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This report is prepared as a requirement of the Internship Program. The report will give a clear idea about the Service Excellence of IBBL. This report contains four main parts.

The first part of the report is introduction, objective, methodology, scope and limitation of the report & an overview of IBBL.

The second part of the report is about Market strategy under Islamic Shariah. IBBL invested by three modes. In this report I have focused on all the qualitative which include profiles of IBBL Vision, Misson, Product Strategy, Pricing Strategy, Distribution Pricing, Promotion Strategy. Investment modes like Bai mode, Profit & loss sharing different schemes of investment such as household durable schemes, housing investment scheme, rural development scheme, etc. and lastly financial performances have been depicted.

last part of the report is about some problems regarding IBBL on investment. Such as the problem of Mudaraba is: lack of expertise, lack of legal frame-work of Islami Banking in Bangladesh. The problem of Ijarah is: asset, when the is no longer being needed, uncertainly about the total life of the asset etc.

To avoid the above problems IBBL can follow the following ideas: IBBL can diffuse its scope of investment through focusing Shariah concept regarding investment among the bank officers, employers and the clients by strong training, workshop and clients-gets together. IBBL should initiate different investment modes according to diverse needs of clients by conducting huge research and study etc .

1.2. OBJECTIVE OF THE STUDY:

The primary objective of this report is to observe the Marketing related activities for the Marketing Department of Islami Bank Bangladesh Ltd.

The other objectives include:

To understand the different marketing strategy.

With a view to familiarize with the various investment schemes.

To get the practical exposure of the banking activities.

To adapt with the corporate environment.

To understand the investment policy of IBBL with other banks.

Where IBBL are?


And there Brand value and how its improved.

1.3. SCOPE OF THE STUDY:

In this report I have focused on all the qualitative which include profiles of IBBL Vision, Misson, Product Strategy, Pricing Strategy, Distribution Pricing, Promotion Strategy. Investment modes like Bai mode, Profit & loss sharing different schemes of investment such as household durable schemes, housing investment scheme, rural development scheme, etc. and lastly financial performances have been depicted.

1.4. METHODOLOGY OF THE STUDY:

a) Nature of the study: Exploratory

b) Sources of information: Both primary and secondary information sources were used to complete this report.

Primary sources: Primary sources were officers and managers (AVP) of

the Islami Bank Bangladesh Ltd., Gulshan branch. Following factors were

considered to collect information:

a. Face to Face conversation .

Secondary sources: Secondary information was collected from various

books, journals, manuals, and also from the web sites.

b) Analysis techniques: Self study was used to analyze the collected information.

c) Presentation of information: Collected information and findings of the

analysis are presented in both table and graphical form.

1.5. LIMITATION OF THE STUDY:

I have faced some problems during preparing my report:

a) Lack of experiences has acted as constraints in the way of meticulous

exploration on the topic.

b) Due to time limitation, many of the aspects could not be discussed in the present report.

c) Since the bank personnel were very busy, they could not pay enough time.d) I had to base on secondary data for preparing this report.e) Also IBBL have not enough marketing policy to keep their no.1 position.f) And last their overall website is not a proper solution for our marketing student.


Marketing strategy is one the most important areas that needs to be carefully examined by the policy makers of Islamic banks. This stems from the need to improve the performance and ensure sustainable growth of Islamic banks as competition in the banking industry intensifies. A sound marketing strategy becomes imperative as Islamic banks not only operate in an environment where service quality and financial returns are perceived as the essential criteria from customers’ viewpoint, but they must also compete with conventional banks which are known to have better experience and expertise in the banking business. Religious element, which was once thought as the major factor that drives Muslims to use Islamic banking facilities offered by Islamic banks, has now become irrelevant to Muslim customers. Coupled with an increasing competitive environment from both Islamic and conventional banks and changes in customers’ perception; it is of paramount importance for Islamic banks to assess the effectiveness of their marketing strategy. This paper reviews the current marketing strategy of Islamic banks in Bangladesh. Among the topics highlighted are strategies related to product, pricing, promotion, distribution channel, and human resources. The study finds that the newest Islamic bank and Islamic banking department of conventional banks have more aggressive marketing objectives than the pioneering Islamic bank.


Concept of Islamic Banking

The concept of Islamic Banking represents a radical departure from traditional

banking. Almighty, Omnipotent, Omniscient and Ubiquitous Allah has strictly

forbidden investing or earning on the basis of interest (riba). Because interest (riba)

is out and out prohibited in accordance with Islamic rules band regulation. So every

sort of transaction must be free from riba.

An Islamic Bank is a financial institution that operates with the objective to

implement and materialize the economic and financial principles of Islam in the

banking arena. The Islamic banks organize their operation on the basis of profit/loss

sharing and other modes which are permitted in Islam.

According to Organization of Islamic Conference (OIC), “Islamic bank is a financial

institution whose statutes, rules and procedures expressly state its commitment to the

principles of Islamic Shariah and to the banning of the receipt and payment of interest

on any of its operations.”

According to Dr. Ziauddin Ahmed “Islamic Bank is essentially a normative concept

and could be defined as conduct of banking in consonance with the ethos of the value

system of Islam.”


