (PO), etc over the counter. This
section accepts cheques from the depositors for payment in cash. The drawer who wants to
receive money against cheque comes to the payment counter and presents the cheque to
the officer. He verifies the following information:

I. Date of the cheque

II. Signature of the account holder
III. Material alteration
IV. Whether the cheque is crossed or not
V. Whether the cheque is endorsed or not
VI. Whether the amount in figure and in word corresponds with each one

Then the officer checks the cheque from the computer for further verification. Here is the
following information that is checked.

I. Whether there is sufficient balance or not

II. Whether there is stop payment instruction or not
III. Whether there is any legal obstruction or not
The cash section deals with all type of negotiable instruments. It also includes the Vault
which is used as the store of the cash instruments. The vault is insured up to a certain
amount, which is called the vault limit; the excess cash is then transferred to Bangladesh
Bank. The IBBL, Foreign Exchange Branch Vault limit is 1.5 crore. When the excess
cash is transferred, the cash officer issues IBDA. The vault counter is around 35 lacs.

Any client who wants to deposit money will fill up the deposit slip and give the form
along with the money to the cash officer over the counter. The cash officer counts the cash
and compares with the figure written in the deposit slip. He then puts his signature on the
slip along with the cash received seal and records in the cash receive register and also in
the computer against the account holder.

Bills & Clearing Section

A cheque is a bill of exchange drawn on a specified banker and not expressed to be
payable otherwise than on demand. [Section-6, Negotiable Instrument Act, 1881]

A cheque maybe an open cheque (which can be presented for payment by the holder) or
a crossed cheque (which can be paid only through a collecting banker.)

The picture below shows a typical cheque issued by banks.

Cheques of its customers are received for collection from other banks.

In case of

receiving cheques, following points should be checked very carefully:

The cheques should not carry a date older than the receiving date for more than
6 months. In that case it will be a stale cheque and it will not be allowed for
collection.

The amount in figure and words in both sides of the pay-in-slip should be same.
The name mentioned in the cheque should be same in both side of the pay-inslip and it should be the same with the name mentioned in the cheque

The cheque must be crosse

Remittance
Remittance means transmission/transfer of money from one place to another. Local
remittance represents remittance that takes place within the territory of a country.
Banks have a wide network of branches all over the country and offer various types of
remittance facilities to the public/customer/client etc.
Virtually there are three types of remittances as under:
DD- Demand Draft
TT Telegraphic Transfer
PO - Payment Order
On Line transaction

Demand Draft
According to Section85 (A) of the negotiable instruments Act, a demand draft is an order
to pay money drawn by one office of the bank upon other office of the same bank for a
sum of money payable to order on demand.
The followings are essential features of a demand draft issued by the bank:
1. It is a negotiable instrument
2. It is drawn by one office of a bank upon another office of the same bank
3. It is payable on demand.
4. Its payment is to be made to the person whose name is mentioned in the instrument
or according to order. In other words, it can not be made payable to the bearer.

Issuance of DD

1. A prescribed Application Form bearing No (F20). The following columns should

be filled in properly.
(a) Name & address of the applicant
(b) Telephone No
(c) Date
(d) Signature of the applicant
(e) Name of the payee
(f) Drawee branch
(g) Amount in words and figure
2. Commission to be realized/charged as per Head Office circular, at present

@0.1

% but min TK.10/3. Total amount should be deposited by the party in cash or cheque as per
arrangement.
4. Printed DD block/leaf to be filled in by a bank official as per request of the
purchase i.e.
(a) Name of the issuing branch
(b) Date
(c) A/c payee rubber stamp
(d) Payees name
(e) Amount in words and figure
(f) Drawee branch

5. DD should be signed by two authorized officials

6. Test Number should be given for DD of TK. 25000/- and above
7. Amount should be written by a cheque written in red ink.
8.

Particulars of DD should be entered in DD issue registered B-44 under

supervision of a authorized official.

9. Telegram/Telex should be sent for amount exceeding Tk.1.00 lac Telex/Telegram
charge should be realized from the customers.
10. If the DD issued for cash payment A/c payee rubber stamp should be cancelled
and a letter requesting the drawee branch to pay the DD in cash should be issued under
sealed cover and signature of the payee should be attested.
11. DD Advice should be sent on the same day.
Accounting entries for issuance of DD
Debit..Cash/partys A/c
Credit.IBGA
Credit.Commission

Payment of Drafts
1. When the draft is presented to the drawee branch for payment, the particulars of
the draft are checked with the advice and signature(s) therein verified.
2. Payment of the DD has not been stopped is to be ensured
3. Verification of Test no. is to be done.

4. In case the advice is not received when the draft is presented, the bank will pay the
draft, after satisfying itself that the instrument is in order. However, on payment of
a draft in the absence of the relative advice the drawee branch should inform the
issuing branch and obtain confirmation about the payment.
5. The drawee branch should ensure that the payment of the instrument is made in
due course.
6. As the demand drat is payable to order it is duty of the paying branch to obtain
identification of the payee if payment is desired over the counter.
7. If the DD is presented through a bank, the endorsement appearing on the
instrument should be prima-facie in order of certified by the collecting banker.
8. Though there is no time limit for presentation, the paying bank should put an
enquiry if a draft is presented after a reasonable period say 6 months. Such draft
may be paid if the collecting banker certifies that amount has been credited to the
payees A/c in absence of such a certificate, it would be advisable to return the
draft for revalidation before payment.

Telegraphic Transfer (TT)

Telegraphic Transfer is by far the quickest method of transferring funds form one place to
another. Some times, the remitter of the funds requires the money to be available to the
payee immediately. In that case the banker is requested by the remitter to remit the funds
telegraphically. It is an instruction conveyed by telegraph/telex/telephone to the drawee
branch for paying certain amount of money to a specified person.

Payment Order
Payment order is meant for making payment of the bankers own or of the customers dues
locally and not for effecting any remittance to an out station. In a sense, the payment
order is used for making a remittance to the local creditors.

Issuance & Payment of PO

1. F-19 form should be filled properly
2. Total amount should be deposited through cheque/cash.
3. Commission to be realized as per banks circular
4. Printed payment order leaf should be filled in as per F-19 and signed by two
authorized officers.
5. Entry should be given in B-22 register under supervision of authorized official
6. The instrument should be handed over to the purchaser
7. PO are required to be discharged by the beneficiary where applicable on revenue
stamp of appropriate value against in cash or through account.
Remarks: No Test is required for PO

LEADERSHIP MANAGEMENT APPROACH AND STYLE

IBBL and Eastern Bank Ltd. follow participation leadership approach. Work
accomplishment is from committed people with interdependence through a common stake
in organization purposed with trust and respect. They are the managers who display in their
actions the highest possible dedication both to people and to dork. They are the real term
managers who are able to mesh the service needs of the enterprise with the needs of the
individuals.
TECHNOLOGY AT ISLAMI BANK BANGLADESH LIMITED
With rapid change in communication banking worldwide has experienced a tremendous
transformation and it continually being shaped to shit changes of industrialization of the
society. Unfortunately, Bangladesh has missed much of the excitement and we are virtually
unaware of the improvements in banking services in other developed countries.
IBBL has now brought a part of that development made through improved computer and
communication technology. Clients of IBBL will now enjoy service quality service quality
that is quite upgraded and to some extent unique.

PERSONAL POLICIES
Personal policies at IBBL are not clearly defined in Dhaka. However the broad outlines of
the policy are
To establish contingency plants for local staff protection
To develop programs to cross train personal for added flexibility

CORPORATE CULTURE (Ideology, Values, Beliefs, Philosophy, etc.)

They have standard set of rules for ethical guidelines. The core idea of it is to Do the right
thing. The right thing may not obvious at all the time. They are to look after community
and serve them, avoid conflict of interest whenever possible. The idea at the Citicorp is to
build a congenial atmosphere and encourage teamwork and progress collectively.
IBBL has a good corporate citizen abided by a set of core values. Some can be classified as
traditional values such as security, trust worthiness, integrity and confidentiality. Others are
perhaps more temporary. They reflect IBBL to its customers to be
Responsible to their needs.
Flexible in approach
Professional in manner
Always striving excellence
The major corporate philosophy of IBBL is to efficiently manage the risk involved and
maintain the stability of the bank to the greatest extent possible.

ORGANIZATIONAL PRACTICES
IBBL is quite conservation in their organization polices. These policies are followed by
Citicorp and are intended to protect the interest of stakeholders. They go through extensive
market research before launching any new product. They try to minimize risk by acquiring
as much information as possible.
MANAGING PUBLIC AFFAIRS
They have a very definite view about public affairs management. The bank wants the name
franchise to be a symbol of status. Retail bank is still not in operations and individual
account is discouraged with high minimum balance requirements.

PRESS RELATIONS
They also have a clear view of press relations. They are not going for an advertisement in
the national dailies. Their motto is to be focused to a target group. First they identify their

target customers and they approach him/ her directly. So, they do not need any promotion
to at

Investment
Department

INTRODUCTION

Investment is the action of deploying funds with the intention and expectation that they
will earn a positive return for the owner (Brokington 1986, p.68). Funds may be invested
in either real assets or financial assets. When resources are used for purchasing fixed and
current assets in a production process or for a trading purpose, then it can be termed as
real investment. The establishment of a factory or the purchase of raw materials and
machinery for production purposes are examples in point. On the other hand, the purchase
of a legal right to receive income in the form of capital gains or dividends would be
indicative of financial investments. Specific examples of financial investments are:
deposits of money in a bank account, the purchase of Mudaraba Savings Bonds or stock

in a company. Ultimately, the savings of investors in financial assets are invested by the
respective company into real assets in the form of the expansion of plant and equipment.
When money is deposited with an Islamic Bank, the bank, in turn, makes investments in
different forms approved by the Islamic Shariah with the intent to earn a profit. Not only a
bank, but also an individual or organization can use Islamic modes of investment to earn
profits for wealth maximization.

