internship report, f.ex cor. branch

Internship Report On

iBanking/Mobile banking,online banking & green

banking system of Islami Bank Bangladesh Ltd.

Submitted To

Course-Coordinator (Training) SPO & Faculty Deputy

Director (Training)ber, IBTRA

Submitted By: Name University

Tahmina Akter University of Dhaka Date of Submission: 10.03.2013

Letter of Transmittal 10th March 2013

Course-Coordinator (Training)

SPO & Deputy Director( Training), IBTRA

Subject: Submission of report on “iBanking/Mobile banking,online banking &

green banking of Islami Bank Bangladesh Ltd.” Honorable Sir,

With due respect we do hereby submit our Internship Report

“iBanking/Mobile banking,online banking & green banking of Islami Bank

Bangladesh Ltd.”,which was assigned to us as an integral part of our

course requirements in B.B.A program. As we have been working in IBBL, Jatrabari Branch, Dhaka, thus, it is a very

good opportunity for us to prepare the report properly out of practical

experiences & empirical data, as well as, application of theoretical

knowledge. Preparing this report has been extremely challenging, interesting and rewarding experience.

Now we are able to understand and utilize the key terms of Islamic Banking in banking

sector. Now it is very easy for us to interpret any impact and its effect on bank. We would

like to express our deepest gratitude to you for providing us with such an opportunity. We have tried our best to make this report as comprehensive and informative as possible

within the time allowed for us. Due to various constraints, there may be some mistakes for

which we beg your apology. Sincerely yours, Tahmina Akter

University of Dhaka

Acknowledgement

First of all I remember Almighty Allah for making us successful to prepare this report. I

are grateful to the Islami Bank Bangladesh Limited authority that has helped us by

updating desired information at their website. At the very outset, I would like to

thank to our Course-Coordinator, SPO & Deputy Director, IBTRA for giving me the

opportunity to know about the Islamic Banking in Bangladesh, and his support and

direction it would never be possible for me to make this report.

I also express our heart full thanks to all the faculty members of Islami

Bank Training and Research Academy (IBTRA) as Ill as the employees

from top to bottom of IBTRA, who gave me necessary information

and excellent guidance to prepare this internship report.

I talked all the concerned officers of the Islami Bank Bangladesh

Limited, Corporate branch of foreign exchange, who kindly provided me the

information and other handouts.

The management of this Branch had been extremely helpful in

providing necessary documents, annual report, statements, voucher etc.

which helped me to prepare this Internship report. I express a deep

debt of appreciation & gratefulness to the employees of IBBL, corporate

branch of forign exchange Branch.

Islami Bank Bangladesh Ltd.

ibanking/mobile banking , Green Banking & online banking system of IBBL

Serial

No.

TABLE OF CONTENTS

Page

No.

Executive Summary

7-8

Chapter

1

Introduction of the Report

9

Rational of the study

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MMeetthhooddoollooggyy

SSccooppee ooff tthhee ssttuuddyy

LLiimmiittaattiioonn

OObbjjeeccttiivvee ooff IIssllaammiicc BBaannkkiinngg

BBaassiicc pprrooppeerrttiieess ooff IIssllaammiicc BBaannkkiinngg

IIssllaammiicc BBaannkkiinngg IInn

BBaannggllaaddeesshh

11

12

13

13

13

7

8-10

11-13

Chapter

2

About the organization

24

CCoorrppoorraattee IInnffoorrmmaattiioonn

VViissiioonn ooff IIBBBBLL

MMiissssiioonn ooff

IIBBBBLL

SSppeecciiaall ffeeaattuurree ooff

IIBBBBLL MMaannaaggeemmeenntt ooff

IIBBBBLL

FFiinnaanncciiaall PPeerrffoorrmmaannccee ooff IIBBBBLL

25

26

27-

29

16

18

Chapter

3

Analytical Part of IBBL 30-

38

Chapter

4

E-banking of IBBL 39



Ibanking/mobile banking, online banking & green

banking of IBBL

40-

91

43-

49

50-

53

54-

56

Chapter

5

Difference between Conventional & Islamic

Banking

92-99

Chapter

6

Findings, Recommendation& Conclusion 100

Findings

Recommendatio

ns Conclusion

Bibliography

Appendix

101

107

108



Executive Summary

Banking system plays a very important role in the economic life of the nation. The health of

the economy is closely related to the soundness of its banking system. In a developing

country like Bangladesh the banking systems as a whole play a vital role in the progress of

economic development. Modern trade and commerce would almost be impossible without the

availability of suitable banking services. Islamic Banking is an integral part of Islamic

Economics and thereby an Islamic way of life. Islamic Banking is a special nature of

financial intermediary which has not involve in any way with interest. The introduction of

interest-free and equity-based financing by the Islamic banking system is based on the

principles of Islamic economics. Here I provide information about Islamic Banks in

Bangladesh.

IBBL is a third generation bank in the private sector banking of Bangladesh. IBBL is the

private commercial bank that is a brain child of some successful local entrepreneurs. IBBL is

a banking company registered under the Companies Act, 1913 (At present the companies

Act, 1994) with its Head Office at 40, Dilkusha Commercial Area, Dhaka- 1000, Bangladesh.

The bank started its historical operation on the 30th March 1983. Now it has as many as

276Branch throughout the country.

IBBL has already achieved tremendous progress within only 30 years. Now IBBL is offering

about to all modern banking service with modern technology. Meanwhile, IBBL has already

introduced on-line banking services. Islami Bank has discovered a new horizon in the field of

banking area which offers different General Banking, Investments and Foreign Exchange

banking system. IBBL has some special mission & vision to establish interest free Banking in

the country. From the very beginning since inception the Bank it has been facing different

kinds of problem due to lack of Islamic Banking Act, Islamic money market and also general

people have no idea about Islamic mode of investment.

I have prepared the internship report on “iBanking/Moblie banking, online banking &

green banking system of Islami Bank Bangladesh Ltd.” as a partial fulfillment for the BBA

program of the university based on primary & secondary data & information. For this specific



purpose I have collected data & information from various sources like published materials

such as the annual report, articles, & IT related to Banking activities. We concentrated on

arranging & putting the data in such a way that the report progressively anchors to a desired

destination of understanding.

In this report we have tried to show

To familiar the history of Islami Banking in Bangladesh.

To learn about the internet banking operations of IBBL.

To show about the processing of internet fund transfer.

To learn about the inter bank fund transfer through BEFTN

To learn about the ICT policy of IBBL.

To learn about green banking

To learn about automated cheque clearing through BACH system.

To show the differences with conventional banking regarding different

aspects. To identify strength and weakness of IBBL.

To find problems or lacking that IBBL is facing.

overall activities & performance of Islami Bank Bangladesh Ltd. We have also shown

the differences with conventional banking regarding different aspects as well as identified

strength and weakness of IBBL & recommend actions that may be necessary to redesign

functions of IBBL.



Chapter One

Introduction of the Report



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Rationale of study:

Internship program of University is a partial requirement for the graduation of

BBA/M.B.A students. Every B.B.A/M.B.A student is appointed to learn some practical

knowledge within the pre-stipulated period by observing the organization day to day

activities. In this regard our internship program started on 10th January at Islami Bank

Bangladesh Limited. In the modern society commercial Banks occupy a position of

economic importance. They play a significant role to meet the needs of the society

such as capital formation, large-scale production, industrialization, growth of trade and

economy etc.

Islamic banks are unconditional and specialized financial institutions that perform most

of the standard banking services and investment activities on the basis of profit and loss

sharing system conforming to the principles of Islamic Shari‟ah. Out of 50 banking

institutions, 7 banks are backed by Islamic mechanism and worldwide accepted

Islamic morality and established code of conduct. This paper, however attempts to

appraise e b a n k i n g performance as well as increasing customers‟ loyalty of Islami

Bank Bangladesh Limited performing beneath the umbrella of Islamic shari‟ah and

approved welfare oriented principles.

Objectives of report

The first objective of writing the report is fulfilling the partial requirements of the

BBA program. In this report, I have attempted to give an overview of internet banking

system of Islami Bank Bangladesh Limited in general. The primary objective of this

report is to observe the mobile/ internet banking, ibank ing and green bank ing

syst em of Islami Bank Bangladesh Ltd.

The other objectives are:

To familiar the history of Islami Banking in Bangladesh.

To learn about the internet banking operations of IBBL.



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To show about the processing of internet fund transfer.

To learn about the inter bank fund transfer through BEFTN

To learn about the ICT policy of IBBL.

To learn about green banking

To learn about automated cheque clearing through BACH system.

To show the differences with conventional banking regarding different

aspects. To identify strength and weakness of IBBL.

To find problems or lacking that IBBL is facing.

To recommend actions that may be necessary to redesign the investments of IBBL

Methodology

In order to carry out the report, I have collected the required data from both primary

and secondary sources. I focused on taking the interviews of the personnel involved in

the different departments, Manager and Senior Level Employees, Business Clients and

Account Holders and specially IT department. After collecting, the data were used to

analyze information, Graphical tools were used to get clear picture of the situation.

a) Nature of the study: Exploratory

b) Sources of information: Both primary and secondary information

sources were used to complete this report.

Primary sources of data: Direct interview process in IT

department,marketing department and clearing department employees.



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Secondary sources of data: Manuals provided by Islami Bank Training

& Research Academy, Published financial statement & Website of Islami bank

Bangladesh Limited.

Analytical

Review:

PEST Analysis

SWOT

Analysis

Graphical

Analysis

Scope of the Study

Islami Bank is the pioneer of welfare driven economy and promoter of balanced growth

in a country like Bangladesh which has a poverty stricken contemporary economic

background. To address the ongoing condition of IB and their bright prospects is a

vital issue to be explored.

Limitations

During preparing this report I have faced these following limitations:

Inadequate published information about bank

Financial constraints to collect information

Insufficient information in websites of bank



14 | P a g e

Confused definition about products and services of Islamic bank

Unsound database about Islamic banks in Bangladesh Bank

Busy working environment

Lack of sufficient well informed officials

Data could not been collected for confidentiality or secrecy of management

Objectives of Islamic Banking

The primary objective of establishing Islamic banks all over the world is to promote,

foster and develop the application of Islamic principles in the business sector. More

specifically, the objectives of Islamic banking when viewed in the context of its role in the

economy are listed as following:

To offer contemporary financial services in conformity with Islamic

Shari‟ah;

To contribute towards economic development and prosperity within

the principles of Islamic justice;

Optimum allocation of scarce financial resources; and to help ensure

equitable distribution of income.