Chapter TwoAn Overview of Islamic Banking


2.1 Public Acceptance towards Islamic Banking System

Since its introduction, Islamic banking products have been well accepted by Bangladeshis. This is reflected by the increasing amounts of total deposits and total loans that are based on Islamic principles placed by Muslim and non-Muslim customers. In the case of BIMB for example, at the end of June 1984 (the first year of operation), the total deposits and total loans were RM241 million and RM162 million respectively. At the end of 1994 (the 10th year of its operations), total deposits increased to RM2, 548 million whilst total loans increased to RM977 million. The corresponding figures for the financial year 2004 were RM11, 269 million and RM7,640 respectively. Public support and acceptance towards the Islamic banking system is also high as reflected by the usage of Islamic banking products offered by the conventional financial institutions. In 1994, i.e. the first year of which selected commercial banks were allowed to introduce Islamic deposit facilities, a total of RM1,463 million deposits was collected from the customers. This figure comprises of deposits in current account (RM166 million), savings deposit three types of deposits continue to receive full support from the public. At the end of 2004, total Islamic deposits placed by customers at commercial banks increased to RM53, 273.5 million. The figure for current account was RM12,886.9 million, whereas RM8,072.9 million and RM32,313 million for savings and investment accounts, respectively. Although figures for total deposits of BIMB and Islamic deposit facilities of commercial banks had increased significantly for the last five years, we cannot generally imply that public in Bangladesh is all receptive towards Islamic banking products. The comparative growth figures between Islamic and conventional deposits are good indicators for making few comments for further considerations. The growth for various types of deposit facilities in conventional and Islamic system of commercial banks is shown in Table 1. As indicated in Table 1, the yearly growth figures for Islamic deposits were greater, in most cases, than the figures for conventional deposits. Looking at individual figures, we can also see that in many

2.2 Aims & objectives of the Islamic Banking

To conduct interest free banking.

To establish participatory banking instead of banking on debtor creditor

relationship.

To invest through different modes permitted under Islamic Shariah

To accept deposits on profit-loss sharing basis.

To establish a welfare-oriented banking system.


To extend co-operation to the poor, the helpless and the low-income group for

economic uplift.

To pay a vital role in human development and employment generation.

To contribute towards balanced growth and development of the country

through investment operations particularly in the less developed country for

achieving the ultimate goal of Islamic economic system.

2.3 Distinguishing Features of Conventional and Islamic Banking The distinguishing features of the conventional banking and IBBL are shown below:Table-1

Conventional Banks Islamic BankingThe functions and operating modes of conventional banks are based on manmade principles.

The functions and operating modes of IBBL is based on the principles of Islamic Shariah.

The investor is assured of a predetermined rate of interest.

In contrast, it promotes risk sharing between provider of capital (investor) and the user of funds (entrepreneur).

It aims at maximizing profit without any restriction.

It also aims at maximizing profit but subject to Shariah restrictions.

It does not deal with Zakat. In the modern IBBL system, it has become one of the service-oriented functions of the IBBL to collect and distribute Zakat.

Leading money and getting it back with interest is the fundamental function of the conventional banks.

Participation in partnership business is the fundamental function of the IBBL.

Its scope of activities is narrower when compared with IBBL

Its scope of activities is wider when compared with a conventional bank. It is, in effect, a multi-purpose institution.

It can charge additional money (compound rate of interest) in case of defaulters.

The IBBL has no provision to charge any extra money from the defaulters.

In it very often, bank’s own interest becomes prominent. It makes no effort to ensure growth with equity.

It gives due importance to the public interest. Its ultimate aim is to ensure growth with equity.

For interest-based commercial banks, borrowing from the money market is relatively easier.

For the IBBL, it is comparatively difficult to borrow money from the money market.

Since income from the advances is fixed, it gives little importance to developing expertise in project appraisal and evaluations.

Since it shares profit and loss, the IBBL pay greater attention to developing project appraisal and evaluations.

The conventional banks give greater The IBBL, on the other hand, give


emphasis on credit-worthiness of the clients.

greater emphasis on the viability of the projects.

The status of a conventional bank, in relation to its clients, is that of creditor and debtors.

The status of IBBL in relation to its clients is that of partners, investors and trader.

A conventional bank has to guarantee all its deposits.

Strictly speaking, IBBL cannot do that.

2.4 Historical Background of Islami Bank Bangladesh Limited (IBBL)

Islami Bank Bangladesh Limited (IBBL) is the first Islamic bank in the “South East

Asia”. It is a multinational joint venture public limited company engaged in banking

business based on Islamic Shari’ah having largest branch network among the private

sector banks in Bangladesh. The bank was incorporated on 13.3.1983 as a Public

Company with limited liability under the Companies Act 1913. The established of this

Bank ushered a new era in Bangladesh, the 3rd largest Muslim country of the world.

The bank is committed to run all its activities based on Islamic Shariah’s IBBL

through its steady progress and continued success has, by now earned the reputation

of being one of the leading private sector banks of the country.

2.5 IBBL as an Islami Bank:

In August 1974, Bangladesh signed the Charter of Islamic Development Bank and committed

itself to reorganize it economic and financial system as per Islamic Shariah.

In November 1980, a delegation of IDB visited Bangladesh and showed keen interest to

participate in establishing a joint venture Islamic Bank in the private sector. Two professional

bodies Islamic research Bureaus (IERB) and Bangladesh Islamic Banker’s Association

(BIBA) made significant contribution towards introduction of Islamic Banking in the country.

At last, the long drawn struggle to establish and Islamic bank in Bangladesh became a reality

and Islamic bank Bangladesh was established in March 1983, in which 23 Bangladeshi

National, 4 Bangladeshi institutions and 1 banks, financial institutions and Governments

bodies of the middle East and Europe including IDB and two eminent personalities of the

kingdoms of Saudi Arabia joined hands to make the dream into a reality.