Investment Objectives of IBBL:

The objectives and principles of investment operations of the Banks are:
The investment fund strictly in accordance with the principles of
Islamic Shariah.
To diversifies its portfolio by size of investment, by sectors (public
and private), by economic purpose, by securities and by
geographical

area

including

industrial,

commercial

and

agricultural.
To ensure mutual benefit both for the Bank and the investment
client by professional appraisal of investment proposals, judicious
sanction of investment, close and constant supervision and
monitoring therefore.
To make investment keeping the socio-economic requirement of
the country in view.
To increase the number of potential investors by making
participatory and productive investment.
To finance various developments schemes for poverty alleviation,
income and employment generation with a view to accelerating
sustainable socio-economic growth and upliftment of the society.
To invest in the form of goods and commodities rather than give
out cash money to the investment clients.
To encourage social upliftment enterprises.

 To shun even highly profitable investment in fields forbidden

under Islamic Shariah and is harmful for the society.

STRATEGIES:
Risk in the investments and return thereon are interrelated. An
investment policy that emphasizes a high return must accept relatively
high risk. Conversely, an investment policy that will tolerate only small
amount of risk must be prepared to accept a relatively low return.
As such, it is really difficult whether to select a high return port-folio on
high risk or low risk port-folio with a low return.
Nevertheless, considering all aspects following guidelines shall be
followed as strategy for banks investments.
i.

If two port-folios have the same risk but different returns, the
port-folio having higher return shall be preferred.

ii.

If the two port-folios have the same expected returns, but

different degrees of risk, the port-folio with lower risk shall get
preference.

iii.

If one port-folio has both a higher return and a lower risk than
another, the first port-folio shall be preferred.

iv.

Keeping in view the risk factor, the bank shall maintain

flexibility in determination of rate of return on investments on
case to case basis in consideration of the risk element involved
in the respective investment.

v.

Emphasis is given for expansion and strengthening cottage and

small industries sector and rural industries. This immensely
potential

industrial

sub-sector

shall

create

employment

opportunities to rural and semi-urban population and shall have

positive contribution in employment and income generation
and poverty alleviation of the low-income group.

vi.

Investment facilities shall be extended for establishment and

expansion of export oriented forward / back ward linkage and
import substitute industries.

vii.

The bank requires retaining 10% of its total deposit liability as

Statutory Liquidity Ratio (SLR) including 4% Cash Reserve Ratio
(CRR) with the Central Bank. The bank may go for investments
up to 90% of its total deposit. The perspective investment plan
is being formulated quantifying the allocation of investments
size-wise, sector-wise, and geographical area-wise, economic
purpose-wise, security-wise and mode-wise keeping in view
20% projected growth of deposit each year.

viii. Taking into consideration the broad objectives of the bank,

national priority, socio-economic need, growth level of the
economy, the investments port-folio of the bank may gradually
be

diversified

and

allocated

in

term

of

size,

sector,

geographical area, economic purpose, security and mode.

ix.

Safety,

security,

profitability

and

liquidity

of

Banks

investments.
x.

Each branch invests, at least 50% of its deposits locally.

xi.

Enhance of extending limit of good investment clients.

xii.

Adopting of modern technology

So, banks investment policy, investment planning and investment

budgeting, till situation changes / improves, shall aim at promotion of
quality general investment.

Investment Mechanism of IBBL

Bai- Mechanism
Share Mechanism Ijara Mechanism

a) Bai-Murabaha a) Mudaraba
a) Hire Purchase
b) Bai-Muajjal
b) Musharaka
b) Hire Purchase Under shirkatul Me
c) Bai-Salam
d) Istishnaa

Bai-Murabaha
Bai-Murabaha may be defined as contract between a buyer and a seller
under which the seller sells certain specific goods (permissible under
Islamic Shariah and the Law of the land), to the buyer at a cost plus
agreed profit payable in cash or on any fixed future date in lump-sum or
by installments. The profit marked up may be fixed in lump-sum or in
percentage of the cost price of the goods.
Types of Murabaha
In respect of dealing parties Bai-Murabaha may be of two types.
Ordinary Bai-Murabaha
If there are only two parties, the seller and the buyer, where the seller
as an ordinary trader purchases the goods from the market without

depending on any order and promise to buy the same from him and
sells those to a buyer for cost plus profit, then the sale is called Ordinary
Bai-Murabaha.
Bai-Murabaha on Order and Promise
If there are three parties, the buyer, the seller and the Bank as an
intermediary trader between the buyer and the seller, where the bank
upon receipt of order from the buyer with specification and a prior
outstanding promise to buy the goods from the Bank, purchases the
ordered goods and sells those to the ordering buyer at a cost plus
agreed profit, the sale is called Bai-Murabaha on Order or Promise,
generally known as Murabaha.
This Murabaha upon order and promise is generally used by the Islami
Banks, which undertake the purchase of commodities according to the
specification requested by the Clients and sale on Bai-Murabaha to the
one who ordered for the goods and promised to buy those for its cost
price plus a marked-up profit agreed upon previously by the two parties,
the Bank and the Client.
In this Bank, Bai-Murabaha is treated as a contract between the Bank
and the Client under which the Bank purchases the specified goods as
per order and specification of the client and sells those to the ordering
client at a cost plus agreed upon profit payable within a fixed future
date in lump-sum or by fixed installments. Thus it is a sale of goods on
profit by which ownership of the goods is transferred by the Bank to the
Client, but the payment of the sale price (cost plus profit) by the Client
is deferred for a fixed period.
It may be noted here that, in case of Bai-Muajjal and Bai-Murabaha,
Islamic Bank is a financier to the Client not in the sense that the Bank
finances the purchase of goods by the client; rather it is a financier by
deferring the receipt of sale price of the goods sold by the Bank to the
Client. If the Bank does not purchase the goods or does not make any

purchase agreement with seller, but only make payment of any goods
directly purchased and received by the client from the seller under BaiMuajjal/ Bai-Murabaha Agreement, that will be a remittance of the
amount on behalf of the Client, which shall be nothing but a loan to him
and any profit on this amount shall be nothing but interest (Riba).

Operational Procedures of Investment of IBBL

Induction of client
Application
Categorization
Processing and appraisal
Sanction
Documentation
Purchase of goods by the Bank
Taking delivery of goods by the Bank
Sales and delivery of goods to the client

Induction of client

Hole preliminary discussion with the prospective client regarding

his investment needs, business experience, viability of the project and

Shariah permissibility of the asset the business and the uses of the
asset.

Brief him on the salient features of Hire Purchase under Shirkatul

Milk mode of Investment. Apprise, in particular, the usual terms and

conditions under which the Bank made such investment. Discuss about
Clients equity participation and its immediate availability.

Look to the past performance of the Client, Check-up Head Office

Current Investment Policy and Branchs track record of Hire purchase

under Shirdatul Melk Investment of the item(s).

If the Proposal is found permissible under Islamic principles and

suitable, advise the Client to submit formal Application. If not found

suitable, regret politely.

Request potential Client to open an Al-Wadeeah Current account.

Let him maintain the Current account. Let him maintain the current
Account satisfactorily for a reasonable period. (This will generally mean
six month).

Application:
Obtain application in triplicate from the client of F-167A and record the
same in the Investment Proposal Received and Disposal Register (B-53).
Obtain and affix attested photograph(s) of the Proprietor
/Partner/Directors/ Trustee/ Administrator on the top right hand
corner of the application.
Scrutinize the application of the Client to see that(a) All columns are properly field in;
(b) Particulars and information given therein are complete
and correct in all respects;
(c)All required Documents/papers as listed in the footnote
for the application is submitted;
(d) It is signed by the client as per specimen signature with
the bank and duly verified by the authorized official of the
bank.

Categorization:
Categories the proposal as under:

Hire Purchase under Shirkatul Melk Commercial:

Investment on hire purchase under Shirkatul Melk mode to

individual /firm/company /society for commercial purpose shall be
termed as hire purchase under Shirkatul Melk Commercial.

Hire Purchase under Shirkatul Melk Industrial:

Hire

Purchase

under

Shirkatul

Melk

investment

to

industrial

undertaking in the form of land, building, machineries, equipment,

transport, etc shall be termed as Hire Purchase under Shirkatul Melk
Industrial

Hire Purchase under Shirkatul Melk Agriculture: Hire Purchase

under Shirkatul Melk investment to agriculture sector in the form of
Agriculture equipments, machineries, shallow Tubewell, Tractor,
trailers, Transport etc. shall be termed as Hire Purchase under
Shirkatul Melk agriculture.

Hire Purchase under Shirkatul Melk Transport:

Hire Purchase under Shirkatul Melk Industrial in the form of transport

Bus, truck, car, taxi, lunch, steamer, cargo vessel, air transport etc.
shall be termed as Hire Purchase under Shirkatul Melk transport.
Hire Purchase under Shirkatul Melk Real Estate: Hire Purchase
under Shirkatul Melk Industrial in the form of land building, market,
apartments, for use /rental shall be termed as Hire Purchase under
Shirkatul Melk Real Estate.

Processing and Appraisal:

Enter the Application in the Investment Proposal Received and Disposal
Register (B-53) and allot a Serial Number to it.

Examine shariah permissibility of the goods. Reject the proposal

outright, if not permitted by Islamic Shariah.

Check-up Credit Restriction Schedule of Bangladesh Bank and Head

Office Current Investment Policy Guidelines.

Visit the Business establishment of the Client. Talk to the business

and important personalities of the locality to ascertain the Honesty,

Integrity and Business dealings of the Client.

Request for confidential report of the client from local Bank Branches.

Confident Report from Credit Information Bureau (CIB) of Bangladesh

Bank through Head Office Investment Division as per Instruction Circular
of Head Office in this Regard.

Obtain Financial Statement/Balance Sheet of the Client for the last

three consecutive years for Investment Proposals of Tk. 50.00 lac or

above as per Head Office Instruction.

Inspect Land, Building, other Assets and Properties proposed to be

Mortgaged or Hypothecated.

Forward Documents, Title Deeds and other relevant Papers to

approve Lawyer of the Bank for examination and furnishing his opinion.