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These objectives are discussed

below:

Offer Financial Services:

Interest-based banking, which is considered a practice of Riba in financial

transactions, is unanimously identified as anti-Islamic. That means all transactions made

under conventional banking are unlawful according to Islamic Shari‟ah. Thus, the

emergence of Islamic banking is clearly intended to provide for Shari‟ah approved

financial transactions.

Islamic Banking for Development:

Islamic banking is claimed to be more development- oriented than its

conventional counterpart. The concept of profit sharing is a built-in development

promoter since it establishes a direct relationship between the bank‟s return on

investment and the successful operation of the business by the entrepreneurs.

Optimum Allocation of Resources:

Another important objective of Islamic banking is the optimum allocation of

scarce resources. The foundation of the Islamic banking system is that it promotes the

investment of financial resources into those projects that are considered to be the

most profitable and beneficial to the economy.



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Islamic Banking for Equitable Distribution of Resources:

Perhaps the must important objective of Islamic banking is to ensure equitable

distribution of income and resources among the participating parties: the bank, the

depositors and the entrepreneurs.

Basic Properties of Islamic Banking

Islamic banking is emerging in an era when the world is settling down to a free

market economy and when phenomenal changes are taking place in the global

economy. A free- market economy visualizes three essential features - free trade,

open capital market and minimum governmental intervention. The vagaries of

protectionism and regionalism are transforming the economy to free trade and

globalize. The changes could provide ample scope for the Islamic banking to grow

and work in competitive environment. Islamic banking, being an integral part of

an Islamic economic system can be practiced more effectively in an environment,

which conforms to the doctrine of Islam. Thus there are some essential requirements for

a successful Islamic banking, such as:

Supportive Legal Framework and Swift Judicial System:

An effective legal framework ensuring speedy justice is essential for a good society,

it is more so for the success of Islamic banking, because its investment risk is more

than that of a conventional interest-based bank as its dealings are on profit and loss

basis.

Disciplined Entrepreneurship:

It would minimize cases of malfeasance and mismanagement. Besides, a banker



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must extend from being merely a financier to a role-player in business. Although a

Murabaha transaction in Islamic banking does provide an opportunity to a

banker to share in business, the Islamic banks generally limit themselves to being

inactive partners for their credit risk only. The real entrepreneurial role of an Islamic

bank needs, therefore, to be increased.

Conceptual Changefrom Credit Risk to Overall RiskManagement:

While it is difficult to predict, with any degree of certainty, the operating results of

an enterprise and the magnitudes of profit and loss, all the same, it seems unjust if

the party providing the capital is guaranteed a fixed and predetermined rate of return,

and the other party undertaking the enterprise is made to bear the uncertainty

alone. Under the circumstances, an Islamic banker has not only to focus on credit

risk but also to view all the business risks of the enterprises in which he has invested

the bank money.

Strong Ethical Values:

The Islamic economic system offers a balance between the two extremes of public or

social and private or individual ownership of property. The success of Islamic banking in

a society is related to the extent of acceptability of the doctrine of trusteeship and

transformation of the self-interested and profit-oriented behavior of people into an

altruistic and value-oriented behavior.

Supreme Shari‟ah Council:

The function of Shariah Council in maintaining Islamic banking activities in a country

within the orbit of Islamic injunctions is dependent on its legal status and the extent of

implementation of its opinion.



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The opinions of Shari‟ah Councils of different countries may not necessarily be uniform.

There is, therefore, a need for a Supreme Shari‟ah Council representing Muslim

community all over the world to decide about various issues con fronted by Islamic

banks. A beginning has been made in this direction by establishing the Council of the

Islamic Fiqh Academy at Jeddah, Saudi Arabia under the auspices of the Organization of

Islamic Conference (OIC) but its role has to be augmented.

Uniform Accounting Standards:

There is need for harmonization of financial reporting of Islamic banks in respect,

particularly, of the following;

The significant accounting policies on which the statements are based should be

fully and clearly declared,

The methods of translating foreign currency transactions would be appropriately

disclosed,

Appropriate and sufficient disclosures regarding the quality of banks assets is of

much concern to the depositors,

Additional disclosure of the nature of the financial contingencies and commitments

of the banks in their financial statements.

Committed Management:

If the management of a bank is determined to step into the business of Islamic banking, it

can easily evolve a strategy for the same, formulate a plan for a specific time - frame and

implement it accordingly.

Progressive and Modern outlook:

In order to ensure successful management in Islamic banks, there is need to apply all the



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available modern tools of managing corporate business, including management of human

assets, offices, information resources, marketing etc.

Body to Evaluate Islamic Financial Institutions:

In order to ensure quality and standard in management of Islamic financial institutions

and to build confidence of the general public in Islamic banking, there is need to establish

some professional body responsible to define professional standards and ethics and other

aspects of Islamic financial institutions. It may also certify the level of financial health of

such institutions.



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Treatment in case of Loan default:

In time of loan default these banks don‟t take any penalty for default which is one of the

major differences between Islamic & conventional banks.

Participatory financing:

Islamic banks believe in participatory financing. They do the investment through profit &

loss sharing. Their investment modes depend on mudaraba & murabaha principles which

require participatory financing of both the parties.

Lending and investing:

In Islam, there is a clear difference between lending and investing lending can be done

only on the basis of zero interest and capital guarantee, and investing only on the basis of

Mudaraba (profit-and-loss-sharing).

Islamic Banking in Bangladesh

Islamic Banking has experienced a phenomenal growth and expansion in Bangladesh in the

backdrop of strong public demand and support for the system along with its gradually

increasing popularity across the world. As a result, a number of full-fledged Islamic Banks

has been established, while a good number of conventional banks have come forward to offer

services compliant with Islamic Shari‟ah through opening of Islamic branches along with

conventional ones. There is also a trend of conversion of conventional banks into Islamic

bank.

It has, therefore, become necessary to ensure that activities of the fast growing Islamic Banks

are carried out properly and uniformly according to the principles of Islamic Shari‟ah. With

this end in view, Bangladesh Bank constituted a Focus group comprising representatives of



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the central Bank, a number of Islamic Banks and the Central Shari‟ah Board for Islamic

Banks of Bangladesh to formulate an integrated guideline for conducting banking business of

the Islamic Bank/Islamic bank branches of conventional banks. Based on the

recommendations of the Focus group this guideline embodying different terminologies used

in Islamic Banking operations, definitions of the terminologies, the principles and modes of

deposits and investments has been prepared. It also dwelt upon the issues of liquidity,

maintenance of books of accounts and preparation of financial statements and other related

issues. This guideline has been prepared mainly on the basis of Banking Companies Act

1991, Companies Act 1994 and Prudential Regulations of Bangladesh Bank. However, this

guideline should be treated as supplementary, not a substitute, to the existing banking laws,

rules and regulations. Incase of any point not covered under this Guideline as also in case of

any contradiction, the instructions issued under the Banking Companies Act and Companies

Act will prevail.

Definitions of Terms used in Islamic Banking Operations

The following terms as used in this guideline, if not repugnant to the subject or affairs, shall

have the following meaning:

"Shari‟ah" means such rules and regulations as have their origin in the holy Qur'an

and Sunnah to govern all aspects of human life.

"Islamic bank" means such a banking company or an Islamic banking branch (es) of a

banking company licensed by Bangladesh Bank, which follows the Islamic Shariah in

all its principles and modes of operations and avoids receiving and paying of interest at

all levels.

"Islamic Banking Business" means such banking business, the goals, objectives and

activities of which is to conduct banking business/activities according to the principles

of Islamic Shari‟ah and no part of the business either in form and substance has any

elements not approved by Islamic Shari‟ah.



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"Branch or Branch Office" means any branch or Branch Office of Islamic Bank

Company or office or Branch of such interest based conventional Banks which run

Islamic banking business.

"Depositor" means some one who holds with any Islamic Banking Company any

account namely Current account based on Al-Wadiah principles, Savings or long and

short term deposit accounts under Mudaraba principles.

"Investment" means any such modes of financing which Islamic Bank Company does

bin accordance with principles of Shari‟ah or as per the Shari‟ah approved modes like

Mudaraba, Musharaka, Bai-Murabaha, Bai-Muajjal, Istisna, Lease, Hire-purchase under

Shirkatul Melk, etc.

"Client" means such a person or institution who/which has any business relationship

with Islamic Banking Company.

"Compensation" means such financial penalty as is imposed by a Islamic Banking

Company over and above the amount of installment when a client fails to repay Bank's

investment on due dates as per the agreement executed by him

Bangladesh is one of the largest Muslim countries in the world. The people of this country

are deeply committed to Islamic way of life as enshrined in the Holy Qur‟an and the Sunnah.

Naturally it remains a deep cry in their hearts to direct and design their economic lives in

accordance with the precepts of Islam. The establishment and commencement of Islamic

banks in Bangladesh, is the true reflection of this inner urge of its people.

In our banking sector there operates 7 banks which are backed by Islamic Shari‟ah and

approved principles according to Quran and Sunnah. First Islamic bank is IBBL which is

established in 1983. This was in fact the one of a kind bank in the Southeast Asia. Other

players in the market are:



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EXIM Bank

SIBL

First Security Islami Bank Ltd

Al-Arafah Islami Bank Ltd

Social Islami bank Ltd

ICB Islamic Bank



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Chapter Two

About the Organization



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Islami Bank Bangladesh Limited

The establishment of Islamic Bank Bangladesh Limited on March 13, 1983, is the true

reflection of this inner urge of its people, which started functioning with effect from March

30, 1983. This Bank is the first of its kind in Southeast Asia. It is committed to conduct all

banking and investment activities on the basis of interest-free profit-loss sharing system.

With the active co-operation and participation of Islamic Development Bank (IDB) and some

other Islamic banks, financial institutions, government bodies and eminent personalities of

the Middle East and the Gulf countries, Islamic Bank Bangladesh Limited has by now earned

the unique position of a leading private commercial bank in Bangladesh.