2.6 Business philosophy of IBBL:

The philosophy of Islami Bank Bangladesh Limited is to the principles of Islamic

Shariah. The organization of Islamic conference (OIC) defines an Islamic Bank as "a

financial institution whose status, rules and procedures expressly state its commitment

to the principles of Islamic Shariah and to the banking of the receipt and payment of

interest on any of its operations. The sponsor, perception is that IBBL should be quite

different from other privately owned and managed commercial bank operating in

Bangladesh, IBBL to grow as a leader in the industry rather than a follower. The

leadership will be in the area of service, constant effort being made to add new

dimensions so that clients can get "Additional" in the matter of services

commensurate with the needs and requirement of the country growing society and

developing economy.

2.7 Mission of the BankTo establish Islamic banking through the introduction of a welfare oriented banking system and also ensure equity and justice in the field of all economic activity balanced growth and equity development through diversified investment operations particularly in the priority sectors and less development areas of the country. To encourage socio-economic uplift and financial services to the low income community particularly in the rural areas. Contrary to the strategy espoused by Islamic banks, conventional banks do not explicitly inform the public the vision and mission of their Islamic banking division. For example, Maybank Bhd. Only highlights the general statement of its aspiration to become an institution that plays an important role in the development and promotion of Islamic banking and takaful in Malaysia and afar. The Public Bank Islamic Banking Division also adopts similar approach. Based from the statement published in the bank’s website, it is clear to us that the Islamic banking products offered by this bank are just an alternative to their conventional products.

In the commercial banking side, this bank aims to establish a strong foothold in the trade finance and small and medium enterprises. As a leader, IBBL has continuously stated its aspiration of continuing its role in developing, promoting and expanding huge transactions in Islamic finance. In the case of Bangladesh Bank, it is evident from the 2009 annual report that the bank aspires to become a challenger to IBBL. As depicted in this report, Bangladesh Bank’s strategy to compete for a share of the Islamic customer base is to increase its consumer and retail financing at 60 percent level in the year 2005 as well as to increase fee-based income through investment banking division.


2.8 Vision of the Bank

The vision of IBBL is to always strive to achieve superior financial performance, be

considered a leading Islamic Bank by reputation and performance. Besides,

To establish and maintain the modern banking technology, to ensure the soundness

and development of the financial system based on Islamic principles and 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 system.

o Try to encourage savings in the form of direct investment

o Try to economic investment particularly in projects, which are move likely to

lead to higher employment.

In a Sentence -To be a Strong, Progressive and Modern Islamic Bank offering innovative, quality and competitive products and services.

2.9 Special Features of IBBL:

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

Shariah Principles.

o Investment is made through different modes as per Islamic Shariah.

o Investment-income of the Bank is shared with the Mudaraba depositors

according to an agreed upon ratio ensuring a reasonably fair rate of return on

their deposits.

o Aims to introduce a welfare-oriented system and also to establish equity and

justice in the field of economic operators.

o Extends socio-economic and financial services to individuals of all economic

background with strong commitment in rural advancement uplift.


2.10 Shareholdings

The IBBL holds a diverse shareholding pattern with foreign and domestic sponsor shareholders. The foreign investors hold 58.23% of total shares while the local investors hold the rest 41.77%. The sponsors other than Sponsor Directors (both local and foreign) hold 42.56% and the general public and the govt of Bangladesh were holding 57.44 % of the total outstanding shares (61,776,000 ordinary shares) as on December 31, 2010.

Table-2Corporate information (as on Dec 31, 2010)

Table: 1

Date of Incorporation 13th March 1983

Inauguration of 1st Branch (Local Office) 30th March 1983

Formal Inauguration 12th August 1983

Listed in Dhaka Stock Exchange

Listed in Chittagong Stock Exchange

1985

1996

Share of Capital

Local Shareholders

Foreign Shareholders

41.77%

58.23%

Authorized Capital Tk.10,000.00 million

Paid-up Capital Tk.6,177.00 million

Deposit Tk.244,292.00 million

Investment (including investment in shares) Tk. 225,752.00 million

Foreign Exchange Business: Tk. 462,370.00 million

Total Income Tk. 25,403.00 million

Total Expenditure Tk. 18,886.00 million

Number of Branches 248 (as on 12.12.10)


Number of Shareholders 52,164

Manpower 9616

2.11 Branch Arrangement

IBBL has the largest network of branches among PCBs. IBBL has 249 branches up-to-date located at different commercially important places. Out of these branches, 162 branches are in considered as online branches. With the expansion of business, Bank divided their branches in 11 Zones to ensure close supervision, effective monitoring, and quick disposal of business and optimum utilization of manpower. 52 branches are located in 3 Dhaka Zones (Dhaka Central, South & North Zones), 31 branches are in Chittagong Zone, 23 branches are in Khulna Zone, 23 branches are in Bogra Zone, 27 branches are in Comilla Zone, 19 are in Sylhet Zone, 18 branches in Barisal Zone, 19 branches in Rajshahi Zone and 17 branches in Mymenshing Zone.


Chapter ThreeGeneral Marketing Strategy Practices


3.1General Marketing Strategy PracticesMarketing strategy is commonly defined as a strategy employed by a firm to attain its marketing objectives, which in turn is related to the achievement of the firm’s business objectives. In other words, marketing strategy refers to the marketing goals and action plans that address matters of product/ service price, distribution, communication, and the process of new product development. The adaptation of any strategy depends much on factors such as management style and experience of the top management, age of the institution, economic environment, and regulations. Generally, we can safely identify whether a particular bank is a market leader, challenger, follower and nicher by identifying its vision, mission, objectives, and marketing strategies. The market leader strategy is for those banks that occupy a dominating position in the market and have established their reputation as a leader. By virtue of having a leadership in the market, it is natural that the market share of the concerned bank is the biggest. Banks belonging to the challenger group are those occupying second, third and lower rank and are always formulating and pursuing strategies to expand their market share by targeting the territory of the market leader. Whereas, strategies adopted by the followers would normally be to maintain its current customers base and win a fair share of new customers by bringing distinctive advantageous to their target market. The market nicher is for the smaller banks, which have limited resources and generally focused on selected customers. Banks that falls under this category often concentrates on only one market segment of the market. Usually, only one marketing strategy, which is well, tailored to meet the needs of a specific target-market group, is developed.