Obtain Lawyers Opinion as per clause No. 8.02.

Please study the following carefully and note down the actual findings in
the Appraisal Form against each item:

Effective demand, price of the goods, short or long-term

duration, quality and other specifications of the goods,
availability, etc. of the said or projected goods.

Where sale price of the goods is payable by the client at

specified future date in lump sum or installments as per
proposal.

For Bai-Murabaha Commercial and Bai Murabaha Industrial

Investment, prepare Appraisal Report on F-167B. For appraisal
Bai-Murabaha agriculture and For Bai-Murabaha Import use
special Appraisal Form devised for each of those, if any,
otherwise

F-167B

providing

the

available/required

supplementary information. In course of preparation of the

appraisal report please ensure incorporation of all information
of all information, particulars figures and statistics in Appraisal
Form correctly with special attention to the following: Contact
primarily with the producers/sellers/suppliers of the goods in
the market, study the market price and work out the purchase
and sale prices of the goods as per guidelines.

SANCTION:

On completion of Appraisal as provided herein above, of the Proposal

is found viable, issue Sanction Advice (F-188) if it is within the business

power of the Branch mentioning all the terms and condition is duplicate

to the Client and endorse copies to Zonal and Head Offices retaining one
copy in the Clients file duly accepted by the Client.

If the proposal is not within the Discretionary Power of the Branch,

the Branch shall with Appraisal Report on F-167A and F-167B to Zonal
Office/Head Office.

If the proposal is within the Business Power of the Zonal Office, Zonal

Office shall accord Approval /Regret the Proposal.

If the proposal is not within the Business of the Zonal Office shall

forward

the

proposal

to

Head

Office

with

their

views

and

recommendations.

On receiving the proposal and the Appraisal Report along with

supporting papers Head Office will either approve or Regret.

If the Branch/the Zonal Office /Head Office, the branch will issue the

Sanction advice (F-188) with a copy to ZO/HO duly recorded in /Facility

Sanctioned Register (B-119) with authority to the investment Client for
the limit.

If the client duly accepts the sanction terms and conditions enter the

particulars of the sanctioned proposal in the limit Register (B-117)

allotting a Fixed Serial number for each Client as per Limit Register
which shall remain permanent irrespective of the mode(s) so long the
Client continues business with the Bank.

Open file Client-wise, affixing the Fixed Number allotted to him as per

Limit Register (B-117) and Clients name, address, telephone number be

recorded prominently in the inner side of the investment File for easy
tracing in case of need.

In case of investment to the existing Client, obtain required papers,

document with the past performance and outstanding liabilities of the

Client, if any and process of sanction the proposal as per instruction laid
down here-in-above after due evaluation or study.

Documentation:
Before purchasing the asset/property by the Bank, obtain sufficient
collateral securities as mentioned in the sanction advice along with the
following charge documents properly executed i.e. duly filled in, signed,
stamped, verified and witnessed where necessary:
I. Hire Purchase under Sirkatul Melk Sanction Advice deal-wise duly
accepted by the client.
II. Hire Purchase under Shirkatul Melk Agreement (Deal-wise).
III. Letter of Pledge (Deal-wise)/Mortgage Deed.
IV. Single party D.P. Not, if there is no guarantor.
V. Double party D.P. Not, if there is guarantor (s) to be made by the
Client in favor of the guarantor and endorsed by the later to the
Bank.
VI. D.P. Not Delivery letter.
VII. Letter of Hypothecation for the asset(s) and Clients stock in
Trade/work- in-process.
VIII. Letter of Disclaimer, (if stored in Clients/Partys own/hired
Godown).
IX. Insurance policy (If stored in Clients/Partys Godown/yard under
Banks effective control) duly recorded in insurance register.
X. Letter of guarantee.
XI. Balance confirmation letter.
XII. Letter of installments.

XIII. Letter of Disbursement.

If the investment is made collaterally secured by Mortgage of
property, obtain the following documents:
I. In case equitable mortgage, Memorandum of Deposit of Title
Deep (MDTD) signed by the owner of the property.
II. In case of Legal Mortgage, Registered Mortgage Deed should be
obtained.
III. Personal Guarantee of the owners of the property on.
IV. Original Title Deeds with CS, RS, SA, Mutation Parcha, DCR of the
property and Mutation record.
V. Up-to-date Rent Receipt.
VI. Non-encumbrance Certificate along with Search Fee Paid Receipt
of the concerned Registry/Sub-Registry office.
VII. Site plan (Map/Naksha) of the Mortgaged property.
VIII. Valuation Certificate (issued by a competent civil engineer and
physically verified by the Branch Officials) countersigned by the
Manager certifying the Market value and the Forced sale value.
Value of the land and value of the construction to be shown
separately

taking

the

depreciated

value

of

the

construction/building into consideration as per standard norms.

(The valuation Certificate should be self contained one giving full
particulars of the land, i.e. Deg Number, Khatian Number, Plot
Number, Holding Number, Mouza Number and name of the
Mouza, Schedule (Chowhaddi), mentioning the name of the
owners of the Land/Building along with a site plan duly signed by
the owners of the property, the Client and attested by a civil
Engineer and the Branch Manager).
IX.

Lawyers certification about verification of the Title Deed which

should be in clear terms that the property covered by the Title
Deeds is free from all encumbrances and the mortgagor(s) have
clear valued Title to the property and the same can be accepted
as collateral security against the Investment/Facility. Legal

opinion should be self-contained, without any ambiguity and

clean in all respects.
X. An Affidavit be sworn in before a 1st Class Magistrate by the
owner of the property to the effect that the property offered for
mortgage

as

security

is

of

his

own

and

free

from

all

encumbrances and the owners is/are lawful owners in possession

and he/they will not Encumber/Transfer/sale and/or charge the
property in any manner whatsoever to other during the
continuance of Banks Investment without prior clearance of the
Bank.
where the Investment is secured by pledge/Hypothecation of
Stock-in-Trade, Machineries etc., also obtain the following
Document:
I. Letter of Pledge asset & goods security, for Clients stocks in
Trade/work-in-Process etc. if any.
II. Letter of Hypothecation for Clients stocks, stores, Work-inProcess etc.
III. Legal

Mortgage

of

Machineries

with

full

details

of

each

machinery
In case the investment Collaterally/ Additionally secured by
Pledge of Shares of reputed Public Limited Company on Banks
approved list and quoted in the Stock Exchange, the following
additional documents are to be obtained:
I. Agreement for Pledge of share along with original share
certificates (No share in the name of minor shall be accepted as
security).
II. Blank Share Transfer Deed in Duplicate on copy signed, dated
and another copy signed and undated.
III. Share Delivery letter addressed to the Bank.
IV. Letter to the concerned Company to register Line in Banks favor.
This notice shall be sent be registered acknowledgement due

post (registered A/D post) and confirmation of recording the Line

shall be obtained from the concerned company.
V. Letter of authority in Banks favor duly signed by the shareholder
to collect dividend /Bonus on his behalf on the share pledged to
the Band. In case of Investment to partnership Firms, obtain the
following Document:
a.

Copy of partnership deed signed by all partners.

b. Copy of partnership deed duly attested by a 1st Class
Gazetted officer with the original copy and attested by the
incumbent-in-charge of the Branch.

In case of investment to Private or public Limited

Company, obtain the following additional document:

I. Obtain certified copy of the Memorandum and Articles of
Association of the company to ensure that the company has
necessary power to borrow/avail investment from any Bank.
II. Resolution of the board Directors of the Company to avail
Investment/Facility/Borrow, do Business with IBBL and authorizing
the office bearers to execute necessary Documents.
III. Personal Guarantee of the Directors of the Company.
IV. If the investment is allowed on Hypothecation of assets, in
addition to other charge documents, 1st charge under relevant
section of the Companys Act-1994 shall be created in Banks
favor in respect of Companys assets prescribed as security. This
charge shall be created with the registrar of Joint Stock Companies
within 21 days from the date of execution of relative Change
Documents.
V. Certificate issued by the registrar of Joint Stock Companies under
section 114 of The Companies Act-1994 in respect of creation of
charges.
VI. Copies of Memorandum and Articles of Association with the latest
amendments, if any, duly certified by the registrar of joint stock
companies and attested by the managing director on every page

with official seal of the company and duly verified by the

Incumbent-In-Charge of the Branch.
VII. A copy of the Certificate of Incorporation duly attested by the
Incumbent-In-Charge of the Branch.
VIII. A copy of the certificate of commencement of Business (incase of
publish Limited company) duly attested by the Incumbent-InCharge of the Branch.
In case of investment to a trust organization obtains the
following Document in addition to other charges Documents:
Copy of trust deed duly attested by a 1st class Gazette officer and
verified by the incumbent-in-charge of the branch with the original copy.
The Trust Deed must contain a clause authorizing the Trustees to do
Business with banks and to avail investment facilities /borrow from
banks.
I. Resolution of the Board of Trustees to do business with IBBL and
avail investment/borrow from IBBL.
II. The charge documents and all other agreements shall be signed
/executed by persons authorized by all the members of the board
of Trustees, in Trustees are authorized to delegate their powers by
the trust Deed; otherwise all the Trustees must sign/execute the
charge documents and all other agreements.
III. Personal guarantee of all the members of the board of trustees
must be obtained.
In case of investment to co-operative security, obtain the
following documents also:
I. Clearance from the register of co-operative societies for doing
business and avail faculties / investment from IBBL within the
annual borrowing limit of the society.
II. Litter to be issued to; the concerned registrar of co-operative
societies under registered A/D Mail informing about allowing

investment /facility to the concerned society by the bank as per

clearance accorded by him.
III. Personal guarantee of the office Bearers of the society if their
personal capacity.
IV. A copy of the byelaws of the society duly certified by the registrar
of the co-operative societies.

SIGNATURE OF THE CLIENT:

After completion of Document, enter Document in Documents Execution
Register
(B-103). Movement of Document, if any, should be duly recorded in
the Document Ex-custody Register duly singed by the Custodians.