Corporate information: (As on Diary 2009 of IBBL)

Date of Incorporation 13th March 1983

Inauguration of 1st Branch

(Local office, Dhaka)

30th March 1983

Formal Inauguration 12th August 1983

Share of Capital

Local Shareholders 37.76%

Foreign Shareholders 62.24%

Authorized Capital Tk. 20,000.00 million

Paid-up Capital Tk. 2,509.64 million

Deposits Tk. 400,377.00 million

Investments (including Investment in Shares) Tk. 392,795.00 million

Foreign Exchange Business Tk. 648,303.00 million

Number of Branches 276

Number of SME Service Centers 30

Number of Shareholders 60,173

Manpower 2068



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VISION OF IBBL

The vision of Islami Bank Bangladesh limited is to strive to achieve superior financial

performance be considered a leading Islamic bank by reputation and performance.

To establish and maintain the modern banking techniques

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, transparency and integrity in order to ensure stability of financial

systems.

Encourage savings in the form of direct investment.

To encourage investment particularly in projects which are more likely to lead higher

employment

MISSION OF IBBL

To establish Islamic banking through the introduction of a welfare oriented banking system

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 developed areas of the country, to encourage socio-economic

uplift and financial services to the low income community particularly in the rural areas.



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Special features of IBBL

The bank is committed to run all its activities as per Islamic Shariah. IBBL through its steady

progress and continuous success has earned the reputation of being one of the leading Private

Sector Banks‟ of the country. The distinguishing features of IBBL are as follows:

All activities are conducted on interest-free banking system in accordance with

Islamic Shari‟ah.

Investment is made through different modes permitted under Islami Shari‟ah.

Establishment of participatory banking instead of banking on debtor-creditor

relationship.

Investment income of the Bank is shared with the Mudaraba depositors according to a

ratio to ensure a reasonable fair rate of return on their depositors.

Its aims are to introduce a welfare-oriented banking system and also to establish

equity and justice in the field of all economic activities.

It extends Socio-economic and financial services to the poor, helpless and low-income

group of the people for their economic enlistment particularly in the rural areas.

It plays a vital role in human resource development and employment generation

particularly for the unemployment youths.

Its aim is to achieve balanced growth and equitable development of the county

through diversified investment operations particularly in the priority sectors and in the

less developed areas.

It extends co-operation to the poor, the helpless and the low-income group for their

economic development



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MANAGEMENT OF IBBL

Islami Bank Bangladesh limited is being managed by a board of directors comprising

foreigners and local. An executive committee is formed by the board of directors for efficient

and smooth operation of the Bank. Besides a management committee looks after the affairs of

the bank.

Organizational Structure of the Company



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Financial Performance of IBBL at a glance

2008 2009 2010 2011 2012

Authorized

capital

10,000.00 10,000.00 10,000.00 20,000.00 20,000.00

Paid-up

capital

4,752.00 6,177.60 7,413.12 10,007.70 12,509.64

Shareholde

r‟s equity

18,572.00 23,620.00 28,400.00 33,717.00 38,803.30

Total

deposit

202,115.45 244,292.14 291,934.60 341,853.67 400,337.00

Total

investment

187,586.55 225,752.41 275,493.94 322,722.83 392,795.00

Investment

rate

13% 20% 29% 17% 19%

Export 93,962.00 106,424.00 148,421.00 178,244.00 161,605.00

Import 168,329.00 161,230.00 246,281.0

0

301,207.0

0

237,307.00

Remittanc

e

140,404.00 194,716.00 214,629.00 236,607.0

0

249,391.00

No. Of

Branches

196 231 251 266 276



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Chapter Three

Analytical Part of IBBL



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PEST Analysis of Islami Banking System

Political > Economical > Social > Technological

PEST analysis: Bangladesh Perspective

PEST analysis is a comprehensive analytical process to trace the competitive position in the

general business environment of any country. The countrywide various factors under the four

terms specified above categorize the status of any business concern.



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Politicalfactors:

Regional legislation, legal procedure, law and order of a country influence the

banking mechanism to a greater extent. Our provision is more or less friendly towards

the banking sector. Principles directed by the regulatory authority and international

bodies‟ impact the banking performance of our country.

Economical:

GDP, corporate income tax provision and distribution channels, market routes and

customer base are components of economical factor. Our country background and

increasing customer demand raise the importance and evolution of Islamic banking

system.

Societal factors:

The biggest proposition of Islamic banking system is the religious perception in minds

of people since most of the residents of our country are Muslims. Media support, life

style, major events like RAMADAN, Eid festivals and Hajj saving propensity also

stimulate the advancement of Islamic banking.

Technological aspect:

Technological factors involve competitive development, research methodology,

revolutionary online transaction system, innovative potentials, one stop service

delivery system manipulate the Islamic shari‟ah powered banks operating in our

country.



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SWOT ANALYSIS

SWOT analysis is a tool for screening an organization and its environment. It is the first stage

of planning and helps marketers to focus on key issues. It helps to detect the possible threats

and opportunities in the market and viability. It helps recognize internal strength and

overcome weaknesses.

It is the scanning of the internal and external environment is an important part of the strategic

planning process. Environmental factors internal to the firm usually can be classified as

strengths, or weaknesses, and those external to the firm can be classified as opportunities or

threats.



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STRENGTHS

Islamic Banking will explicitly reorganize the deplorable condition of the poor and

marginalized segments of society. Banking products which comply with Islamic law are

becoming increasingly popular, not only in the Gulf countries and far eastern states like

Malaysia, but also in other developed markets such as the United Kingdom. Reputed

banks like Standard Chartered, Citibank, and HSBC are operating interest free windows

in several West Asian countries, Europe and USA. There is a huge potential market in

Bangladesh for Islamic banking products.

Moreover, Islamic banking helps the weaker and hapless section of the society through

various financial products. Islamic banking finances (through its Joint ventures,

partnerships and leasing)are provided by investors or banks to the borrowers with a

condition that financial risk is to be borne by the investors, and other risks to be borne

by the borrower. This helps even the indigent and vulnerable to get finance at a no risk

and cost basis, but definitely requires other credits like strong business proposal,

rational planning, skilled hands and specialized art to attract the financier. Better

business proposals succeed in fetching funds as opposed to the projects with

comparatively poor propositions. Such inclusive growth will aggrandize the

Bangladeshi economy.

There is no room for diversion of funds. Therefore, investment in consonance with

Islamic banking principles will surely boost the engine of economic growth in our

country.



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Commercial banks cannot raise deposits without promising a specified rate of return to

depositors, but under Shari‟ah, returns can only be determined post-facto depending on

profit. Also banks have to maintain a Statutory Liquidity Ratio (SLR), which involves

locking up a substantial portion of funds either as cash, gold or in government

securities. Such cash will not get any return, keeping it in gold is risky as it could

depreciate and government securities come with interest.

We have seen the fall of giants in the world of financial sector like Lehman Brothers in

the aftermath of the US sub-prime mortgage crisis. Therefore, it is of paramount

importance to be strict about credit rating system, to circumvent any chance of further

bankruptcy. Since Islamic banking adheres to strict credit rating

system and prohibits indebted economic agents to avail more debt finance, it could save

our financial and economic enterprises from bankruptcy.

WEAKNESS

Islamic banking needs to introduce corporate governance with transparent accounting

standards. It needs to perform detailed evaluation before embarking Profit Loss

Sharing Scheme, which demand a pool of highly trained professionals. The imparting of

professional training is costly. Detailed principles are still to be laid down and

techniques and procedures evolved to carry them out.

The financial institutions in Bangladesh comprises of Banks and Non Banking



36 | P a g e

Financial Institutions. Banks in Bangladesh are governed through some Regulatory

Acts. But Islamic banking operations sometimes contradict with the set laws. Like:

Banking Regulations Act prohibits bank to use any sort of immovable

property apart from private use –this is against Ijarah for home finance.

Banking Regulations Act requires payment of Interest which is against

Shari‟ah.

It is observed that inability to evaluate a projects' profitability has tended to act

against investment financing. Some borrowers are frustrated to the banks appraisal

efforts as they are reluctant to provide full disclosures of their business.

Limited appeal outside core customer base.

Widely acceptable and reliable techniques are yet to be devised.

Adverse selection has been one of the major impediments in the world of Islamic

banking.

Among the other disincentives from the borrower's point of view are the needs to

disclose his accounts to the bank if he were to borrow on the Profit Loss Sharing

basis. However, many small-time businessmen do not keep any accounts, leave alone

proper accounts. And large conglomerates do not like to disclose their real accounts to

anybody. The widespread lack of business ethics among certain business community

will be another major hurdle in the path of Islamic banking in Bangladesh.



37 | P a g e

The practices in use by the Islamic banks have evoked questions of morality. Bai

mu'ajjal (sale with deferred payment) and Murabaha (cost-plus financing) are

permitted in the Shari‟ah under certain conditions. What are being done in many

countries are fictitious deals which ensure a predetermined profit to the bank without

actually dealing in goods or sharing any real risk. This is against the letter and spirit

of Shariah.

Opportunity

The size of the market will be very large if it can be targete properly .

In the name of religious faith, people are looking for interest free banking and finance.

It is significant to mention here that Islamic banking is not meant for Muslims only

but non Muslims may also avail the benefit of it. And it is feasible to have a parallel

banking system based on Shari‟ah along with a conventional one.

After 4/5, most of the countries started pulling out their investments from the US and

Europe because of the fear of freezing of assets. Another reason could be the

slowdown in the economies of western countries. A growing Bangladeshi economy

has created a huge enthusiasm among Islamic nations as it sees the unlimited

opportunities it can avail.

Islamic banking is an effective mechanism to defeat the liquidity and inflation



38 | P a g e

problems along with allowing comprehensive growth. For real inclusive growth, we

have to ensure increase in income and employment status of workers in all segments.

If Islamic banking is introduced, the inadequate labor capital ratio, for informal sector

workers associated with agriculture and manufacturing industries could be resolved

through equity finance, which might be a revolution in our agriculture and

unorganized sector. With improved labor capital ratio, our vulnerable workers

associated with agriculture and unorganized sector might be able to compete

effectively with the formal sector workers. Thus Islamic Banking may financially

empower majority of our work force.

Islamic banking should not be a religion based banking business, but could be

profitably used to resolve our issues pertaining to economy.

Threats

Moving towards more Shari‟ah compliant services offered by mainstream banks.

It may bring financial segregation in the economy. The compartmentalization of

Shari‟ah compliant and Non Shari‟ah Compliant banking might be dangerous for the

stability of our financial environment.