3.2 Product StrategyAs a service oriented business, image is a central factor in a bank’s effort to differentiate itself from competitors. Generally, the way products or services are made available to customers helps to create the image of the particular institution in the mind of the customers. This image is reflected in the customers’ perceptions and feelings about the products or services offered. This is important because customers experience with a particular product or services will affect their attitude towards the bank and other product and services as well even if they had never used the other products. Under product strategy, customer must also be able to link a specific image with a specific Since customers purchase products and services to satisfy their needs and wants, Islamic banks have to understand the nature of these needs and want in order to appreciate the kind benefits customers expect to receive. Among the different kinds of benefits that people expect to get when buying goods and services includes good value for money, novelty, availability, and ease of use. Benefits enter into the equation when a customer decides to use one product in preference to another. It is the benefits received, which makes a product or services attractive to a customer. In view of this, banks should give more attention to the benefits it creates for the users when marketing a product or a service. Relating this to Islamic banks, they have to be able


to communicate these benefits convincingly to public, either directly or indirectly, in order to persuade the public to use the facilities and products being offered. Since Islamic banking is an alternative to conventional banking, Islamic banks needs to innovative in terms of products and services. Only through innovation in products and services can Islamic banks sustain their competitive advantage against other conventional or foreign banks that offer similar Shariah compliance facilities. Table below presents the list of products and services offered by IBBL—

The Products offered Under Mudaraba Mode are as follows:

MSA-Mudaraba Savings Account

MHSA-Mudaraba Hajj Savings Accounts

MSB-Mudaraba Saving Bonds

MSS-Mudaraba Special Scheme

MTDR-Mudaraba Term Deposit receipt

MMPDS –Mudaraba Monthly Profit distribution scheme

MMS-Mudaraba Mohor Savings A/c

MSNA-Mudaraba Short Notice A/c

Mudaraba Waqf Cash Deposit Account

Trend of Deposits: 2005 to 2009


The amount of total deposits under various deposits products and deposit mix in 2009. Table-3SL no. Types of Deposits Deposit in

million TkMix in 2009

1. Mudaraba Savings 95,082 38.92%

2. Mudaraba Special Savings (Pension)

46,593 19.07%

3. Mudaraba Term 45,268 18.53%

4. Current & Contingency 20,903 8.56%

5. Mudaraba Savings Baond 15,593 6.38%

6. Mudaraba Monthly Profit Deposits

10,506 4.30%

7. Mudaraba SND 3,435 1.41%

8. Bills Payable 2,546 1.04%

9. Mudaraba Hajj 769 0.32%

10. Mudaraba Muhor Savings 186 0.08%

11. Mudaraba waqf Cash Deposit 160 0.07%

12. Mudaraba Foreign Currency Deposit

360 0.15%

13. Foreign currency Deposit 209 0.09%

14. FC deposit ERQ 251 0.10%

15. FC held against B/BL/C 1,858 0.76%

16. FC held against Cash L/C 2 0.00%

17. FDD/FTT Payable 371 0.15%

18. Non Resident FC of Exchange 113 0.05%


house /Bank

19. FC security deposit 45 0.02%

20. FC Deposit against Foreign Bank Guarantee

28 0.00%

21. Other deposit 15 0.00%

Total 244,292 100%

3.4 Mudaraba Accounts:

Mudaraba is a form of business contract where one party suplies money and the other manages the business by investing labor and time. Profits generated form the venture are shared by both in a proportion agreed upon at the time of contract. However, in this arrangement, the financier is solely responsible for any loss that may be incurred. The financier of the business is known as Sahib al Mal, Rabbul Mal or owner of the capital and the manager of the business is called Mudarib or entrepreneur.

IBBL receive deposits in Mudaraba accounts that are invested into business ventures by the bank directly or through some other third party. Any profit earned form these investments is distributed among the Mudaraba depositors at a predetermined percentage and the bank retains the residual amont as its profit. In the event no profits are earned, the depositors receive nothing for their deposit. In addition, should a loss be incurred, the Mudaraba depositors are liable to share in the losses in the proportionate share of their deposits. However, if the loss incurred is due to the fault, negligence or non-adherence of bank rules on behalf of the bank or bank personnel, liability of loss is the banks sole responsibility.


3.3 Different product (continues)

Treasury Product

Foreign Exchange

Investment and trading in Islamic Securities

Electronic Banking

ATM services

Debit Card

I Banking ( Internet Banking)

On Line Banking(eIbs)

Other Services

Lockers

Protection

Electronic Integrated Banking System

IBBL has developed its own integrated banking system namely as eIBS (electronic Integrated Banking System) with the following objectives:

To support True Islamic Banking System. To develop in-house software which encourage local talents to design &

develop, maintain and enhance the banking system.

To give an opportunity to the young, energetic fresh graduates to design, develop and maintain a complete banking solution of International Standard.

IBBL has taken the initiative to develop such large scale software to support the Islamic Banking solution in the year of 2001. A team of 20 fresh and experienced graduates from different reputed universities was formed under the supervision of a talented project manager and advisory and consultancy services of local and western reputed universities made the project a success history in Bangladesh.