Purchase of Goods by the Bank:

I. That the goods desired by the Client are first purchased by the Bank
and the

ownership of the Bank on the goods is established, i.e.

Bank must transform its money into goods.

II.

That after purchase of the goods, the risk of the goods is borne by
the Bank until the possession of the Merchandise has been passed
on the Client.

III.

That the specification of the goods, delivery schedule and other

terms of contract are fulfilled.

IV. Obtain deal-wise application Order for Purchase on F-136 after due
study.

V. Open investment account in Investment Account Opening Register

(B-102).
VI. Enter the Account Particulars in the Investment Ledger (B-105).
VII. It should be carefully noted that purchase of goods shall be made
only after completion of all the Documentation formalities, including
Pre-Audit memo (F215).
VIII. In case purchase of Bai-Murabaha

goods

by the Bank

on

Credit/deferred payment basis, the Bank shall execute a Credit

Purchase Agreement with the seller to that effect mentioning date
of delivery of Goods to the bank and that of payment by the Bank.

IX. If the goods are to be purchased from the local or outstation market
and money is to be paid/remitted thereof and other expenses such
s TA/DA, transportation etc, shall be borne by the Bank, which shall
ultimately be loaded on the cost of Goods.

Taking Delivery of Goods by the Bank:

I. After finalization of purchase of Bai-Murabaha Goods either by the
Bank officials or through any Agent from the local or out station
market the Bank shall request the seller to delivery the goods
purchased to the Banks Authorized official /Agent or to the Bank
godown against proper acknowledgement.
II. After taking delivery of the goods by the Bank or trough and Agent,
the Bank shall make payment of the price of the goods to producers

/sellers /supplier through DD/TT/PO against Cash memo which will

exclusively be issued in the name of the Buying Agent.
III. The Bank shall not be invest in such cases where the allotting
Authority will not accept the Letter of Authority and agree to
deliver the goods to the Bank as per authorization of this Allotted.

SPECIAL SCHEMES UNDER INVESTMENT MODES

(I) Household Durable Scheme:
Islami Bank Bangladesh Limited has introduced Household Durables
Investment Scheme which has already created great enthusiasm among
the people and received tremendous response from them. Objectives
are to assist the service holders with limited income in purchasing
household articles.
(II) Investment Scheme for Doctors:
A good number or newly graduated doctors from Medical Colleges are
unemployed. Many of the medical graduates are waiting for job because
the opportunity for Government service is limited. If these young
doctors could be self-employed by extending investment facilities, they
could make modern facilities available at the door-steps of rural people.
In view of the above facts, Islami Bank Bangladesh Limited has taken
the initiative an introduced the " Doctors Investment Scheme" to ensure
modern treatment and medical facilities available to the people through

extension of Banks investment facilities for self-employment of newly

graduated doctors and at the same time extending investment facilities
to the established medical practitioners to procure modern and
sophisticated medical equipment.
(III) Small Business Investment Scheme:
Bangladesh a third-wood developing country is rich in natural and
human resources. In spite of vast possibilities, the majority people of the
country live in hardship-below poverty tapped, explored and exploited.
Physical labor is their only means of earning. A large segment of this
populace is active youth force. Many of them are efficient, intelligent
and energetic with initiative & drive and have courage to take risks. But
they cannot uplift their socio-economic condition due to poverty, lack of
financial support and other required facilities.
(IV)Housing Investment Scheme:
One of the basic human needs is to have a house to live in. A house is in
an abode of peace and happiness. Housing has now become an acute
problem in the country, especially in the towns, cities and metropolis.
With their limited income, it has become almost impossible on the part
of the lower middle class, middle class and sometimes, even for upper
middle class to solve their housing problem. To meet this basic human
need, Islami Bank Bangladesh Limited is committed to contribute to this
end to provide a peaceful and happy
(V) Real Estate Investment Program:
Professionals, Service-holders, Businessmen, Real Estate Developer and
other categories of people who are not entitled for availing investment
facilities under Housing Investment Scheme, shall be eligible under this
program Investment is to be extended to build new houses and for

extension/ completion of the house already constructed, commercial

building, shopping complex, flat apartment etc.

(VI) Transport Investment Program:

Under this scheme, investment in being allowed to the existing
successful businessmen and potential entrepreneurs in this sector for all
types of road and water transport with simple and easy terms and
conditions.

The

bank

is

also

extending

investment

facilities

to

multinational companies, established, business houses and well to do

officials and professionals for acquisition of private cars, microbus and
jeeps.
(VII) Car Investment Scheme:
Car is considered as on essential mode of transport in the modern
society, particularly by a section of the officials, business houses and
business executives and established professionals for movement in
discharging their duties and responsibilities punctually and efficiently.
Many of these categories of people cannot purchase a car on payment
of entire purchase value at a time out of their own sources. To meet this
need Islami Bank has introduced the Car Investment Scheme for the
mid and high ranking officials of government and semi-government
organizations, corporations; executives and directors of big business
houses and companies arid also for persons of different professional
groups on easy payment terms and conditions.
(VIII) Rural Development Scheme of IBBL:
Islami Bank Bangladesh limited (IBBL) envisages an economic system
based on equity and justice. Taking into consideration that majority of
the population below poverty line lives in rural Bangladesh, the Bank

has devised a Rural Development Scheme (RDS) with a view to creating

employment opportunity for them and alleviates their poverty through
income generation activities.
The IBBL through its RDS project has been implementing integrated
programs for the landless poor, wage laborers and marginal farmers
aimed at meeting their basic needs and promoting their comprehensive
development.

Consciousness

among

the

poor

needs

should

be

enhanced so that they can lift their position in the socio-economic

structure of the country. In order to consolidate their economic base,
invested money should be used in income generating activities so the
poorer section of the population can become self-reliant. RSD works for
the realization of that objective.
Islami bank bangladesh limited launched its rural development scheme
(RDS) in 1995, to cater to the investment needs of the agriculture and
rural sector of the country to create opportunity for employment and
raising income of the rural people with a view to alleviating poverty.
The scheme has been aimed at achieving an integrated development in
rural areas and gradually developing model village within 10 kilometers
radius of the selected branches.
By this time, the scheme expanded its operations through 139 branches
of the bank in 10,751 villages of the country under 296 thanas of 61
districts. The rural poor are

provided with investment facilities in

agriculture and 343 selected off-farm economic activities in the rural

areas starting from tk.10,000/- to a maximum limit of tk. 3,00,000/-.
The amount of cumulative disbursement through this scheme stood at
tk.24,238.69 million up to december, 2009. Rate of recovery against the
running investment is 99%. At present the number of member under the
scheme is 492,475 out of which 423,528 are women I.E.86% of the
members are female. Besides the investment activities, succeessful
members, so far, have been provided 7,478 no. Of tube-wells with

amounting tk.14.83 million and 4,270 sanitary latrines amounting

tk.4.57 million on quard-e-hasana (profit-free investment) as A part of
health and sanitation program of the scheme. Moreover the scheme is
working in the area of consciousness rising of its members in order to
establish their moral and social .
(IX) Agricultural Implements Investment Scheme:
Bangladesh is predominantly an agricultural country with vast majority
of people living in rural areas. Most of our people for their living are
dependent on agriculture. Agriculture still contributes the lion share of
the gross domestic product. But we could not as yet become selfsufficient in food production. We still import a bulk quantity of food
grains from abroad to meet the deficit. We must modernize our
agriculture and establish more and more industries in order to minimize
imports.
The Bank has introduced Agriculture Implements Investment Scheme"
to provide power tillers, power pumps, and shallow tube wells, thrasher
machine etc. On easy terms unemployed youths for self-employment
and to the farmers help augment production in agricultural sector.
(X) Micro Industries Investment Scheme:
Islami Bank Bangladesh Ltd. has been appreciably participating in this
direction by financing industrial sector. With a view to creating wider
base for industries, the Bank has decided to launch "Micro Industries
Investment Scheme" through its Branches.

DATA ANALYSIS OF THE INVESTMENT OF IBBL

Trend of IBBL Deposit

The trend of deposit increasing of IBBL last four years is so much

satisfactory. Total deposit of the Bank stood at Tk. 244,292 Million as on
31.12.09 as against Tk. 202,115 Million as on 31.12.08 showing an
increase of Tk. 42,177 Million i.e. 20.87percent against 18.31 percent
growth of investment of the Banking sector.

Trend of IBBL Deposit

Year

Tk.

2005

107,779

2006

132,419

2009

166,325

2008

202,115

2009

244,292

Trend of IBBL Deposit

244,292
202,115
166,325
132,419
107,779

2005

2006

2007

2008

2009

Trend of IBBL Investments:

Investment of the Bank stood at Tk. 214,616Million as on 31.12.09 as
against Tk. 180,054 Million as on 31.12.08 showing an increase of Tk.
34,562 Million i.e. 19.20 percent against 18.57 percent growth of
investment of the Banking sector.

Trend of IBBL Investment

Year

Tk.