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Chapter Four

Ibanking/ mobile banking, g r e e n b a n k i n g &

o n l i n e b a n k i n g s y s t e m of IBBL



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E- Banking related software

ICTW, in coordination with all other departments, has decided upon the following software

standards (Any software used may be added with the concern of ICTW as per requirement):

Desktop operating system

• Microsoft Windows

Server operating system

• Sun Solaris

• Linux (Freeware)

• Windows 2008/2003/2012

• Any Customized OS for Appliance or Virtualization

Database Management System (DBMS)

• Oracle

• MS SQL Server

• MySQL (Freeware)

Web Servers

• Apache

• Tomcat

• IIS

Development Tools

• PHP

• Java

• JSP

• Cocoon

• Hibernet

• Struts

• Intelij IDEA



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• i-report

• Microsoft Visual Studio

• Microsoft Dot Net

Productivity tools package

• Microsoft Office

oWord

oExcel

oPowerPoint

oAccess

oOutlook

oOpen Office / Star Office

Core Banking System (CBS)

• eIBS (Electronic Integrated Banking System) – Developed by ICTW, IBBL

Other In house Software (Developed by ICTW, IBBL)

• MIS

• Bach Application (for Automated clearing Housing)

• HRM

• Inventory

• Attendance

• Reconciliation

• BACH

• B E F T N

• Trade Ware for foreign trade centralization

• Back office Management system (IBW)

• Auto reconciliation system



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• Other Financial Module

Internet browsing software

• Internet Explorer

• Mozilla Firefox

• Google Chrome

Software Tools

• WinZip/Power Archiver

• Adobe Acrobat Reader

• VNC

• McAfee Total Protection for anti-virus, anti-Spam (Server and Desktop

Protection)

• JDK

Contact Center (Interactive voice response) System

• IVR based Phone Banking

• Agent Desktop based support System

• Post Call Management System

Bangla

• Lekhani

• Bijoy

Banking Services

• ATM-Debit Card (Third party software)

• Khidmah Card-VISA/Master card

• Remittance Card

• Travel Card



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• SWIFT

• i-Banking

• Mobile Banking

• Instant Cash (Web Payment via exchange house)

• Contact Center System

The current software can exist in any one of the following

scenarios:

• An ICTW created “image”

• An ICTW installation procedure that provides for the following:

o Installation options

o Upgrade considerations (if applicable)

o Data conversion (if applicable)

• A shortcut to a network application

• An automated installation through an ICTW developed solution that may be

used in a rapid- deployment scenario or silent-install situation

• A terminal application, or other thin-client type of application accessible via the

IBBL, intranet

page

Software cannot be present on IBBL, computers in the

following scenarios:

• An installation not by a procedure

• A piece of software purchased for one‟s home computer

• A downloaded title from the Internet

• A pirated copy of any title

• A different title from the current software list of this policy

• Any means not covered by the ways that software can exist on IBBL computers

Automation system of IBBL

IBBL has always been a front runner in harvesting and using new technologies and innovative

services to make banking operations easier and simpler. Also, it has taken initiatives to make

the bank totally IT driven and to achieve full automation. The bank has, by this time,



44 | P a g e

established online connectivity to its all branches having dual connectivity at all major and city

branches, which has turned out to be the largest in the banking sector of the country.

Establishment of own ATM network of the bank & introduction of remittance card for

beneficiaries of foreign remittance earners are already done and the Bank has a vision to

incorporate Islamic Credit Card (Khidmah Card) & different prepaid cards along with existing

ATM (debit) card. All types of Electronic Fund Transfer (EFT) & Alternative Payment System(

ATM,POS,SMS Banking & internet banking & Mobile banking) are either already incorporated

or being incorporated into the Bank‟s long list of services. All branches including

SME/KRISHI Branches of IBBL have sophisticated IT systems equipped with state of the art

IT components used in the Banking sector.

EIBS( Electronic Integrated Banking System)

IBBL boasts to be the only bank in Bangladesh possessing in – house developed and

implemented Core Banking System, eIBS, which is based on open source technologies and

most secure Database Management System like ORACLE. All banking modules have been

fully integrated in eIBS including three major modules: General Banking (GB), Investment and

Foreign Exchange. GB & Investment modules are running at all including SME branches.

While investment and Foreign exchange are fully integrated with the existing eIBS GB

modules.

An advanced version of RDS module of eIBS has been developed by the Bank‟s own

workforce and meanwhile implemented in all RDS branches of the Bank and found them

satisfactory. It has targeted to implement the system in the newly declared 14 RDS branches as

well.



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Operations of CPS ( Cheque Processing System) of IBBL

i.

ii.

iii.

iv.

Endorsement

Error/Modification

Zip File

B. CPS Operation

Outward Clearing

Branch Operation

Maker Operation

i. Login into CPS

ii. Upload Images from Zip file

iii. Error and Modification

iv. Entry Data Making

Checker Operation

i) Correction in Branch level

ii) Mark Instrument Ready to Verify

iii) Correction after rejection from

Service Branch iv) Process of Credit Operation

v) Accounting

A. Scanner Operation

Scanning the Instrument



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Service Branch Operation

a) As a Branch all operations of Branch

level b) As a service Branch:

i) Verify by Service Branch

ii) Generate OCE

c) As a Supervisor:

iii) Push OCE to PBM

iv) Pull Acknowledgment

v) Pull IRE

vi) Read IRE

vii) Mark Clearing/Return instrument

viii) Process report from PBM

ix) Verify Report of PBM and CPS

x) Monitoring PBM

PBM Supervisor (Head Office)

ii) Monitor QFTP

iii) Monitor HSM and other Devices

iv) Monitor Related Software

v) Monitor Network Link

vi) Download Broadcasting

i) Monitoring PBM



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Inter bank fund transfer of IBBL

BACH

Bangladesh Bank has been working to modernize the country‟s payment system. The most

visible step towards modernizing payment system is the establishment of the Bangladesh

Automated Clearing House (BACH).

Bangladesh Automated Cheque Processing System (BACPS) is one of two components of

BACH.

The other component of BACH is the Bangladesh Electronic Funds Transfer Network

(BEFTN).

BACPS

The basic features of BACPS are :

the adoption of new cheque design standard with a Magnetic Ink Character Recognition

(MICR) code line and the exchange of cheque-image and data instead of paper cheques for

clearing and settlement purpose. Retention of the original paper cheque will become the

responsibility of the presenting bank rather than the paying bank.

Terminologies

CHM- Clearing House Module

PBM-Participating Banks Module

CPS-Cheque Processing System

CBS-Core Banking Solution(i.e.:eIBS)

OCE – Outward Cheque Envelope

ICE-Inward Cheque Envelope

ORE-Outward Return Envelope



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IRE-Inward Return Envelope

Flow of Data(Outward)



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Flow of Data(Inward)

Cut offs

Session Presentment Return

Regular Value (500,00 tk) 1:00 PM 6:30 PM

High Value (above 500,00

tk)

12:00 PM 3:00 PM



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Sharp Points: Outward

Instruments can be presented till 11.30 AM of that particular business day which will

increase customer satisfaction.

Some instruments failed in PBM for IQA parameters. These instruments can be re-

scanned and re-presented in that same business day if time is available.

Users should check CPS whether the credit file is being created or not.

Sharp Points: Inward

Inward instruments processing should be started from 10 AM of that particular business

day.

Inward reports in CPS and eIBS should be checked whether no of instruments are equal

or not.

Frequent sending of feedback files from eIBS should be done while processing the

debits and returns.

BEFTN

The Bangladesh Electronic Funds Transfer Network (BEFTN) will operate as a

processing and delivery centre providing for the distribution and settlement of electronic

credit and debit instruments among all participating banks.

EFT Credits

• Inward Foreign remittances

• Domestic remittances

• Payroll private and government

• Dividends/Interest/Refunds of IPO

• Business to business payments (B2B)

• Government tax payments

• Government vendor payments

• Customer‐initiated transactions



51 | P a g e

EFT Debits

• Utility bill payments

• Equal Monthly Installments (EMI)

• Government tax payments

• Government license fees

• Insurance premium

• Mortgage payments

• Club/Association subscriptions

EFT Applications

I. Consumer Applications

• CIE – Customer Initiated Entry: Customer initiated entries are limited to credit

applications where the consumer initiates the transfer of funds to a company or person

for payment of funds owed to that company or person, typical example of these entries

are utility bill and other Internet banking product payments.

• PPD – Prearranged Payment and Deposit Entry

o Direct Deposit: Direct deposit is a credit application that transfers funds into a

consumer‟s account at the receiving bank, such as payroll, remittances, interest,

pension, dividends and/or refunds etc.

o Preauthorized Bill Payment: A preauthorized payment is a debit application.

Companies with existing relationship with the customers may participate in the

EFT through the electronic transfer (direct debit) of bill payment entries, such as

insurance premiums, loan installments, etc.

II. Corporate Applications

o • CCD – Corporate Credit or Debit: This application can be either a credit or a

debit application where funds are either distributed or consolidated between

corporate entities or government entities, such as funds are being transferred

between organizations (i.e. sister concerns) under the same group.

o • CTX ‐ Corporate Trade Exchange: This application supports the transfer of

funds (debit or credit) within a trading partner relationship in which business

payment remittance information is sent with the funds transfer.



52 | P a g e

SETTLEMENT AND POSTING

Originating Bank:

Specific procedures and timing of settlement between the OB and the originator are

solely at the discretion of the OB and the originator and therefore, governed by

agreement between them. It is the OB„s responsibility to monitor the credit‐worthiness

of its corporate customers to ensure that the OB„s risk in originating EFT payments is

managed efficiently.

EFT Operator (BEFTN):

BEFTN will calculate net settlement figures for each participating bank. BEFTN will

also provide information to participating banks on the amounts that will be settled for

each bank on each settlement date.

Receiving Bank (RB)

o a) Posting: The RB is responsible for posting entries and for providing funds

availability, both of which are determined by the settlement date in the batch

header record.

EFT Debits will be delivered to a RB not earlier than one banking day

prior to the settlement date. The rule clearly mentions that debit entries

cannot be posted prior to the settlement date.

EFT Credits will be delivered to a RB not earlier than one working day

prior to the settlement date.

o b) Settlement :Settlement between the originator and the OB is governed by

agreement. Settlement between the RB and the receiver is determined by these

Rules.