Major services of eIBS are:

Supports Shariah Based Banking

Supports all operations of General Banking

Full support to Investment operations

Foreign Exchange operation

Central MIS

Online Banking

IBBL iBanking

ATM

SWIFT

SMS Banking

3.5 Pricing Strategy

The second element in the marketing mix is pricing. Pricing strategy is another marketing technique that can be used to improve a bank’s overall competitiveness. The key to success is to have a well planned strategy, to establish policies and to constantly monitor prices and operating costs to ensure profits. An important part of the pricing strategy is determining how product or service is priced. It has been proven in many previous research that majority of customers do not use religion as the main factor when establishing a relationship with Islamic banks. In the case of corporate customers for example, they believe that it is the cost and benefit element that is the most important factor when selecting financial institution (Ahmad and Haron, 2002). Most customers still seek the highest return and low est charges imposed when deciding which bank to place a deposit or obtain funding from. Generally, marketing textbooks recommend three types of pricing strategies: skimming, penetration, and competitive pricing strategy.

3.6 Calculation of Profit sharing and weightage in IBBL:

On the basis of the Islamic Banking principles, let us work out the rates

of profit using the information and figures given below:


Table-4

SL.No Types of Mudaraba Deposit

Yearly Prod.

Weightage

Weighted prod.

Share of profit

Rate of profit

1 2 3 4 5 6 7

a) Mudaraba

Hajj savings

i) above 10 120 1.35 162.00 6.81 5.67

ii) Upto 10 120 1.30 156.00 6.55 5.46

b) Mudaraba waqf cash deposit a/c

50 1.20 60.00 2.52 5.04

c) Mudaraba special savings (pension)

i) above 10 years Term

125 1.35 168.75 7.09 5.67

ii) Upto year 10 years

100 1.30 130.00 5.46 5.46

d) Mudaraba Muhor savings A/C

i) 10 Years Term

90 1.30 117.00 4.92 5.46

ii) 5 Years Term

110 1.10 121.00 5.08 4.62

e) Mudarab


a saving Bond (msb)

i) 8 Years Term

112 1.25 140.00 5.88 5.25

ii) 5 Years Term

88 1.10 96.80 4.07 4.62

f) Mudaraba Monthly Profit Deposits (MMPDS)

100 1.20 120.00 5.04 5.04

g) Mudaraba Term Deposit

i) 36 Month 100 1.00 100.00 4.20 4.20

ii) 24 Month 110 0.98 107.80 4.53 4.12

iii) 12 Month 80 0.96 76.80 3.23 40.3

iv) Month 06 125 0.92 115.00 4.83 3.86

v) Month 03 95 0.88 83.60 3.51 3.70

h) Mudaraba savings

220 0.75 165.00 6.93 3.15

i) Mudaraba special notice deposit

180 0.55 9.00 4.16 2.31

Total 1805 1,856.75 78.00


3.7 Distribution PricingThis component of the marketing mix is related to the distribution of services to the ultimate customers. Services that require the customer to go to the producer must be as accessible as possible. Hence, an important consideration in the distribution strategy for banks is location of their branches. The task before the management is to select the place where the actual sale is to take place and this should be in the face of conveniences an comforts to the customers. To the extent it is possible, they should reach to the doorsteps of the customers. Thus it is pertinent that the branches are located at a suitable point. However, a study conducted on Bangladeshi customers by Haron et al. (1994) found otherwise. For example, the authors reported that the top five factors that are considered as important by Bangladeshi Muslim when selecting their banks are:

1. Fast and efficient services

2. Speed of transactions

3. Friendliness of bank personnel

4. Confidentiality of bank

5. Knowledgeable about the needs of customers

Non-Muslim customers ranked the following as important

when selecting their banks :

1. Friendliness of bank personnel

2. Fast and efficient services

3. Reputation and image of bank

4. Speed of transactions

5. Confidentiality of bank

Although Bangladeshi customers do not perceive location as one of the top priorities, nevertheless policy in ensuring the accessibility of banking services to customers is regarded an important distribution strategy by most banks. Table 6 (see page 14) presents the number of branches and Islamic Banking Scheme (IBS) counters for the year-end 1999 to 2003. Since sales and market share are contingent upon distribution (i.e. market coverage and distribution intensity), products and services must be made easily accessible to the end-users. Para 2.11 clearly shows that conventional banks offering Islamic windows place more importance on their distribution strategy than their Islamic counterparts. With 248 branches opened by Islamic banks, conventional


banks have a strong channel network that is deemed as a crucial way to gain competitive advantage since distribution channel provides access to market targets. Recognising the importance of distribution strategy as one of the key to successful and effective marketing strategy, Islamic banks had recently introduced the concept of mini-branch and kiosk to their customers in which basic banking facilities are provided

through this new distribution channels. These mini branches and kiosks are strategically located at departmental stores and shopping complexes so as they are accessible to the general public.

3.8 Promotion Strategy

Promotion is the function of informing, persuading, and influencing the customer’s decision process. Usually the bank’s marketing manager will respond to the goals and objectives of the bank by formulating various elements of the promotional strategy i.e. personal selling, advertising, sales promotion, publicity and public relations. Promotional strategy is closely related to the process of communication. A standard definition of communication is the transmission of a message from a sender to a receiver. Marketing communication, then are those messages that deal with buyer-seller relationships. Marketing communication is a broader concept than promotional strategy, because it includes word-of-mouth advertising and other forms of unsystematic communication. A planned promotional strategy, however, is certainly the most important part of any marketing communications. Table highlights the existing promotional strategies adopted by selected Islamic banks and conventional Bank in Bangladesh.