2005

93,644

2006

113,575

2007

144,921

2008

180,054

2009

75,859

Growth of investment: 2005 to 2009

250,000

200,000

150,000

100,000

50,000

0
2005

2006

2007

2008

Mode-wise Investment
Mode-wise Investment
Mode

2006

2007

2008

2009

Amoun

Amount

Amount

Amount

t
Bai-Murabaha

59465

73833

96,217

117,180

HPSM

39399

50201

63,159

73,871

Bai-Muajjal

6921

6546

6,500

7,318

Purchase

4847

11040

10,223

11,289

Quard

1948

1955

2,151

2,833

Bai-Salam

906

1153

1,719

2,082

Negotiation

2009

Mudaraba

50

50

50

50

Musharaka

153

35

43

Total

11353

144921

180,104

214,666

Mode-wise Investment 2009

2833

11289

2082

Bai-Murabaha
HPSM

73871

Bai-Muajjal

117180

Purchase Negotiation
Quard
Bai-Salam

73871

Sector-wise Investment:

Sector-wise Investment
(Amount in millions)

Mode

2005

2006

2007

2008

2009

Amount

Amount

Amount

Amount

Amount

Industrial

10.21

6.24

35.79

31.50

50.39

Commercia

629.81

768.45

876.34

1104.65

1159.63

l
Real Estate

5859.75

6582.85

6903.09

7183.26

7933.20

Transport

2947.38

2698.88

2621.24

3087.55

3630.48

Agriculture

12.53

11.94

13.61

27.21

76.64

Different Special Investment Schemes

(Amount in Millions)
Name of schemes
Rural

2005

Development 1106.47

2006

2007

2242.22

2884.6 3011.72

Scheme
Household

2008

2009
3752.20

6
Durable 782.09

699.95

742.80 638.40

686.49

33.38

23.54

17.06

2698.88

2624.2 3087.55

Scheme
Investment Scheme for 64.42

15.34

Doctor
Transport

Investment 2947.38

Scheme

Car Investment Scheme

Small

3630.48

27.75

23.54

31.46

768.45

876.34 1104.65

1159.63

6.24

35.79

31.50

50.39

Investment 12.53

11.94

13.61

27.21

76.64

Investment 609.78

506.75

485.29 429.24

Business 629.81

41.16

53.81

Investment Scheme
Micro

Industries 10.21

Investment Scheme
Agricultural
Scheme
Housing

452.67

Scheme
Real Estate Investment 5859.75

6582.85

Program

6903.0 7183.26

7933.20

% to total Investment

12.87%

11.95%

10.09

8.65%

8.30%

Trend of Investment in Industrial: 2005 to 2009

Amount in million
60
50
40
30
20
10
0
2005

2006

2007

2008

2009

Trend of Investment in Real Estate: 2005 to 2009

Amount in million
7933.2
6582.85

6903.09

7183.26

5859.75

2005

2006

2007

2008

2009

Trend of Investment in Transport: 2005to 2009

Amount in million

4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2005

2006

2007

2008

2009

Trend of Investment in RDS & HDS

(Amount in Millions)
5000
4500
4000
3500
3000
Column1

2500

Rural Development
Scheme

2000
1500
1000
500
0
2005

2006

2007

2008

2009

Rural Development Scheme (RDS)

Items

2009

2008

2007

2006

2005

No. of Villages

10,751

10676

10023

8057

7564

No. of Group Member

542715

577740

516725

409575

217425

No. of Centre

22,261

21,193

18,897

15,321

8526

Investment (Million Tk.)

24,239

18,768

13,969

9,303

7,486

Recovery of Investment

99%

99%

99%

99%

99%

No of Employee

969

1526

1941

1848

1627

Trend of Group member & Centre

Number

542715
577740
409575

516725

217425
8526
2005

No. of Group Member

15,321

2006

No. of Centre
21,193

24,239

18,897

2007

2008

Position of Disbursement & Outstanding of RDS Investment

2009

Position of Disbursement and Outstanding of RDS

Investment
23497

25000

18768

20000
Million Tk.

15000

13969
9303

6033

10000
5000
0

11065

2005

2006

22422

2007

28847

3703.

3011

2008

2009

Disbursement Outstanding

Trend of Investment Recovery

Total investment and overdue position: 2005 to 2009

Million Tk.

208951
175560
140878
109420
90550

Total Investment Total Overdue

3094

2005

4155

2006

Trend of Investment Recovery:

4043

2007

4494

2008

5665

2009

Perc
enta
Trend of investment recovery:2001to 2005
ge
96.50%
95.99% 95.88%
96.00%
95.50%
94.80%
95.00%
94.50%
94.55%
94.00%
93.50%
2005
2006
2007
2008

95.74%

2009

Recovery

Trend of IBBL Operating Result

Operating result: 2005 to 2009

Million Taka

25404

30000
25000
20000

8424

10582
11130

23756
18886
17699
14038
17409
13918
Net Profit

45000
10000
0

2162

2005

2909

2006

3781

2007

6518
6348

2008

Expenditure
Income

2009

Foreign Exchange
Department
Foreign Exchange
Foreign Exchange Department is an important branch of IBBL, which deals with import,
export and foreign remittances.

Foreign Exchange department is an international

department of the bank. It facilitates international trade through its various modes of
services. It bridges between importers and exporters. If the branch is an authorized dealer
in foreign exchange market, it can remit foreign exchange from local country to foreign
country. This department mainly deals in foreign currency, thats why it is called foreign
exchange department.

Bank branch should be authorized dealer, with due approval from Bangladesh Bank to
run foreign exchange transactions. According to the Bangladesh Law , the payment must
be received within 120 days.
This department is playing an important role in enhancing export earning, which aids
economic growth and in turn it helps for the economic development. On the other hand, it
also helps to meet those goods and service which are more demandable and not adequate
in our country.
Foreign Exchange Department is dividend in to 3 sections.

Import

Export

Remittance

Modes Used in Foreign Exchange Investments of IBBL

Murabaha/ Bai Muazzal ---- Import/Export

Bai- Salam -------------------- Reshipment

Hire purchase----------------- For important Machinery under project

Investment

Foreign Exchange Performance 2009

Import

Tk. 161,230 million

Export

Tk 106,424 million

Remittance

Tk

Total

Tk.

194716 million

462370 million

Remittance

Export

Import

50,000

100,000

150,000

200,000

250,000

Graphical Representation of Foreign Exchange Performance 2009

Modes Used in Foreign Exchange Investments

Murabaha/ Bai Muazzal ---- Import/Export

Bai- Salam -------------------- Reshipment

Hire purchase----------------- For important Machinery under project

Investment

Comparative Figure Of Import, export And Remittance Are Given

Below:

Taka In Million
Particular
s

2008
Amoun

% of

2009
Amount

% of total

% of
growth
in 2009
over

total

2008

Import

168329

41.80%

161,230

34.87%

(-)4%

Export

93962

23.33%

106424

23.02%

13%

Remittance

140404

34.87%

194716

42.11%

39%

Total

402695

100%

462370

100%

15%

Growth of Foreign Exchange Business: 2005

-2009

Import

Export Remittance

225000
194716

200000
168329

175000
137086

150000
125000
100000

161230

96870

106424
140404

84143

74525

75000

53819

50000

36948

25000

36169

93962
66690

51133

0
2005

Letter Of Credit:

2006

2007

2008

2009

Definite and conditional undertaken by the issuing bank on behalf

of/importer to the beneficiary or exporter for making payment is called
letter of credit.
A letter written by a company's bank to the company's foreign supplier,
stating that the bank guarantees payment of on invoiced amount if all
the underlying agreements are met
Letter of credit is an arrangement whereby bank (issuing bank) acting
on the instruction of the customer (importer), undertakes to make
payment, or to accept drafts, or authorizes of another bank to pay,
accept or to negotiate draft drawn by the beneficiary (exporter) against
stipulated documents, provided that the terms and condition of the
credit are compile.

LETTER OF CREDIT ISSUE PROCESS:

The issuing process of letter of credit is one of the vital points for a bank
engaged in foreign exchange operation. In one side it has to satisfy the
client on the other hand it needs to care the order of the Bangladesh
Bank rules and regulations very care fully. After all the steps are as like
1. When importer wants to import goods he request issue bank (his
bank) to issue a L/C.
2. To do that the importer gives an application to the bank for the
L/C.
3. Checking out the permissibility of that item that is going to import
by the importer and the required rules and regulation of both by
the Islami Sharia and by the Bangladesh Bank
4. So the issuing bank issues a L/C and sends it to the advising
nominated bank.
5. If the beneficiary wants confirmation of the L/C the L/C may be
confirmed usage-confirming bank to confirm payment.
The advising bank authenticates the L/C and advises the same to the
beneficiary. The exporter submits the necessary documents to the
advising bank after execution of export.

ADVANTAGES OF LETTER OF CREDIT:

There are lots of advantages that are basically derived by opening of an
LC while Export and Import activities are taking place. In the report it is
mentioned from different perspective such as
To The Exporter
A letter of credit is generally a very safe method of obtaining
payment provided the exporter complies with the terms of credit.
An irrevocable credit cannot be amended without his knowledge
agreement.
An irrevocable credit carries a definite undertaking on the part of
the issuing bank to pay.
A confirmed irrevocable undertaking of a bank generally in the
exporters country.
A credit open in his favour can often lead to a credit being opened
on his behalf in favour of his supplier (to-back credit); alternatively
the credit may be transferable.
Finance may be available b means of: - negotiating of his bills.
The exporter has indirect control of the document of title.
Better than collection as a means of securing payment.
To The Importer
Protect own position by stating the precise documentation
required.

He should consider making a status report on the supplier and in

the case of a large order call for a performance bond.
Credit can be obtained from the exporter by insisting on the use of
a term bill or exchange.
He could also consider the use of a revocable credit, which would
be particularly appropriate where the goods are dispatched in part
shipment as soon as the first lot of goods arrives. The importer

can inspect them and if they are not up to quality, can cancel the
credit,, hopefully before other shipments are made.
The advising bank will only make payment when the exact
document specified has been received.
Once

the

specified

documents

which

will

usually

be

the

documents of title are in the hands of the advising bank then it

will only a matter of time before they sent to the issuing bank
allowing him to collect the goods to their safe arrival.
Finance may be available by means of:a.

Ordinary bank loan/ overdraft.

b.

Loan against imported merchandise.

c.

Acceptable credit.

The Documentary Letters of Credit

Letter of Credit is a credit contract where the Opening/Issuing Bank is
committed to place an agreed amount of money at the beneficiarys disposal
under some agreed condition

TYPES OF LETTER OF CREDIT

1. Revocable Credit: A revocable credit is one where the issuing bank is at

liberty to revoke, that is it can cancel the credit at any time. According to
UCPDC (Uniform Customs for Practice of Documentary Credit), a revocable
credit may be amended or cancelled by the issuing bank at any time and
without prior notice to the beneficiary before shipment of consignment
against the L/C.

2. Irrevocable Credit: An irrevocable L/C is one which cannot be revoked

or amended by the bank with the concurrence of the interested party.