53 | P a g e

BEFTN-System Overview



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Inward EFT File



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Authorize Inward EFT Instruction



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Payment Inward EFT Instruction

Send EFT Feedback



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Portion of commission income on EFT from total commission income

Year 2011 2012

commission

income on

EFT

169,800,000 357,840,000

total

commission

income

548,500,000 688,600,000



63 | P a g e

I Banking:

IBBL has already started SMS banking, internet banking (I banking) and spot cash services.

Though SMS push service, remitters and beneficiaries of the foreign remittance can

automatically receive a message in their mobile phones once the amount is credited in their

accounts. Though SMS push- pill service, clients can see their latest balance information

and last three transactions in their mobiles from any corner of the globe. At present 1,10,000

clients have been registered in SMS banking and on average 6500 requests are being

received per day.

Though iBanking , foreign remittance houses and valued clients can check account details at

IBBL‟s Web Portal. So far, nearly twenty thousand clients have registered for taking the

internet banking services. The bank is in the process of providing e- commerce services to

the cutomers using ibanking.

It is also planning to provide full scale mobile banking services like mobile airtime

recharge, utility bills payment etc. to its customers. Separate advisory committee and

implementation team have been working collaboratively. Though it, IBBL intends to

catalyse a new banking trend and bank the unbanked population bringing them under the

umbrella of the Islamic banking.

From I banking services corporate clients are mostly benefitted. At now Akij group of

industries and Pran AMCL co. are some of the largest clients of IBBL and they are

benefitted through real time fund transfer and online payment system. IBBL maintains Robi

Top Up collection a/c and all corporate multinational bank‟s collection a/c .IBBL provides

through iBanking:

P to P services (Person to Person)

P to B services (Person to Business)

B to B services ( Business to Business)

As a result banks profit making is increasing tremendously. Customers loyalty has

increased.Where there is no branch customers can make payment their deposit installment

through iBanking.8000 comission agents have been registerd. This is the all about ssyber

banking which has made banking industry geographically independent.



64 | P a g e

IBBL is offering ibanking services through fund transfer and irecharge.

FUND TRANSFER

Conditions for Fund Transfer:

1. Maximum amount Tk. 20,000.00 within 5 transactions per day.

2. Maximum 5 (Five) account can be subscribed as a destination account.

3. Subscribed account cannot be deleted within 30 days.

4. After subscribing collect secret PIN CODE from Branch.

5. Charge applicable.

If agree with all instructions tick the check box and click subscribe me.

Steps of subscribing Fund Transfer:

After login client will view new links for subscribed these feature (displayed just below of

Click the link Fund Transfer to subscribe this feature. Next page will show some

instructions.



65 | P a g e

Web portal based existing services are listed below:

1.

2.

3.

4.

5.

6.

A/C wise Liability

Report

Summary of Mode

wise Liability Report

Cost sheet for

Negotiation

Cost sheet for

Realization

Cost Sheet for

Retirement of a Bill

View Account

information

View account Balance

View account

Statement

Search FTT Message

Customer is provided with his investment

account wise liability details.

Customer can see his liability position in

mode-wise form.

Cost sheet for negotiation prepared by

branch can be availed throw this service.

Cost sheet for realization prepared by


Cost sheet for retirement prepared by


Customer can see the detail of an account

(i.e.: Installment amount for a particular

Special Savings Account.)

Customer can check his current deposit

account balance.

Account statement of deposit account can

be checked and printed.

Detail and current status of an FTT

message which are sent by Exchange

house of remitter can be viewed.

Detail and current status of an FTT

message which are sent by Exchange

house of remitter can be checked.

Detail information of a clearing instrument

for debit or credit is available.

Transaction summary of all accounts the

customer has been registered in his

iBanking Profile.

Currently free of cost.






7.

8.

9.




10. Search FDD Payment Currently free of cost.

11. Clearing Instrument

Status (Credit &

Debit)

12. Transaction Summary



Sl. Service name Description of the service Service charge



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Portion of commission income on iBanking from total commission income

Year 2011 2012

commission

income on

iBanking

299,953,640 566,282,700

total

commission

income

548,500,000 688,600,000



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Services through Mobile (m-Banking)

Controls over mobile transaction are required to manage the risks of working in an

unprotected environment. Therefore, bank shall establish following control procedures to

ensure confidentiality, integrity, authenticity and non‐repudiability:

• Security standards shall be followed appropriate to the complexity of services offered.

• Appropriate risk mitigation measures shall be implemented like transaction

limit, transaction frequency limit, fraud checks, AML checks etc. depending on the

risk perception, unless otherwise

mandated by the regulatory body.

• Services provided by bank through mobile shall comply with security principles and

practices for the authentication of transactions mandated by the regulatory body.

• Proper level of encryption and security shall be implemented at all stages of

the transaction processing. The following measures with respect to network and

system security shall be adhered to:

o Implement application level encryption over network and transport layer

encryption wherever possible.

o Establish proper firewalls, intrusion detection system (IDS), intrusion

prevention system

(IPS), data file and system integrity checking, surveillance and incident response

procedures.

o Conduct periodic risk management analysis, security vulnerability

assessment of the application and network at least once a year.

• Proper documentation of security practices, guidelines, methods and procedures used

in such mobile

services shall be maintained and updated.

Registration scopes of Islami Bank mCash account:

i.Availability of

Service



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Islami Bank mCash Account can be registered from:

1. Any branch of Islami Bank Bangladesh Limited,

2. Any agent approved by Islami Bank Bangladesh Limited and

3. Mobile network operators‟ approved agent endorsed by IBBL.

Islami Bank mCash signboard will be appeared in all these places. Account opening form

will be available at the places having m-Cash signboard.

ii. Eligibility

criteria

1. Anyone who has an active mobile SIM of any mobile bank

2. Possesses 1 copy of passport size photograph.

3. Has Photocopy of National ID Card / Nationality Certificate / Driving License /

Passport

He/she can open the Islami Bank mCash account by filling up account opening form and

submitting it to the agent.

iii. Validation, activation and

notification

a. Combination: The mobile account number will be a 12 digit number combining his

mobile number with a check digit which will be placed at the last of his mobile

number.

b. PIN generation: After the customer calls *16259# or *259# he/she will get the

mCash Account Activation Confirmation menu and would submit a four digit PIN

number. It will be used for each transaction done by him/her. At this stage, customer

only can deposit money to his account but will not be able to perform other

transactions.

c. Validation: After activation of his/her mobile account, he/she will get a confirmation

SMS. After that, he/she can enjoy all the services of Islami Bank mCash.

Usage of PIN Number:

PIN will provide the first level of security to the customer and for each transaction his



69 | P a g e

mobile phone and PIN

number will be

required.

This PIN number is not shareable to anyone and must have to be remembered by the

customer with higher preference.

Closing procedure of Islami Bank mCash account:

i. To close a mCash account, customer will go to the agent and request him to close his/her

account.

ii. Agent will request the system to close his/her account from his/her Account close menu

after taking the

PIN number from the

customer.

iii. System will deduct a closing charge as per fixed by management from his deposit and

create an auto withdrawal request of the rest of the deposit amount and the account will

be closed.

iv. The agent will give the cash money to the customer.

Transaction Rules:

Cash in (deposit):

• Customer will give the deposited amount and mobile account number to the agent

• Agent will start the cash in process from his mobile phone.

• Agent will give the deposit slip to the customer

• Than agent will receive a SMS as the confirmation of his/her cash in (deposit)

• After receiving the SMS customer will confirm about his/her cash in. So,

he/she must not leave the agent counter before getting the SMS.

Cash Out (withdraw):

• Customer will give mobile account number and tell the amount of cash out (withdraw) to



70 | P a g e

the agent

• Customer will call *16259# or *259# from his mobile and get the Cash Out

(withdraw) menu in his mobile phone.

• Then he will submit the agent‟s mobile account number, amount of money and PIN

number

• Then transaction will complete and both the customer and the agent will receive the

confirmation SMS

from the

System.

• Agent will take the customer‟s signature/finger print and give the cash out

(withdraw) receipt and money to the customer.

Fund Transfer from one account to another:

• Customer will call *16259# or *259# from his mobile and get the Fund Transfer

menu in his mobile phone.

• Then, the customer will submit the mobile account number, amount of money and PIN

number.

• Then, both the account holder and the customer will receive a confirmation SMS and

transaction will be completed.

Merchant Payment:

• To purchase products from any merchant, the merchant should be a registered IBBL

merchant.

• Customer will call *16259# or *259# from his mobile and get the Merchant

Payment menu in his mobile phone.

• Then, the customer will submit the mobile account number of the merchant, amount of

money and PIN

number.

• Then, both the customer and the merchant will receive a confirmation SMS and



71 | P a g e

transaction will be completed.

Mobile Recharge (Top-Up):

• Customer will call *16259# or *259# from his mobile and get the Mobile Recharge

menu in his mobile phone.

• Customer will select this menu and then will select the mobile number of his own

phone or give the other mobile number.

• Then customer will submit the recharge amount and PIN number.

• Then, the customer will receive a confirmation SMS and transaction will be completed.

Balance Check:

• Customer will call *16259# or *259# from his mobile and get the My Wallet menu in his

mobile phone.

• Then customer will select the Balance Check menu and submit the PIN number

• In the reply SMS, he will get the current balance of his mobile account.

Mini Statement Check:


mobile phone.

• Then customer will select the Mini Statement menu and submit the PIN number

• In the reply SMS, he will get the Mini Statement (last 5 transactions) of his mobile

account.

PIN Number Change:




72 | P a g e

mobile phone.

• Then customer will select the Change PIN menu and submit the current PIN number and

twice the new

PIN number.

• In the reply SMS, he will get the confirmation about the change of his PIN number.

Receiving of Foreign Remittance in mCash:

A remitter can send the foreign remittance directly to the mCash mobile account from the

IBBL foreign liaison offices, approved agents and exchange houses. There, the remitter must

provide the following information:

1. Amount of Money

2. Name of the beneficiary

3. Account Number (mCash Mobile Account)

4. Bank Name: Islami Bank Bangladesh Limited

After the fund will be credited directly to the mobile account, both the remitter and the

beneficiary will get the confirmation SMS.

This money can be withdrawn from any of the service point of mCash.

Security of Islami Bank mCash:

1. The mobile account number is generated from the customer‟s mobile number and the

check digit so that the account number will not be known to anyone. So, anyone can

not able to make any transaction without knowing his/her full mobile account number.