Table-4

Promotional Channel Shajalal Islami Bank

Brac Bank

DBBL HSBC IBBL

Website - + + + -

Advertising Television + ++ ++ + +

Radio - + + - -

News Paper + + + + ++

Pamphlet + + + + +

Direct mail + + ++ ++ +

Magazines + ++ ++ ++ +

Billboard + ++ ++ ++ +

Public Relation press kites

+ + + + +

Seminar + + + + ++

Annual Report + + + - +

Donations - + + + +

Sponsorship - ++ ++ + -

Community relations + + ++ + ++

Personal selling + ++ ++ + +


*this is my personal strategy help from different bank article, magazine, Newspaper, TV etc.

Table indicates that IBBL is back than the other institutions in terms of promotional strategy. The latest promotional strategy undertaken by IBBL is to forge a working relationship with lower learning institutions in Bangladesh. Under the ‘on the job training scheme’ students of higher institutions will undergo training program provided by IBTRA and this training program will be incorporated in their academic program. The objective of this scheme is to disseminate knowledge of Islamic banking products and services to students and train them to marketing agents for IBBL on the other hand, has a more tailored promotional strategy of targeting entrepreneurs as its potential customers. This is done through various entrepreneur development programmes which are handled by the bank’s Entrepreneur Development Department whereby participants are educated on Islamic banking principles and concepts. Training programmes that have been previously offered includes seminars on Islamic banking and product financing for entrepreneurs, workshops on business planning, business management and financial management. As part of the bank’s promotion strategy, participants are given detailed explanation on the types of products and services offered by IBBL and how their companies can obtain the financing needed from IBBL to start up or expand their businesses. Both IBBL and Public Bank or conventional are not as aggressive as the different Islamic banks in terms of promoting their products and services. Part of these conventional banks’ marketing strategy is to target their markets and in doing so, they already have specific types of potential customer base. Thus, these banks do not need to have an extensive promotional marketing strategy as they only need to extend and pursue marketing to their target customers.

A Milestone OF IBBL on promotional act ivies

Islami Bank Bangladesh Limited (IBBL) is working for the beautification of Dhaka city as exclusive sponsor of Bangladesh Cricket Board for the ICC Cricket World Cup-2011, said a press release.

Important squares, over bridges, bus stands, circles, different locations and establishments of Dhaka city have been decorated with stickers, posters, festoons, stand signs, bill boards, mega signs, canvas boards, gates, balloons, cutouts, neon signs, etc.

Jatiya Sangsad Bhaban, National Monument, Shaheed Minar, Baitul Mokarram National Mosque, Curzon Hall, Mahastangarh, Cox's Bazar sea beach, the Sundarbans, tea estates, Hill Tracts, the national bird Robin, Lilly and Kadam flowers, Parrot, Deer, Tiger, hand fan, rickshaw, sampan boat and lifestyle of indigenous people were reflected on these publicity measures.


3.9 Important Features

1. In case of Hire Purchase under Shirkatul Melk transaction the asset/property involved is jointly purchased by the lessor (bank) and the lessee (client) with specified equity participation under a Shirkatul Melk contract in which the amount of equity and share in ownership of the asset of each partner (lessor bank and lessee client) are clearly mentioned. Under this agreement the lessor and the lessee become co-owners of the asset under transaction in proportion to their respective equity.

2. In Hire Purchase under Shirkatul Melk Agreement the exact ownership of both the lessor (bank) and lessee (client) must be recognized. However, if the partners wish and agree the asset purchased may be registered in the name of any one of them or in the name of any third party clearly mentioning the same in the Hire Purchase Shirkatul Melk Agreement.

3. The share/part of the purchased asset owned by the lessor (bank) is put at the disposal possession of the lessee (clients) keeping the ownership with him for a fixed period under a hire agreement in which the amount of rent per unit of time and the benefit for which rent to be paid along with all other agreed upon stipulations are clearly stated. Under this agreement the lessee (client) becomes the owner of the benefit of the asset not of the asset itself, in accordance with the specific provisions of the contract that entitles the lessor (bank) the rentals.

4. As the ownership of leased portion of asset lies with the lessor (bank) and rent is paid by the lessee against the specific benefit, the rent is not considered as price or part of price of the asset.

5. In the Hire Purchase under Shirkatul Melk agreement the Lessor (bank) does not sell or the lessee (client) does not purchase the asset but the lessor (bank) promise to sell the asset to the lessee only if the lessee only if the lessee pays the cost price/equity price of the asset as fixed and as per stipulations on which the lessee also gives undertakings.

6. The promise to transfer legal title by the lessor and undertakings given by the lessee to purchase the ownership of leased asset upon payment part by part as per stipulations are affected only when it is actually done by a separate sale contract.

7. As soon as any part of lesssor's (bank's) ownership of asset is transferred to the lessee (client), that becomes the property of the lessee and hire contract for that share/part and entitlement for rent thereof lapses.

8. The hire contract becomes effective from the day on which the lessor transfers the possession of the leased asset in good order and usable condition, so that the lessee may make use of the same as per provisions of the agreement.

9. Effectiveness of the sale contract depends on the actual sale and transfer of ownership of the asset by the lessor to the lessee.