Special Documentary Credits:

Confirmed L/C
Transferable L/C
Divisible L/C
Revolving L/C
Restricted L/C
Back to Back L/C
Stand by Credit
Anticipatory L/C: (Red Clause L/C).
Anticipatory L/C: (Green Clause L/C).
L/C With recourse to drawer
L/C Without recourse to drawer.

i. Confirmed Irrevocable Letter of Credit:

When an issuing bank authorise or requests another bank /third

bank to confirm its irrevocable credit and the letter has added its
confirmation, such confirmation constitutes a definite undertaking
of the confirming bank in addition to that of issuing bank. This
type of L/C is called confirmed irrevocable letter of credit.
ii. Transferable Letter of Credit:

A transferable credit is one that can be transferred by the first

beneficiary to one or more subsequent beneficiaries. The first
beneficiary acts as the middleman and does not supply the goods
himself. 2nd beneficiary who acts as actual supplier and to whom
the credit is transferred in full or in part.
Transferable credit

 Government by ICC 500 (ART 48)

Transferable if indicted transferable
Transferable with or without substitution of documents (ART
481)
Can be transferred once only (ART 48G)
Can be transferred to one or more second beneficiaries. (ART
48E)
Transfer is affected at the request of the first beneficiary by
the bank where the credit is available
Transfer must be effected in accordance with the terms of the original
credit subject to certain exceptions (ART 48H)
iii. Divisible Letter of Credit:

The terms such as 'Divisible: means fractionable while using the

terms 'Transferable'. When the L/C is transferable, it is better to
incorporate the clause the L/C is Divisible.
iv. Revolving Letter of Credit:

The revolving credit is one which provides for restoring the credit
to the original amount after it has been utilized. A credit revolving
as to time because automatically reinstated or available on
utilization at specified intervals of time within given overall period
of validity.
v. Restricted L/C:

If the L/C opening bank specifically mentioned in the credit for

negotiation restricted i.e. when the negotiation is restricted to the L/C
advising bank only against adding confirmation to the credit. This type
of L/C is called restricted L/C. If negotiation is not restricted to a
particular bank is known as unrestricted Letter of Credit.

vi. Back to Back L/C:

Back to Back L/C is a type of import L/C either Inland or Foreign ,

which opened against lien of a valid export LC / Master LC. In our
country this method of finance is widely used in export of
garments. Bangladeshi exporter receive an irrevocable L/C for
supply of readymade shirts garments from an American/ EEC/
Importer/Bank. To execute the export order he is to import fabrics
and accessories from Korea/Japan etc., by opening an import L/C
favoring Foreign Supplier keeping the American Bank/EEC Bank

L/C in the 'BACK' which is called back to back L/C. Normally,

Payment of Back to Back L/C is to made from the proceeds
received against Export LC / Master LC .
vii. Stand by credit:

It is a performance guarantee where Local Law does not allow

Bank to issue bank guarantee. The Issuing Bank, guarantee the
performance of the contract by the Credit applicant. In the event
of the applicants failure to perform, the issuing Bank is obliged to
pay the sum mentioned in the credit to the Beneficiary.

The Standby Credit is a Documentary Credit or similar

arrangement however named or described which represents an
obligation to the Beneficiary on the part of the Issuing Bank to:
repay money borrowed by the Applicant.
make payment on account of any indebtedness undertaken by the
Applicant or
make payment on account of any default by the Applicant in the
performance of an obligation.

viii. Anticipatory Letter of Credit: (Red Clause L/C:

When the Credit authorising the negotiating bank to provide preshipment advance to the beneficiary is typed in red, it is called
Red Clause L/c.
ix. Anticipatory Letter of Credit: (Green Clause L/C:

This L/c authorise negotiating bank to grant advance to the

beneficiary for storage facility at the port in addition to preshipment advance.
x. With recourse to drawer:

Sometimes, letter of credit are marked as either with recourse to

drawer or without recourse to drawer. These terms are related
with the bill of exchange, which are to be drawn under the
strength of L/C. The with recourse means in case the
drawee(Importers Bank) of the bill fails to honour it, the banker as
the holder of the bill can claim the amount back from the drawer
(Exporter).
xi. Without recourse to drawer:

The without recourse means in case the drawee (Importers Bank)

of the bill fails to honour it, the banker as the holder of the bill can
not claim the amount back from the drawer. In order to avoid such
liability, the exporter may ask the importer to arrange credit
without recourse to the drawer. Under this case the issuing bank
will have recourse to the drawee only.

NEED DOCUMENT FOR L/C OPENING:

1. Current account open
2. Trade license
3. IRC(import registration certificate)
4. Chambers of commerce certificate
5. TIN(tax identity number)
6. Vat certificate
7. Import permission(if require)
PARTIES OF LETTER OF CREDIT:
Issuing bank
Advising bank
Credit applicant
Beneficiary
Nominated bank
Negotiating bank
Reimbursement bank
DIFFERENT PARTIES ROLES:
Role Of Issuing Bank

 The credit and amendments must be complete and precise

Indicating credits irrevocable or revocable
Definite undertaking of the issuing bank
Such undertaking cannot be amended or cancelled without
consent of all parties.
State how the credit will be available and nominate the bank
where it will be available
Advice the credit and subsequent amendments through the same
ban
Reimburse nominate bank
Determined to take documents or not on the basis of documents
alone
Reasonable time to examine documents
If refusing documents issuing banks should without delay telex
advice the presenter stating discrepancies and hold documents at
its disposal return them
Despite presenter pointing out the discrepancies, the issuing bank
still have to follow the procedures as per art (14B), (14C) and
(14F)
No need for certificate of compliance
If incomplete or unclear instructions are received to issue or
amend the credit bank may give preliminary notification to
beneficiary and seek clarification from the applicant
Role Of Advising Bank:
Without engagement and responsibility
Exercise reasonable care in checking the apparent authenticity of
the credit.
If incomplete or unclear instruction received to advice the credit
bank may give preliminary notification to beneficiary and seek
clarification from thinning bank

 Services to the corresponding banker

Services to existing/ potential customer
Role Of Negotiating Bank:
Offering

temporary

finance

fro

the

exporter

awaiting

reimbursement from the issuing bank

Check documents with reasonable care and within reasonable
time
Ensuring that documents are presented as per L/C terms and
conditions and ICC-400 requirements
Ensuring it as being the nominated bank
Source of repayment
Issuing bank
beneficiary
Role Of Confirming Bank:
Definite undertaking of the confirming bank in addition to that of
the issuing bank
Advise the credit without adding confirmation and inform issuing
bank if not willing to confirm the credit
Such undertaking can be amended nor cancelled without the
consent of all parties.
If incomplete or unclear instructions are received to confirm the
credit bank may give preliminary notification to beneficiary and
seek clarification from the issuing bank
TRANSPORT DOCUMENT
Transport document is a document issued by the transport company or
the fright forwarder stating the goods will be delivered to the intended
destination as per agreed perms and conditions. Depending on the
mode of movement of the cargo on appropriate transport document will
be called for.
DEFINITION OF BILL OF LADING:

Bill of lading means a document, which evidences a contract of carriage

by sea and taking over or loading of the goods by the carrier, and by
which the carrier undertakes to deliver the goods against surrender of
the document. A provision in the document that the goods are to be
delivered to the order of named person, or to order, or to bearer,
constitutes such an undertaking.
Transport Document Services Three Purchases:
1. Receipt for goods
2. Contract for transport and storage
3. Title document that proves ownership of goods
Various Types Of Bill Of Leading:
Marine bill of lading
Short form bill of lading
Through bill of lading
Combined transport bill of lading
Line bill of lading
Charter party bill of lading
Container bill
IMPORT MECHANISM OF L/C:
As per import and export control Act, 1950, the person engaged in
foreign trading should obtain registration from the office of chief
controller of import and export. Thus and importer needs to collect
Import Registration Certificate (IRC) from the aforesaid office. On the
next step importer needs to obtain Letter of credit Authorization (LCA)
from Bangladesh Bank. Having both IRC and LCA, the importer steps
into a bank. Regular steps or procedures for import mechanism are as
follows.
Importers Application For L/C Limit Or Margin:
An importer desirous to have an import L/C limit must apply to the
import department with following:
Full particulars of bank account

 Types of business-historical background

Amount of limit required
Terms of payment
Goods to be imported
Security to be offered
The L/C Application:
For opening L/C the client must submit to the bank an application in the
printed format of IBBL and this L/C application is also agreement
between ANZ (Bank) and the importer. Along with L/C application
importer must submit:
Proforma invoice
Insurance

cover

note

importer

should

provide

following

information in the application form

Full name and address of the beneficiary
Brief description of the goods keeping conformity of the L/C
Unit price quality of goods
Origin of the goods
Mode of transport and last date of shipment
Port of shipment and destination
Insurance cover note, number and name of the issuing company
Tenor of draft (site/ insurance/ deferred)
Sale terms
Negotiation period
Mode of advising
Weather shipment/ transshipment allowed
Instruction to add confirmation
Full name and address of importer
LCA no
Opening of L/C under UCPDC publication no. 500
Any other relevant information
Application Must Be Checked In The Following Manner:

 That the terms and conditions of L/C application are consistent

with the exchange control
That the goods are eligible to import
That it is not difficult for the beneficiary to comply with all the
terms and conditions to be incorporated in the L/C
That the L/C must by the importer, agreeing terms and condition
Goods are not of Israel and vessels to be used are not of Israel.
Indenting registration no
Insurance cover note with date of shipment
Radioactivity report in cases of food item
Whether IMP from dully filled in and signed
That the goods are marketable
Whether liability is under appropriate limit
In case of car the life is not more than of 5 year
In case of old machinery survey or certificate whether asked
After scrutinizing all these legal aspects and taking clearance from
ANZ correspondent banking department, necessary entry is give
to the margin register and charges commissions and margin is
realized.
Transmitting The L/C
The L/C is transmitted to the advising bank for advising the L/C to the
beneficiary. L/C is generally transmitted through tested telex of fax.
Before transmission a final examination of the L/C contents is necessary
for the issuing bank.
Add Confirmation:
Very often advising banks receive request from the issuing bank to add
their confirmation while advising credit to the beneficiary. The advising
bank can do it, if there is prior arrangement between advising and
issuing bank or if it feels that the issuing bank is a reputed and reliable
institution, good enough to discharge its obligation. By being involved as
a confirming agent, the advising bank undertakes to negotiate

beneficiary a bill without recourse to him. In IBBL, if the L/C value is

more that or equal to USD 20,000/- then the bank asks for the credit
information report of the beneficiary. The purpose of which is whether
beneficiary has the capacity or capital to produce or supply the goods.
Credit report can be sought from the buyer, from the sellers bank or
from any other place.
Amendment Of L/C:
L/C is based on an agreement between buyer and seller. Any
amendment they want to bring in L/C should be informed to this issuing
bank, which will transmit the amendment to the advising bank with test.
Service and telex charge is debited from the party account.
In case of revocable L/C amendment can be brought without prior notice
of the beneficiary or issuing bank. But in case of irrevocable L/C, which
is very much popular, cannot be amended without informing beneficiary
or the issuing bank. However, any instruction regarding amendment
should be complete and precise.
Presentation Of Documents:
Having been advising bank, the seller then proceeds to dispatch the
goods to the buyer. The seller then presents the document evidencing
shipment of gods, to the negotiating bank. Negotiating bank then
forwards all the documents with a schedule to the issuing bank. Most
common documents are:
Invoice
Bill of lading on the receipt
Certificate of origin
Packing list
Weight list
Shipping advice
Non of negotiable copy of B/L
Bill of exchange, Phytosanitary, inspections certificate.
Letter of insurance cover note
Pre-shipment inspection certificate

 Shipment certificate.
On the receipt of the documents, the bank will enter the some in
the inward receive register branded with rubberstamp. Showing
the date of receipt

EXAMINATION OF DOCUMENTS BY BANK

As already pointed out earlier the issuing banks undertaking a letter of
credit to pay, accept or negotiate is conditional to the presentation of
documents which are strictly as per the terms and conditions the credit.
A careful examination of documents is, therefore, the major bank on
which the whole edifice of documentary credit reset. Banks therefore
must examine all documents stipulated in the credit with reasonable
care. The check paints points for the banks are given in the box
Check List For Document Examination By Banks:
Documents should appear on their face to be compliant with the
stipulation in the documentary.
Documents are not being inconsistent with each other.
Non-stipulated documents should not be presented. Banks should
either return such papers to the presenter or pass them on
without responsibility.
Examination of documents is completed within seven banking
days following the day of receipt of documents.
Conditions in the documentary credit which do not sates the
documents to be presented in compliance are ignored.
Documents dated prior to the date of credit are accepted, unless
specifically prohibited by the credit.
If

documents

other

that

transport

documents,

insurance

documents and commercial invoice are called for the name of the
issuer and content (wording or data) are to the clearly specified. If
not, banks will accept documents as presented. Even the
beneficiary will be accepted.

 Original credit accompanies the presentation.

Documents musts be presented within banking hours.
Endorsement, whenever required, must be checked especially on
issuance certificate, transport documents and bill exchange.

If credit says original documents. Documents produced by

reprographic, automated or computerized systems. Carbon copies are
acceptable if marked as original and appear to have been signed if
required.

Signature can be by handwriting, perforation, stamp, facsimile

symbol, or any mechanical or electronic method of authentication.
If credit requires copy (s) documents marked as copy ace
acceptable. Copy need not be signed unless specifically stipulated
otherwise.
If multiple documents required like Duplicate, Two Copies, only
one original and rest copy (s) is acceptable.
If credit requires documents to be authenticated, validated,
legalized, vases, certified etc, any signature, stamps or label
which appears to satisfy it is acceptable.
Protection To Banks Under UCP:
Banks have been given several protections under UCP provision. While it
may seem that they are overprotected, there is one alternative as the
banks, liability under the credit would become very risky and very costly
if these protections were not available. This also focuses on the fact that
the credits are not foolproof and the best protection in trade is to have
good knowledge of standing and status of the other party to the
contract.

Banks Assume No Liability Or Responsibility:

a.

Form sufficiency, accuracy, genuineness, falsification or

legal effect of any document.

b.

General and/ or particular conditions stipulated in the

document.
c.

Description, quantity, weight, quality, condition, packing,

delivery, value or existence of goods represented by documents.

d.

Goods, faith acts omission, solvency, performance or

standing of consignor, courier, forwarder, consignee insurer, or

any other person.
e.

Consequences of delay, loss in transit, mutilation, error of

any message, letter, document.

f.

Errors in translation.

g.

Interpretation of technical terms.

h.

Interruption of technical terms.

i.

Strikes or lockout.

j.

Acts of an instructed party.

Examination of Specific Document:

Procedure for the examination of following documents is given below:
a.

Commercial invoice

b.

Partial shipments

c.

Expiry date

d.

Insurance documents

e.

Bill of lading

f.

Non negotiable sea way bill

g.

Multi model transport document

h.

Charter party bill of lading

i.

Air transport document

j.

Surface transport document

k.

Courier charges

l.

Recourse for discrepant documents.

COMMERCIAL INVOICE:
Need not be signed. Must be issued by beneficiary (Except in
transferable credit if first beneficiary does not provide his invoice).
Should be in the name of applicant (except in transferable credits
if first beneficiary does not provide his invoice).
Need no be signed.
Description of goods in invoice must correspond with description
in the credit.
If amount of invoice is in excess of the excess of the credit, banks
may refuse to accept the invoice.
If credit requires a certification of weight, superimposition on
transport documents is acceptable, unless credit stipulates a
separate document.
Include exact license and/ or certificate number in invoice if
required by the credit.
Should show terms of shipment mentioned in the credit.
If about, approximately or circa is used with amount credit,
quantity or unit price, allow 10% plus or minus is allowed.

PARTIAL OR INSTALMENT SHIPMENTS:

If partial shipment is prohibited 5% less (or more) in the amount of

drawing acceptable provided, quantity and unit price stipulated are in

full.

Partial shipments are acceptable unless prohibited.

Similarly post or courier receipts acceptable in same date and

place of dispatch.
EXPIRY DATE:

All credits must stipulate an expiry date and the place where it
expires. The banks must, therefore, make sure that the documents are
presented on or before expiry.

Documents must be presented on or before expiry.

If credits are available for one month, six month, first day is
the date of issuance of credit.

If last day falls on a holiday expiry extended to next working date

(not period after shipment).

Disregard Prompt, immediately as soon possible, etc. to be

disregarded.

On or about means plus or minus 5 days.

To, until, till, from includes date mentioned.

INSURANCE DOCUMENTS:
Issued and signed by insurance companies or underwriters or their
agents.
Brokers cover note is not acceptable but insurance certificate or
declaration under open cover is acceptable.
All originals must be included.
Insurance should be in the same currency as credit.
BILL OF LADING:
Bill Of Lading (B/L) To Acceptable If It Indicates the name of carrier
Indicates goods loaded on board or shipped on named vessel.
Full set of originals is included.
Indicates port of shipment and port of discharge stipulated in the
credit.
No indication that vessel is propelled by sail only.
NOT NEGOTIABLE SEA WAYBILL

Accept If Sea Waybill:

Indicates the name of carrier.
Indicates goods loaded on board or shipped on named vessel.
Full set of originals is included.
Indicates port of shipment and port of discharge stipulated in the
credit.
Contains all terms and conditions or reference to another
document.
There is no indication of charter party.
No indication that vessel is propelled by said only.
MULTIMEDIA TRANSPORT DOCUMENT:
Accepted If Document
Indicate the name of carrier or multimedia transport operator.
Indicates goods have been dispatched, taken in charge or loaded
on board.
Consists of full set.
No indication of charter party.
No indication of propagation by only sails.
CHARTER PARTY BILL OF LADING:
Accepts If Document
Contains any indication that it is subject to charter party.
Authenticated by owner/ master or agent.
To avoid misunderstanding, it is advised that the credit clearly
indicate which expenses are on account of the applicant and
which expenses on account of the beneficiary.
RECOURSE FOR DISCREPANT DOCUMENT:

In case of discrepant document, all bank keeps recourse if the

credit has compliant document presented the confirming bank to have

no recourse but the negotiating bank has recourse unless negotiating

bank has confirmed the credit.
Lodgment And Requirement Of Import Document:
Usually payment is give within seven days of documents received.
Otherwise in case of document, purchased by negotiating bank if may
claim for interest.
Intimation Letter:
Before payment an intimation letter is given to the buyer
instructing to release the document and make payment.
Requisition:
Requisition for foreign currency is given to the international
department

(ID)

for

arranging

necessary

find

before

final

payment.
Payment Procedure:

A telex copy forwarded; addressed to the nearest correspondent

(reimbursement section) that payment is being made.

Confirmation letter to the negotiating bank confirming remittance.

Sale memo prepared given exchange rate:

. TT and OD rate paid to head office.
. B.C. rate taken from customer.
The difference is exchange-trading project.
Operating a payment against document (PAD) account. Entry
given to PAD register.
15.5 % rate of interest charged from the negotiating date up to
retirement. In case of discrepant document profit is charged from
the lodgement date till the retirement date.
Inter Branch Exchange Trading Credit Advice (IBETCA) sent to ID.
Account Treatment:

Sundry Deposit L/C Margin A/C......................Dr.

Pad A/C ....Cr.
(Margin Amount transferred to PAD A/C)
Customer A/CDr.
PAD A/C ..Cr
(Customer A/C debited for rest of the amount)
PAD A/C ..Dr.
H.O.I.D. A/C + Ex. Trading A/C .Cr.
Income A/C Profit on PAD ..Cr.
(Amount given to head office ID and Profit credited).
Reversal Entry:
Bankers Liability .Dr.
Customers liability .Cr.