2. The 4 digit secret PIN number and mobile phone, both are required for every transaction

where the PIN is in the brain of the customer and the mobile phone is kept under the

control of the customer. So anyone can not be able to make any transaction without taking

the PIN number and control of the mobile phone.

3. USSD and SMS based Interactive Voice Response (IVR) channels are used as

communication/transaction media which are secured and safe.



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Online banking:

Presently, IBBL possesses the largest online banking network in the country. All branches

including SME/Krishi branches are under on-line connectivity with 83 branches under dual

connectivity using Fiber Optics, DDN and Radio Link where “any Branch Banking” facilities to

the clients are being provided. Both the revenue and number of transactions of online banking

of IBBL have indicated positive growth over the past years. More than 15,000 transactions per

day are taken place with volume of approx Tk. 500 crores using online remote deposits and

withdrawals.

Services

Cash Deposit

Cash Withdraw

Fund Transfer

Account Statement

Balance Inquiry

Investment Recovery

Transaction Limit

There will be no limit for Cash Deposit and Fund Transfer.

For Cash Withdrawal, transaction limit will be Tk.10,00,000 per day per account.

Charges

For Cash Deposit, Cash Withdrawal and Fund Transfer, charges at the following rates

and VAT will be recovered from the Customer's Account:

Within the District:

Cash Deposit / Withdrawal / Transfer

Amount

Charges

Upto Tk. 20,000.00 Tk. 15.00

Above Tk. 20,000.00 Tk. 15.00 + 0.20 for next per thousand of part

thereof



75 | P a g e

Maximum Online Charge Tk. 1,500.00

Inter District:


Amount

Charges

Upto Tk. 20,000.00 Tk. 20.00

Above Tk. 20,000.00 Tk. 20.00 + 0.30 for next per thousand of part

thereof

Maximum Online Charge Tk. 2,500.00

Within the Divisional City Area:


Amount

Charges

Upto Tk. 1,00,000.00 Free. But not more than 2 (two) times in a day.

Portion of commission income on remote transaction from total commission income

Year 2011 2012

commission

income on

remote

transaction

299,953,640 337,573,882.87

total

commission

income

548,500,000 688,600,000



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E-Cash - ATM Card

Since 2001, IBBL began providing AYM services to its customers from 55 branches through a

consortium of 9nfinancial organizations using a 3rd

part ATM service provider. Accordingly

since 2008, the bank is operating its own ATM network presently having 200 self ATMs along

with almost 1400nshared ATMs.

Upto 31st December 2011, ATM card holders of IBBL used IBBL‟s own 141 ATMs, 465

booths of 8 banks of OMNIBUS, 485 booths of Qcash of 15 banks. The other deliverables of

the project are POS( Point Of Sale), Shariah based Credit Card (Khidmah), Prepaid Cars &

Remittance Card services. Among them, Remittance card has been rolled out into the service

line of IBBL. Customers now can perform full or partial withdrawal of their foreign remittance

amount either from IBBL ATMs or branches using the remittance Card. In the meanwhile,

IBBL has joined VISA, the largest world retail electronic payment network, as a principal

member. It would pave the way for making IBBL cards usable at any global outlets (ATMs

and/or POS).



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Upcoming e-products:

Khidmah

Salary card/Wage card

Hajj card

Gift card( electronic Prize bond )

Automated Teller Machine (ATM), interalia, has unveiled the horizon of Electronic Banking of

21st Century. Through ATM, customers can avail non-stop online teller service without going

to the specific branch of the member bank. They can withdraw or deposit cash or cheque as

well as pay utility bills like BTTB, Grameen, AKTEL, City Cell Phone, DESA, WASA, TITAS

etc. with the help of this modern computer controlled machine. The service is now offered by

ETN and eleven member banks including Islami Bank Bangladesh Limited.

Facilities

ATM Card holders can withdraw cash from ATM at any time.

Customers can make transactions from any of the machines with logo „E-cash‟

installed at different places in the city.

In course of time utility bills like WASA, TITAS and DESA etc can be paid

through ATM.

Now BTTB, Grameen, AKTEL, City Cell Phone bill can be paid through ATM.

Now IBBL E-cash cardholders can be paid their monthly installment of

Mudaraba Hajj Savings, MSS (Pension), Mudaraba Muhor Savings and HDS

schemes of IBBL through ATM .

The machines are located in convenient places where customers usually deal

with money matters. So they can easily avoid the risk of cash carrying by using

ATM Card.

Customers may know their present balance at any time from the machine.

In course of time POS (Point of Sale) can be used.

Getting an ATM Card from IBBL

A customer having a deposit account with the designated branch of Islami Bank

Bangladesh Limited can get an ATM card.



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Interested customer would collect ATM Account Opening Form from the

concerned branch and submit it along with the Card Fee of Tk.500/= (Taka five

hundred) only.

After 7 (seven) days from the date of application, the customer would collect the

PIN and Card separately from the designated Officials of the concerned branch

and then after 48 (forty-eight) hours, customer can use his Card at any ATM

with logo „E-cash’.

Customers can withdraw any amount multiplied by Tk.1000/- per instance

subject to fulfillment of the above conditions i.e. Tk.1000/=(Taka One

thousand), Tk.2000/=(Taka two thousand), Tk.3000/=(Taka three thousand) and

maximum Tk.5000/=(Taka five thousand) per instance and maximum

withdrawal limit Tk.20,000/- per day.

Procedure for cash withdrawal ATM

Go to any of the ATMs located anywhere within Dhaka / Sylhet /

Chittagong City.

Insert your card into the ATM and type PIN –press ENTER.

Select the „Cash Withdrawal‟ option by pressing > key

Press the > key against your required amount

Collect the money along with receipt

If you want another transaction, press YES or press No to end

transaction.

BTTB bill payment procedure

We are pleased to inform you that recently, arrangements have been made for payment of

BTTB Bill through ATM Card from 20 ATM booths are going on.

The phone numbers of the following Exchange of BTTB (with in Dhaka city) will avail the

facilities:



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1. Gulistan

2. Moghbazar

3. Uttara (Tongi)

4. Khilgoan

5. Nilkhet

6. Sher-e-Bangla Nagar

7. Mirpur (Amin bazar)

8. Islambag (Zinzira)

9. I.G. Gate

10. Gulshan

Firstly client will register his telephone number through BTTB application forms from

respective branch from where he has taken ATM card. Branch would check and approve

the Application form and send to Card cell.

Client can charge the Card for utility payment after 48 hours from registration. After

successfully completion of bill payment through ATM, client would get a print copy

(thermal paper) from ATM booth. This print out is the main document of payment the

bill. So, client should preserve this document by photocopying the same.

A client can pay maximum three BTTB bill (s) from one card which was registered

earlier.

The charge for the bill payment will be Tk.20/- per transaction.

Client may collect another document of paying the same bill from card cell / branch, if

needed.

Actual figure of BTTB Bill must be paid. In case of less amount of bill payment, the rest

amount would be added with the next month bill.

In case of higher bill payment, client has to apply for refund of the money.

IBBL Schemes

IBBL‟s ATM Network is operationally ready to process the deposit and settlement of monthly

installment of Mudaraba Hajj Savings, MSS (Pension), Mudaraba Muhor Savings and HDS

schemes of IBBL made at ATMs by E-cash cardholders.

Pre-requisite:

1. Must have an IBBL E-cash ATM card.

2. Must open a Hajj / Pension / Muhor / HDS account at IBBL.



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3. Must apply for deposit of monthly installments under the schemes through ATM

in prescribed form supplied from card cell, ITD.

4. Must have sufficient amount of money in the ATM Link Account (MSA /

AWCA / SND) maintained at the branch.

5. Must maintain sufficient ATM balance.

6. Cardholders may deposit installments from 1st to 25

th day of the month only for

HDS.

7. Presently Cardholders may deposit installments from 1st to 20

th day of the month

only for Hajj, Pension and Muhor Schemes, which would be extended up to 25th

later. However, clients would be able to do the same from 6th

to 25th day of the

month if they deposit at the branch.

Paying installment of monthly Deposit Schemes

1. Go to any of the ATMs located anywhere within Dhaka / Sylhet / Chittagong

City.

2. Insert your card into the ATM and type PIN –press ENTER.

3. Press the > key against Deposit

4. Press the > key against IBBL Schemes

5. Select the MSS / Hajj / Muhor / HDS

6. Select the installment month and ENTER

7. Confirm the transaction by pressing YES

8. Collect the payment receipt

9. If you want another transaction, press YES or press No to end transaction

Important

For any transaction, type PIN carefully

If you fail to insert correct PIN thrice, card will be captured by ATM



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Collect the money from the cash dispenser within 45 seconds otherwise the cash

will be taken into by the ATM

In case of lost card or any other problem, customers have to inform card issuing branch

and dial 101 immediately.

Portion of alternative income collection from net income

Year 2011 2012

Direct

deposit

collection

from

ATM

charges

recievered

34,021,316.00 84,194,608.98

Net

income

38,401,000.00 400,000,000



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Green Banking

IBBL is aware that the change in climate has direct impact on biodiversity, agriculture, forestry,

dry land, water resources and human health. To safeguard the planet and its Eco- system from

the adverse effect of environmental degradation caused by rising carbon emission, encroachment

of rivers, improper disposal of industrial, medical & household waste, deforestation, loss of open

space etc., Bangladesh Bank in line with global norms has already introduced Green Banking

and sustainable practices at all the scheduled banks in Bangladesh

Green Banking activities as envisaged by Bangladesh Bank and IBBL‟s position there against is

given below:

Sl.no. Title Functions (description

of the Job)

IBBL‟s position

1. Policy

Formulation &

Governance

Establishment of a

Green Banking Unit,

headed by

.

Formed under RMW

a Senior Executive

To formulate a high

powered Committee

comprising directors

from the Board.

EC has been entrusted

Green Banking policy

and

strategy

Policy drafted

Fund allocation for

green banking.

Allocated a fund of

Tk. 592.37 million

Quarterly reporting of

Green Banking

Being complied



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activities

2. Incorporation of

Environmental along-

with Credit/

Investment Risk

Grading.

Risk in

CRM/IRM

Environmental and

Climate Change Risk

rating

do

3. Initiating In-house

Environment

Management

To prepare an

inventory of the

consumption of

water, paper,

electricity, energy etc

of the

Offices and Branches

Under progress

To take measures for

saving electricity,

water

and paper

consumption.