Chapter FourModes of Investment of IBBL


4.1 Different Investment Modes

The Branch selects any of the following modes depending upon the sector and purpose of investment:

a. Bai-Muajjal b. Hire-Purchase Shirkatul Meelk (HPSM) or Leasing c. Mudaraba d. Musharakae. Bai-Salam f. Murabaha TR

4.2 Sector of Investment in (Economic purpose)

1. Industry term investment

1.1. Large industry

1.2. Medium industry (investment 2 lac -5 lac)

1. Working capital investment.

2. Large industry ( other than bai mujjal – bb bills)

3. Medium industry ( other then bai –mujjal)4. Small industry ( investment from 2 lac – 5 lac 05. Bai muajjal back to back ( BB) bills.6. Agro based industry 7. Transport and communication ( other than special scheme)8. Trade ( commercial industry )6. Other investment.7. Investment Under special scheme

7.1 Agricultural Implement investment scheme.

7.2.Car investment scheme

7.3. Household durable scheme

7.4. Real estate investment scheme ( REIP)

7.5 Transport investment scheme

7.6. Investment scheme for doctor (ISD)

7.7. Micro Industries investment scheme (MIIS)

7.8. Mirpure silk weaver’s investment scheme (MSIS)

7.9. Rural Development Scheme (RSD)

7.10. Small business investment scheme (SBIS)

7.11. Entrepreneur’s investment scheme


4.3 Investment Processing of IBBL

Generally a bank takes certain steps to deliver its proposed investment to the client. But the process takes deep analysis. Because banks invest depositors fund, not banks’ own fund. If the bank fails to meet depositors demand, then it must collapse. So, each bank should take strong concentration on investment proposal. However, Islami Bank Bangladesh Limited (IBBL) makes its investment decision through successfully passing the following crucial steps:

Table-6-


Tables.7 Five Years’ Performance of IBBL

(Amount in million Taka)

Particulars 2005 2006 2007 2008 2009

Authorized Capital 5,000.00 5,000.00 5,000.00 10,000.00 10,000

Paid- up Capital 2,764 3,456.00 3,801.60 4,752.00 6,177

Reserves Fund 5,450 6,551.23 8,039.74 9,308.49 13,927

Total Equity 8,331 10,435.96 157,65.94 18,572.08 23,619

Total Deposits(Including bills payable) Gross

107,779,42 132,419.40 166,325.29 202,115 244,292

Total Investments (Including Inv in Share) Gross

97,178 117,132.83 165,286.32 187,586.65 225,752

Import Business 74,525 96,870.00 137,086.00 168,329.00 161,230

Export Business 36,169 51,133.00 66,690.00 93,962.00 106,424

Remittance 36,948 53,819.00 84,143.00 140,404.00 194,716

Total Foreign Exchange Business

147,342 201,822.00 287,919.00 402,695.00 462,370

Total Income 10,586 14,038.30 17,699.52 24,230.33 25,403

Total Expenditure 8,424 11,129.63 13,918.70 17,408.50 18,886

Net Profit before Tax 2,162 2,908.67 3,780.82 6,347.83 6,517

Payment to Government (Income Tax)

1,041 1,490.12 2,322.46 3,424.39 3,253

Dividend 25% 25% (15%Cash)

25% 30% (stock) 30%(20% stock)

Total Assets (including Contra)

150,959 188,115.27 250,634.48 288,017.19 340,638

Total Assets (Excluding Contra)

122,880 150,252.82 191,362.35 230,879.14 278,302

Fixed Assets 3,067 3,724.69 3,987.23 4,407.22 6,512

Number of Foreign Correspondents

860 870 884 906 919


Number of Shareholders 17,201 20,960 26,488 33,686 52,164

Number of Employees 6,202 7,459 8,426 9,397 9,952

Number of Branches 169 176 186 209 248

Book value per Share ( Taka)

238 3,020 182 238 325

Earning per Share (Taka)

48.76 368.42 30.04 56.29 55.10

Market Value per Share (Taka) (Highest)

558 4,749 6,999 830 890

Capital Adequacy Ratio 9.44% 9.43 11.18 10.72% 11.65%


4.5 Organization Structure of IBBL Board of Director

Shariah Council of IBBL:

Chairman

Vice Chairman

Member Secretary

Members


Chairman

Vice Chairman

Directors

Executive Committee Audit Committee

4.6 Organogram of IBBL:


Board of Directors

Executive President Board

secretariat

Deputy Executive

president

Operations

Deputy Executive

president

Investment

Deputy Executive

president

Investment

all Banking

Human

Resources

Division

(EVP)

Financial

Administration Division

Planning and research Division

Audit and Inspection Division (EVP)

Assets Management Division (EVP)

Establishment and common services

General Investment Division (EVP)

Project Investment Division (EVP)

Rural Development Division (EVP)

Information Technology Division (EVP)

Foreign Trade Operation Division (EVP)

Treasure and fund Management Division (EVP)

Chapter FiveSome of Promotional Activities of IBBL


5.1 Training services:

1. International; Training to Foreigners on Islamic Banking

2. National: Training to others on Islamic Banking

3. Islamic Banking Diploma.

5.2 Corporate Social Responsibilities of IBBL:

Islam Bank Bangladesh Limited being one of the most important

corporate citizens of the country has been discharging its responsibilities

to the society in general, both directly through its mainstream

operations as well as indirectly through its fully owned subsidiary ‘Islami

Bank Foundation’ since inception.

Social Services provided through Islami Bank Foundation are as follows:

5.3 Health Care Services:

Islami Bank Hospitals

Islami Bank Community Hospitals

Low Cost Eye Treatment Project

Circumcision Camp

Charitable Dispensaries

Islami Bank Homeopathy Clinic


Health Care Education:

Islami Bank Medical College

Islami Bank Nursing Training Institute

Islami Bank Health Technology Institute

Midwifery Training Institute

5.4 Technical Education:

Islami Bank institute of Technology

5.6 General Education:

Islami Bank International School and College

Islami Bank Model School and College

Islami Bank Mohila Mrdrasha

Scholarship Program

Model Forquania Maktab

5.7 Other Programs:

Bangladesh Sangskritic Kendra

Islami Bank Women Rehabilitation Centre

Islami Bank Service Centre

Monorom-Islami Bank Crafts and Fashions


Chapter SixAchievement & Recognition


As recognition of good performance IBBL. Won the following awards:

The global Finance, a reputed U.S.A based quarterly financial magazine, awarded

IBBL as the Best Islamic Financial Institution of the country for the year 2009.