6.8.8 Guidelines On Back To Back Letter Of Credit Transaction

(Back To Back L/C):
A Back to Back mechanism involves two separate L/C. One is master
export L/C another is Back to Back L/C. On the strength of Master Export
L/C bank issues Back to Back L/C. Back to Back L/C is commonly known
as buying L/C. On the contrary Master Export L/C is known as selling L/C.
Features Of Back To Back L/C:
It is an import L/C to procure goods/ raw materials for further
import.
It is operand based on export L/C.
It is a kind of export Finance.

 Export L/C is at sight, but Back to Back L/C is at unasked scrutiny.

No margin is required to open back to Back L/C.

Check List To Open Back To Back L/C

Application is registered with CCI & E and has bounded warehouse
license.
The Master L/C has adequate validity period and has a defective
clause.
L/C value shall not exceed the admissible percentage of net FOB
value of relative master L/C.
Unasked period wills up 180 days.
Securitization Of Master L/C:
Presence (P) absence (A) of following clause in Master L/C may require
amendment.
Usage clause is not mentioned. (A)

Negotiation restricted to other bank (P).

Beneficiar
y

1.
Contract

Applican
t

SELLER

BUYER

2. Doc.Credit
Application
4. Advise of Doc.Credit

3. Documentary Credit

ADVISING BANK

The Canadian Advising

Bank

ISSUING BANK

The Bangladeshi Issuing

Bank

Documentary Credit Cycle

The Plan of Payments by means of the letter of

credit
The description of process
(1) The contract is concluded between the importer (buyer) and
exporter

(seller);

(2) The buyer (importer) addresses in Serving Bank with the request to

let out rrevocable the letter of credit (to open the letter of credit)
according to conditions to the contract and transfers the sum of a
covering

under

the

letter

of

credit;

(3) The bank of the buyer (importer) opens the required letter of credit
and the Bank-Correspondent asks to notify the supplier (exporter) on
opening

of

the

letter

of

credit;

(4) Straight Bank (the Bank-correspondent of the Bank-Emitter) informs

the supplier (exporter) on opening of the letter of credit
(5) The supplier (exporter) organizes transportation of the goods by
means of the

conclusion of the agreement with the transport or

insurance company and receives the transport invoice or insurance

policy.
The supplier (exporter) gives, according to the contract, the following
documents:
-Invoice,
-Air

or

railway

Insurance

Packing

invoice,
policy,
sheet,

- Certificate of quality
- Others
It is supposed, that all documents correspond to conditions of the letter
of credit.
In this case we proceed from the assumption, that straitening and
executing bank is the same.
(6) The Executing Bank checks all documents on conformity to the letter
of credit and, if not it is found out of any divergences, the Bank pays the
requirements of the Exporter.
If the divergences are found out, executing the bank can work with one
of the following ways:

- To send the documents for collection to Bank-Emitter,

- To pay the documents after reception from the Exporter of the letter of
guarantee,
- To pay the documents after reception of the consent with divergences
from the Bank-Emitter.
(7) Executing the Bank sends the documents to the Bank-Emitter
according to the conditions, stipulated by the letter of credit;
(8) Executing the Bank sends the requirement about a covering (with
the invoice of the addressee under the letter of credit) to Confirming
Bank;
(9) The Bank-Emitter notifies the Buyer (Importer) on arrival of the
documents;
(10)

The

Buyer

(Importer)

receives

from

the

Bank-Emitter

the

documents;
(11) The Buyer (Importer) gives the invoice of the transport company for
reception of the goods;
(12) After reception of the goods from the transport

Summary of the Plan of Payments

Trend of foreign exchange business of IBBl:

Items

2005

2006

2007

2008

2009

Import

74,525

96,870

137,086

168,329

161,230

Export

36,948

53,819

84,143

140,404

106,424

Remittance

36,169

51,133

66,690

93,962

194,716

200,000
180,000
160,000
140,000
120,000
Import

100,000

Export

80,000

Remittance

60,000
40,000
20,000
0
2005

2006

2007

2008

2009

500,000
450,000
400,000
350,000
300,000
Remittance

250,000

Export

200,000

Import

150,000
100,000
50,000
0
2005

2006

2007

2008

2009

Some Important terms of Letter of Credit

Amendment of Credit: Sometimes the importer may require amendment to be made in
the L/C, but this amendment must be made with the consent of the exporter, otherwise
amendment will have no validity.
Adding Confirmation: Sometimes the exporter may not rely on the L/C issuing bank.
Exporter requires the L/C to be confirmed by another bank situated in his country. Then
on request of issuing bank, any bank in exporters country gives guarantee about the
payment. This is called Confirming Bank. By adding such confirmation, confirming
banks undertakes the liability to honor the Bill of Exchange of exporter.
Validity and Expiry of Credit: All L/C must mention the expiry date of L/C within
which the documents for payment/acceptance must be presented. This date must exceed
the date of issuance of the bill of lading or other shipping documents, during which
presentation of documents for payment/acceptance must be made.
FOB (Free On Board): Under FOB basis, the exporter quotes the price covering all his
expenses until the goods duty packed are delivered on board, the carrying vessel named
and arranged by the buyer with the freight and the insurance being paid by the buyer. The
importer bears any costs incurred and all risks from the time the goods are placed on board
inclusive of those arising out of the ships failure on berth.
Cost and Freight (C & F): In this case the exporter quotes the FOB price plus insurance
cost. The responsibilities of carrying out all formalities for shipment of the goods develop
upon the seller.
CIF (Cost, Insurance and Freight): Under CIF, the exporter quotes C&F price plus the
insurance cost. The responsibility of carrying out all formalities for shipment of the goods
develop upon the seller.

FAS (Free alongside Ship): Under FAS, the seller quotes the price covering all his
charges until such time as gods are loaded on train at the specified railway station. The
buyer is responsible for all charges from the time he takes delivery of all goods from the
exporters yard.
EX-Factory: The seller quotes the price of the goods ex-factory on the date agrees. The
importer is responsible for all further necessary arrangements and charges.

RECOMMENDATIO
N
After observing the operation procedure of IBBL, I recommend the following:
IBBL should launch new financial products to attract deposit, as Consumer Credit Scheme,
Child Education Scheme, and Plastic Money etc. IBBL can also lunch ATM as
diversification.
Investment procedure simplification: Present Investment Procedure is too much boring
and complicative. It needs longer time to process similar deals which disturbing consumers
and bank.
Marketing Division:
To increase the faith of former mentioned depositors and people, IBBL should convince
them in the best manner, so that market share can be captured. A separate marketing
division should be set up for this matter.
Diversify Assets Portfolio:
Leading portfolio of IBBL should be diversified. Not to concentrate or give weight only in
working capital financing.
IT Facilities:
IT facilities of IBBL are not satisfactory good. Computer system which owned by branch
are not up to date, not sufficient and moreover some of computer system not work properly
when they are needed. There is no sufficient and high bandwidth Internet connection
available in the bank. So, IBBL should develop Information Technology to ensure better
service for the customer and support communication with outside.

Questionnaire:
1. What is the name and address of the bank? What are the
objectives of establishing of the bank?
2. When it was established & when it commencement its service?
3. What is the ownership?
4. What is the capital structure of IBBL?
5. What is the Legal status and nature of the Bank?
6. What types of service gives to its customers?
7. What is the Organizational Structure of Uttara Bank Ltd?
8. What is the organization chart of the bank?
9. What is the Organization Hierarchy of Uttara Bank Ltd?
10.

What is the Organizational Structure of Uttara Bank Ltd

Shyamoli Branch?
11.

Please describe the Networks UBL?

12.

Please supply a List of AD Branches.

13.

Please supply a List of Regional Offices.

14.

Please supply a List of total Branches.

15.

What are the Different Wings of UBL?

16.

What Significant accounting policies followed by the bank?

17.

Are there any training facilities for staff and officers?

18.

Please state security position of the employee?

19.

What are basis of the promotion?

20.

How do you prepare your financial statement?

21.

Please state the characteristics of your deposits?

22.

What are the major sources of deposit?

23.
24.
25.

Please mention the sources of your fixed capital?

What are the major types of Deposit Schemes?
What is the major service provided by the bank under

International Banking?
26.

What is the Lease Financing position of the bank?

27.

Describe the Category of credits and its interest rate?

28.

What are the Remittance services of bank?

29.

What are the Charges of Retail loans?

30.

What are the Foreign Currency Dealing Rates to Customer?

31.

What is the Human Resource Position of the bank?

32.

No. of employees and designation of the employees of the

bank and branch.

33.
34.

How many branches of the bank in Bangladesh?

No. of employees and designation of the employees of the

bank and branch?

35.

What types of project finance by this bank?

36.

How do you prepare your financial plan?

37.

What is the major source of your working capital?

38.

Do you have any problems of working capital? If yes, its

nature and causes?

39.

Please mention the sources of your fixed capital?

40.

Do you have any long-term borrowing?

41.

Do you face problem in procuring long-term fund?

42.

Please mention your short-term borrowing?

43.

Do you have internal sources of fund?

44.

Do you have any financial control mechanism?

BIBLOGRAPHY
Books
1

Chapra, M.U, (1995). Towards a Just Monetary System. Leicester: The

Islamic Foundation.
2 Rahaman, A.A.M.Habibur. Islami Banking.
3 Kabir at el, Text Book on Islamic Banking, Islamic Economics Research
Bearue, Dhaka, 2004.
Class Notes (IBTRA)
1

Jebal, Ahmed Asheque, Vice President & Faculty Member, IBTRA

Hussain, Md. Abul, SVP & FM, IBTRA

3 Hossain, Md. Mosharraf. AVP.IBBL.

Manual (IBBL)
1

Bai-Murabaha

Hire Purchase Under Shirkatul-Melk

Bai-Salam

4 Musharaka
Web Site (IBBL)

Others

http://www.islamibankbd.com

Various types of publications of IBBL.

Annual reports of Islami Bank Bangladesh Ltd. for 2008, 2009

Various lecture sheets of IBTRA.