To circulate a set of

general instructions

(Green

Office Guide) to the

employees for

efficient use

of electricity, water,

paper and reuse of



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equipments

To use scrap papers as

notepads and to avoid

disposable cups/

glasses to become

more Eco-

friendly.

To install energy

efficient electronic

equipments.

To use energy saving

bulbs in place of

normal

bulbs in branches/

offices of the bank

To make plan to use

solar energy at

premises to

save electricity.

To encourage

employees to

purchase energy

efficient cars (that

consume less fuel) for

reducing gas and

petroleum

consumption.

Arrangement of

automatic shutdown

of

equipments

Do



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Use of extensively

online communication

do

Double –side printing.

do

To apply Eco-font in

printing to reduce use

of

ink.

do

4. Introducing

Green finance

To prefer financing in

the Eco friendly

business activities and

energy efficient

industries such as:

do

Renewable energy

project

Clean water supply

project

Waste water treatment

plant

Solid & hazardous

waste disposal plant,

Bio-gas

plant

Bio-fertilizer plant etc

To promote



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environmental

practices applying

consumer finance

program.

5.

Creation of

Climate Risk

Fund

Finance in economic

activities of the flood,

cyclone and drought

prone areas without

charging additional

risk premium.

Do

Creation of Climate

Change Risk Fund

Allocated a fund

of Tk. 50 million

6. Introducing

Green

Marketing

To use environmental

causes for marketing

i.e.

financial services to

the customer for

awareness

development among

the common people.

Partially

implemented

To advise the clients

for modifying the

product,

changing the

production &

packaging process

and modifying

advertisement for

environmental

Implemented and

being practiced



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cause.

7. Online banking To allow the

customers online

banking

Implemented

8. Supporting

Employee

Training,

Consumer

Awareness and

Green Even

Arrangement of

employee awareness

development and

training program on

environmental and

social risk

More intensive

programs to be

taken

Arrangement

of

customer

awareness

development

Steps to be taken

9. Reporting

Green Banking

Practices

To take measure to

report on the

initiatives/practices to

Bangladesh Bank and

disclose in the Bank‟s

websites.

Implemented

10. Sector Specific

Environmental

Policies

To be designed

Under process

11. Green Strategic

Planning

Determine green

targets

To determine a set of

achievable targets and

Steps to be taken



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strategies.

To disclose these in

the annual report and

web-site for green

financing and in-

house

management.

Target areas for green

financing:

i.

To reduce

loans/investments for

environmentally

harmful

activities.

ii.

To attain a particular

percentage

of

environmental

loans/

investment.

iii.

To

introduce

Eco-friendly

financial products.

12. Setting up

Green Branches

eatures of Green

Branches:

• To use maximum

natural light

Do



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• To use renewable

energy and energy

saving bulbs and other

equipments.

• To reduce water and

electricity use.

• To use recycled

water.

•

A green Branch will

be entitled to display a

special logo

approved by BB.

13. Improved

In-house

Environme

nt

Manageme

nt

To take Strategy of

reuse, recycling of

materials

& equipments, and

source reduction and

waste

minimization.

Partially

implemented

To rely increasingly

on virtual meeting

through

the use of video

conferencing in lieu

of physical

travel for saving cost

and energy.

Do

14. Formulation of

Bank Specific

Develop and follow

an environmental risk

Under process



91 | P a g e

Environmental

Risk

Management

Plan and

Guidelines.

management manual

or guidelines for the

assessment/

monitoring of project

and working

capital investments.

To set internationally

environmental

standards.

accepted

higher

Do

15. Rigorous

Programs to

Educate Clients

to be

undertaken.

Encourage the clients

and business houses

to

comply environmental

regulation.

Steps to be taken

Introduce rigorous

program to educate

clients

about environmental

risk.

Do



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Chapter Five

Difference between Conventional & Islamic banking



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One must refrain from making a direct comparison between Islamic banking and

Conventional banking (apple to apple comparison). This is because they are extremely

different in many ways. The key difference is that Islamic Banking is based on Shari‟ah

foundation. Thus all dealing, transaction, business approach, product feature, investment

focus, responsibility are derived from the Shari‟ah law, which lead to the significant

difference in many part of the operations with as of the conventional.

By the way of the definition an Islamic bank & Conventional bank can be distinguished:

“Islamic Bank is a financial institution whose statutes, rules and procedures

expressly state its commitment to the principles of Islamic Shari‟ah and to the

banning of the receipt and payment of interest on any of its operations”.- OIC

“A commercial (conventional) bank is dealer in capital or more properly a

dealer in money. It is an intermediate party between the borrower and the lender. It

borrows from one party and lends to another and the difference between the terms at

which it borrows and those at which it lends from the source of its profit”.- Prof.

Gilbert

The foundation of Islamic bank is based on the Islamic faith and must stay within the limits

of Islamic law or the Shari‟ah in all of its actions and deeds. The meaning of Shari‟ah is the

way to the source of life and is now used to refer to legal system in keeping with the code of

behavior called for by the Holly Qur‟an.

On the other hand, the conventional bank is based on man made principles. There many

fundamental and functional differences exist in these principles. As a result various conflicts

arise within the internal and external management systems. These principles vary man to

man, place to place. As a result it increases complexity in the conventional banking systems.



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Maintenance of CRR/SLR:

All Islamic Banking Companies shall maintain Cash Reserve Ratio (CRR) and

Statutory Liquidity Ratio (SLR) as per rates prescribed by Bangladesh Bank from time to

time. Every commercial Bank having Islamic bank branches shall maintain SLR/CRR for its

Islamic branches at the same rate as prescribed for the Islamic banks and shall, for the

purpose, maintain a separate Current Account for the Islamic branches with Bangladesh

Bank. For Islamic banks, SLR is 10.5%, CRR is 4.5% & LRR is 5%. But Conventional banks

SLR is 18.5%, CRR is 5.5% & LRR is 13%.

Project appraisal and evaluation:

Islamic banks share profit and loss of any project financed. So the banks pay greater attention

to developing project appraisal and evaluations. It gives more emphasis on the viability of the

project. As the bank‟s interest is linked with the earnings capability of the enterprise, it has to

judge the worthiness or suitability of the project by applying suitable appraisal criteria. Any

failure on the part of the bank to assess the soundness of the project would seriously affect

the profitability of the enterprise.

But in the conventional banking system, the bank is simply a financier and is not directly

concerned about the success or failure of the project for which loan was made, as long as it

receives its payments. This is so because the banks income (interest income) does not

fluctuate with the fluctuations in the profit generated from the specific projects. Since return

from loan is fixed, it gives little importance to project appraisal and evaluations.

Basis for collection of deposit

Islamic banks collect the deposits on the basis of profit sharing. The main function of Islamic

banks is to mobilize savings and provide financial support to the entrepreneurs. Like the

conventional banks, the Islamic banks neither pay nor receive interest from any of its

transactions thereby saving everybody from the course of interest. It disapproves hoarding of



95 | P a g e

savings and encourages its productive investment. It mobilizes savings of the common people

in line with Islamic Shari‟ah.

In the conventional banking system, the collection of the deposit is on the basis of interest.

Here depositors receive interest in a predetermined rate of their deposits. Investors are to pay

a predetermined rate of interest to the bank. The techniques, thus, involves each and every

partner in the transaction process with the element of interest.

Moral Dimension

In the Islamic banking system all economic agents have to work within moral value system of

Islam. They can not finance any project which conflicts with the moral value system of Islam.

They will not finance a wine factory, a casino, a night club or any other activity which is

prohibited by Islam or is known to be harmful for the society.

But the conventional banking is secular in its orientation. It has no restriction to finance any

project like Islamic banking systems. It emphasizes on the possibility of earning maximum

profit. It does not follow any religious rules and regulations or does not obey any restriction.

Emphasis on Productivity as compared to credit worthiness

Islamic banks give greater emphasis on the viability and soundness of the project and the

business acumen and managerial competence of the entrepreneur. Under profit loss sharing

banking, the Islamic banks will receive a return only if the project succeeds and produces a

profit. Islamic banks have very careful attitude towards evaluation of applications for equity

oriented financing. Since Islamic banks have a built in mechanism of risk sharing, it would

need to be more careful in how it evaluates financing requests. It adds a healthy dimension in

the whole lending business and eliminates a whole range of undesirable lending practices.

On the other hand, conventional banks give greater emphasis on credit worthiness of the

clients. It is customary that conventional banks evaluate applications, consider collateral and

avoid risk as much as possible. Their main concern does not go beyond ensuring the security

of their principal and interest receipts.



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Scope of the activities:

An Islamic Bank has wider scope of activities compared to a conventional bank. A

substantial distinguishing feature is that Islamic banks are universal or multipurpose banks

and not purely commercial banks. These banks are conceived to be a crossbreed of

commercial and investment banks, investment trust and investment management institution

and would offer a variety of service to their customers. A substantial part of their financing

would be for specific projects or ventures. Their equity oriented investment would not permit

them to borrow short term fund and lend to long term investment. This should make them

less crisis prone compared to their capitalist counterparts, since they would have to make a

greater effort to match the maturity of their liabilities with the maturity of their assets.

Compared to the Islamic banks, conventional banks have narrower scope of activities. The

main function are collecting the deposits and ending to the borrower in different purposes in

exchange of rate of interest.

Guarantee for deposit:

There is no guarantee for deposit money in the Islamic bank system. Without taking risk

financial transactions are not allowed in Islam. Under Islamic framework, depositors are

taking risk as Sahib-al-Mal. Therefore the earning of the depositors is uncertain. As Islamic

banks works on the basis of profit loss sharing system, depositors or Sahib-al-Mal have to

bear the loss if any. On the other hand conventional banks have to guarantee all its deposits.

Without considering the trend of income these banks have to give interest on the deposits

money at predetermined rate. They do not share any profit or loss with their clients. They

only maintain a debtor-creditor relationship with their clients/depositors.



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Distributive justice and economic stability:

Since profits are shared between the entrepreneurs, the bank and depositors in the Islamic

banking system, there is no bias towards any income sector. In fact, the banks welcome

profitable business ventures form all income sectors. Islamic banks share a proportion of the

profits accrued from a project implying an equitable distribution. The distributors remain

unaltered since the Islamic banks receive a share of total profits accrued from different

projects financed by the bank. But the conventional banking maintains a flat rate of interest

regardless of the profitability of the projects financed by it. This system of fixed interest rate

is somewhat biased against the borrower rate is determined in a way that assures profits to the

other parties in the transaction. This limits investment opportunity utilization capacity of the

conventional bank thereby reducing productive efficiency of conventional banking.