The Institute of Cost and Management Accountants of Bangladesh (ICMAB)

awarder IBBL as the ICMAB National Best Corporate Award -2007 & ICMAB

Best Corporate Performance Award-2008.

Credit Rating In formation & Service LTD. (CRISL) rated IBBL AA (High

Safety) for long term for the year 2004, 2005,2006, 2007, and 2008.

The Institute of Chartered Accountants of Bangladesh (ICAB) awarded IBBL with

the Certificate of Appreciation in the best published accounts and reports for the

year 2001 and Certificate of Merit for the year 2008.

Bankers Forum awarded IBBL as the Best Bank for Corporate Social

Responsibility for 2008.

IBBL got Best Banking Stall Award in the banking fair organized by Sheraton

Hotel, Dhaka in 2009.

6.1 Market Leader in Shariah Based Banking

Islamic Banking in Bangladesh was started in the year 1983 with the establishment of Islamic Bank Bangladesh Limited as the first Islamic Bank. There were 452 branches of 7(seven) Islamic bank in Bangladesh out of which Islami Bank Bangladesh Limited had 248 branches as on 31st December, 2010. Over the last 25 years, Islami Bank Bangladesh Limited has been providing shariah based Islamic Banking services across the country through introducing a lot of Islamic banking.

These findings suggest that Islamic bank have to give increasing attention to measuring marketing’s effectiveness and customer satisfaction.


Chapter SevenForeign Exchange and Foreign Trade


As the requirement of the report first we need to know about foreign exchange and

foreign trade. Foreign exchange means foreign currency includes any instrument

drawn accepted made or issued under clause (13) of article 16 of the Bangladesh Bank

order 1972, all the deposits, credits and balances payable in any foreign currency and

draft check, letter of credit and bill of exchange expressed or drawn in Bangladesh

currency but payable in any foreign currencies.

On the other hand foreign trade includes the spectrum of goods services, investment,

technology transfer etc.

In today’s modern world the banking sector is uprising and playing a vital role in our

economic development. It is also playing a significant role in expanding foreign

exchange business of the country. Islami Bank Bangladesh Ltd. is one of the largest

commercial bank and Islamic financial institution of the country. It operates all its

activities under the obligation of Islamic Shariah including Foreign Exchange

Business and playing a significant role in foreign exchange business of the country

from the beginning. As an Islamic Bank IBBL has some differences in foreign

exchange business operations along with regular activities. It has some unique

products & services in financing foreign exchange business. Such as Bai-Murabaha,

Musaraka, HPSM, Bai Salam, Bai-Asraf etc.

According to the principle of Islamic Shariah, interest is strictly prohibited. So Islami

Bank Bangladesh Ltd. is conducted based on profit & loss sharing approach rather

than interest basis. So, to operate the foreign exchange business on the basis of “Profit

& Loss Sharing Approach” IBBL considers foreign trade financing investment under

different Islamic modes and executes “Buy & Sell” operation with the clients.


By following this unique system IBBL try to avoid the interest beneath modern

foreign exchange business and provide various services helpful for the importers &

exporters.

As it is shown in the report that the foreign exchange business IBBL has grown

rapidly there are some problems IBBL needs to deal with. So in my report I try to find

out the Islamic ideas regarding Foreign Exchange Business, Procedures maintained by

IBBL & some concurrent problems.


Chapter EightConcluding Remarks


This paper highlights some of the existing marketing strategies adopted by Islamic banks in Bangladesh Theoretically; Islami bank in Bangladesh should not face any difficulties in gaining support from customers as Muslims constitute the majority of the country’s population. However, recent studies have indicated that religious no longer plays an important factor in bank patronage. Works of Rosly and Abu Bakar (2003) found that religious factor is not conclusive enough to drive Muslims to use Islamic banking facilities. In light of this revelation, Islamic banks have to better understand the needs, preferences and behavior of their target group customers in order to stay in the game. Hence, marketing strategy that is tailored to customer acquisition and retention should be properly addressed. This becomes increasingly crucial as foreign players enter the market and as products and services become more undifferentiated. Hence, Islamic banks have to be innovative and creative if they wish to establish a strong competitive position and gain competitive advantage. In the case of IBBL for example, as a market leader in the Islamic banking industry, this bank should take on the role of a barometer of the industry and thus, lead the way in setting price structure for the market making price and making other marketing changes. In reality, however, it is the other Islamic banking providers that are enjoying these competitive advantages over IBBL. In terms of product strategy, conventional banks currently aggressively are focusing its marketing efforts on e-banking services. The strategy towards e-banking as an alternative distribution or delivery channel for its customers is done with the long-term aim of saving cost on operating or opening new service outlets or branches. On the promotional strategy side, both Islamic banks are pursuing strategies to educate the public about Islamic banking products and services. As competition intensifies, Islamic banks have to design effective performance evaluation system and understand the changing needs of its customers. For example, in a recent work (2010), the authors reported that IBBL customers perceived compliance to Shariah as the most important factor when dealing with the bank. This means that customer is concerned s to whether Islamic bank is observing the Shariah principles in conducting its activities. From their findings, they further concluded that Islamic business ethics are perceived as an essential element that Islamic banks must conform to. In a different study, Tahir and Ismail (2010) reported that the service level of Islamic bank in Bangladesh unacceptable and less than satisfactory..


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