Allocate Efficiency:

The income distribution scheme under conventional banking works against the goal of

optimum allocation of scarce financial resources. This is because of the fact that conventional

banking, instead of financing in terms profitability of projects, diverts funds to projects with

sound collateral. These results in loans being made to higher income borrower that can be

meet the collateral requirements. But in Islamic banking, the productivity of the projects is

more important. In this way, the resources instead of going to low to higher return projects

even if the creditability of the borrower is lower. Therefore, this system is more efficient in

allocation of resources. Since, they are specialized in the area of finance and investment; their

expertise will be improving the profitability of the project as well as contribute in the

management of that project.

Stability of banking system:

The Islamic banking model is more stable than the conventional banking model. In an

interest based system, there is lack of symmetry in the cash flow of the banks and the cash



98 | P a g e

flow of the enterprise. The entrepreneurs of the businessman have to give a fixed interest to

the banks that has no relationship to the actual return of the project. This creates instability in

the entire business sector. The bankers also lack equilibrium in their assets and liability side

because their assets are fixed while liabilities are variable.

In case of Islamic banking system, the liabilities of the bank are on the basis of mudarabah

and hence are also variable. If there is any stock, it affects equally both asset and liability side

of the banker's balance sheet. Thus their liabilities are related with actual performance of the

projects hey financed. The asset and liabilities are mutually linked and this mechanism

returns equilibrium between the assets and the liabilities of the Islamic banks. So there is a

very likelihood of bank failures.

Growth of the banking system:

From growth point of view the Islamic banking system is better than the conventional

banking system. Islamic banking model promotes innovation. In Islamic banking small and

medium entrepreneur has a better project he has a possibility of getting it's financed. Since

risk is shared between the financer and entrepreneur. It results in a better distribution of risk.

Therefore ingenious efficient entrepreneurs will be forthcoming and innovation will be

promoted. Moreover conditions of the cost of capital are more favorable under the Islamic

system. Here the cost of capital varies with productivity. It does not have any deterrent effect

on investment which a fixed cost of capital has.

Emphasis on the character of the loan applicant:

When money is deposited with an Islamic bank, the bank in turn makes investment in

different forms approved by the Islamic Shari‟ah. When a client make an offer or a proposal

regarding loan or investment the bank emphasizes more on the character of the applicants.

The bank must verify the character of the applicant before allowing his application. The

banks deal with their client based on faith and trust. So it is necessary for the bankers to know

the background, family status, educational qualification, business experience, reputation of

the applicant. Again the bank may meet with the prospective client regarding his investment



99 | P a g e

needs and business experience prior to an application/proposal is submitted. The bank may

review the client's past performance and other financing arrangement he may have had with

the bank in the past. When the banks become contain that the applicant is not involved with

any activities violating the Islamic Shari‟ah they grant his proposal.

On the other hand, conventional bank emphasizes on the financial strength, collateral

security, and creditworthiness of an applicant more than his character. Without considering

the character the bank will grant that proposal which will certainly give a maximum profit at

a predetermined fixed rate.

Islamic banks perform mostly the same functions as the conventional banks but they do it in

distinctly different manners. These differences make the Islamic banking system distinct from

the conventional banking system. It may be mentioned that if the Islamic banking system, is

to become truly liquid and efficient it must develop more standardized and universally

tradable financial instrument. Islamic banks can provide more efficient banking services if

they are supported with appropriate banking laws, regulations and guidelines. It would be

better if Islamic banks had the opportunity to work as a sole system in an economy. That

would provide Islamic banking system to fully utilize its potentials. Thus it can be free from

all difficulties and problems that are in the conventional banking system. It can be hopefully

expected that if the overall economic system as well as the banking system can be executed

according to Quran, Sunnah and Hadit it will bring the maximum prosper in the entire

economy.



100 | P a g e

Chapter Six

Findings, Recommendations, Conclusion, Bibliography &

Appendix



101 | P a g e

Findings

From the above analysis we found that the overall functions and performance of IBBL over

the years are quite satisfactory. Though the no of branches in not enough for this

overpopulated country, the IBBL is performing well. Though it‟s a profitable bank, it has

some lacking which are constrains for its operations.

Devising an interest-free mechanism:

They have not yet been successful in devising an interest-free mechanism to place

their funds on a short-term basis. They face the same problem in financing consumer

loans and government deficits.

Risk of profit-sharing:

The risk involved in profit-sharing seems to be so high that almost all of the Islamic

banks in Bangladesh have resorted to those techniques of financing which bring them

a fixed assured return. As a result, there is a lot of genuine criticism that these banks

have not abolished interest but, they have, in fact, only changed the nomenclature of

their transactions.

Inadequacy of legal support of the Central bank:

The Islamic banks do not have the legal support of the Central bank in Bangladesh, do

not have the necessary expertise and trained manpower to appraise, monitor, evaluate

an audit the projects that are required to finance. As a result, they can not expand

despite huge excess financial liquidity.



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Lack of risk-hedging instruments:

The prohibition against “riba” and some “fiqh” issues in the interpretation of

“gharar” mean that many risk-hedging instruments based on traditional tools, such as

option, futures and forwards are not available to Islamic banks in the current state of

Islamic banking.

Underdeveloped money market and government securities based

on profit-loss sharing:

This may difficult to manage the liquidity in terms of mismatching the asst-liquidity

and increases the liquidity shocks. Fortunately, significant progress has been made in

Iran for government securities and short-term instruments such as National

Participation Certificates and Central Bank Mushrakah for such issues.

Requirement of holding a large proportion of the assets in reserve

accounts:

Islamic banks have historically been forced to hold a large proportion of their assets in

reserve accounts in central banks or in correspondent accounts than conventional

banks. This has significantly affected their profitability because Central Bank gives

minimum or no return to these reserves. This in turn, has affected their

competitiveness ad increases their potentiality to the external shocks with its

consequences.



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Operational risks:

Operational risks may arise from various sources;

The unique activities that Islamic banks must perform.

The non-standardized nature of some Islamic products.

The lack of an efficient and reliable Shari’ah legislation system to

enforce financial contracts.

Risks involved with „Salam’:

Salam (purchase with deferred delivery) contracts expose Islamic banks to both credit

and commodity price risk. This is because banks agree to buy the commodity on a

future date against current payment and also hold the commodity until it can be

converted to a cash.

Risks involved with „Ijarah‟:

Ijarah also contain the credit and commodity price risk because this contract do not

provide Islamic banks with the ability to transfer substantial risks and rewards to the

lessee as leased assets must be carried on the balance sheet of banks for the term of

the issue.



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Recommendations

After observing the operation procedure of IBBL, we recommend the following:

IBBL should launch new financial products to attract customers as Consumer Credit Scheme,

Child Education Scheme, and Plastic Money etc. IBBL can also lunch ATM as

diversification.

Marketing Division:

To increase the faith of people, IBBL should convince them in the best manner, so that

market share can be captured. Marketing division should concentrate more on investment

strategy.

Diversify Assets Portfolio:

Leading portfolio of IBBL should be diversified. It should not concentrate or give weight

only in working capital financing.

IT Facilities:

IT facilities of IBBL are not satisfactory enough. 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

Upgrading website:

Islami Bank Bangladesh Ltd. should upgrade its website regularly and provide details

information of Consumer Credit Scheme.



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Real judgment before sanctioning the loans:

When a loan is issued for the customer, he should justify by the KYC policy. It is a sensitive

issue for the investment division. So the relevant officer must take the responsibilities to

recover the loan.

Ensure Sufficient Manpower:

The number of human resources in documentation section is really insufficient to give

services to huge number of customers. So, number of staff should be increased in the

sections.

Need Personnel having Business Knowledge:

Most of the personnel have no business education. So selection of employee from business

school can give proper solution.

Development of Human Resources:

Human resource is another sector for the branch to be developed urgently. Human resources,

in the branch, need to be equipped with adequate banking knowledge. Majority of the human

resources must have basic knowledge regarding money, banking, finance and accounting.

Without proper knowledge in these subjects, efficiency cannot be optimized. Bank can

arrange training program on these subjects.



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Ensure Proper Maintenance of Files:

IBBL gives personalized services. All the officers have to give concentration to the

customers, while maintaining the customer files. Every staff should try to reduce these

irregularities.

Ensure Proper Communication System and Maintenance of

Machineries:

Sometimes Communication System remains out of order. Attention should be given on

proper maintenance of phone, computer, fax machine and photocopier.



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Conclusion:

Banks play a very vital role in the economic development of the country. The popularity of

banks is increasing day by day which leads to increase competition as well. Currently 57

Banks are operated in Bangladesh. All the Commercial banks are offering almost the same

products and services. But the way they provide the services are different from each other. So

people choose their bank according to their satisfaction and need. On the other hand, Banks

innovate new products and services to attract their desired customer. Islami Bank Bangladesh

Ltd. is one of the fast growing banks in Bangladesh because of its rapid customers‟

satisfaction. The bank is committed to run all its activities as per Islamic Shari‟ah. IBBL

through its steady process and continued success has, by now, earned the reputation of being

one of the leading private sector banks of the country. Islami Bank Bangladesh Ltd. is also

playing an important role in establishing Islamic Economics by combing the economic values

with social and moral values. By following the novelty of Islamic Economics the bank is

trying to make a balance development between spiritual and material life. Still now hear

about 301 Islamic banking and financial institutions in about 49 countries of Asia, Africa,

Europe, America and countries like Pakistan, U.K., U.S.A., Germany, Argentina, Denmark,

Luxembourg, Switzerland and India have been established. The banking system of Pakistan

and Iran was totally remodeled on the basis of Islamic Shari‟ah services. IBBL will be more

effective in our economy by launching new financial products to attract deposit as Consumer

Credit Scheme, Pension Scheme, and Child Education Scheme and contribute more to

develop the living standard of middle class people.



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Bibliography

1. 2. Annual Reports of Islami Bank- 2011-2012

2. www.islamibankbd.com

3. Handout provided by IBTRA

4. Information from IT wing of IBBL

http://www.islamibankbd.com/



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internship report, f.ex cor. branch

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