Allah has forbidden investing of earning on the basis of interest (riba). It means interest (riba) is harem according to Quran and Sinnah. So every sort of transaction must be free from riba. But not only in Bangladesh but also over the world all the banks are working basins on interest. As it is haram in Islam the Muslim scholars thought a plan to establish a banking system that is free form interest and will work on the basis of profit-loss sharing. Then depending on this thought, it is decided to establish Islamic banks through the whole world to protect every one form this curse. So Islamic banks are working on the basis of Islamic shariah that is free from interest.
Genesis and Short History of IBBL:
Islami Bank Bangladesh Ltd. As a first shariah based interest free bank in South- East Asia in registered in 13th March, 1983 as a public limited company according to company law of 1913.
The 1st local branch of the Bank started its function on 30th March in 1983 at Motijheel of Dhaka. The bank is formally inaugurated in 12th August in 1983. The authorized capital of the bank is 5,000million taka and paid-up capital is 3,456 million taka. 57.37% of the authorized capital is foreign and 42.63% of the authorized capital given by the local shareholders.
The corporate Head office of the bank is situated at its own modern building Islami bank Tower of 17th floor at 40, Dilkusha C/A , Dhaka.
The equity of bank till 31st December , 2006 was at Tk. 10,436 million & which is for at least 9.00% for necessary risk based asset against 9.43% till 31-12-2006. There was 8 zonal office of the bank throughout the country and there 176 branches. Till 31st December,2006, the total number of shareholders of the bankwas 20,760 and number of the officers and employees was 7,459.
Functions of IBBL:
The functions of Islami Bank Bangladesh Limited are as under:
- To maintain all types of deposit accounts
- To make investment
- To conduct foreign exchange business
- To extend other banking services
To conduct social welfare activities through Islami Bank Foundation
3.4 Essential Features of IBBL:
Islami Bank Bangladesh Ltd. Have earned reputation as one of the top ranking Bank in the private sector through progress and continued success. The main features of the bank as follows:
# All activies of the bank is conducted in the interest free system according to Islami Shariah.
# Bank invest its capital in various modes approved by Islami Shariah.
# To ensure the rate of profit of the Depositors at logical and fair way. The earned profit distributed among the Mudaraba depositors according to fixed ratio from the investment.
# Introduction of welfare oriented bank system and to introduce fair and equity business.
# Bank giving financial help to poor and middle income people espically financial benefit to the rural poor.
# Bank playing an important role of employment to the unemployed youths and in the employment in the Human Resources Development.
# Bank invested in the sectors of development espically in the area of preferanceand adjusted the investment guideliner properly.
# Bank ensure the application ofShariah law through the regular guideline of the Shariah Council compose of 13 numbers of shariah export.
3.5 Aims and Objectives of IBBL:
- To conduct interest-free banking.
- To establish participatory banking instead of banking on debtor-creditor relationship
- To invest on profit and risk sharing basis
- To accept deposits on Mudaraba & Al-Wadeah basis.
- To establish a welfare-oriented banking system.
- To extend co-operation to the poor, the helpless and the low-income group for their economic up liftmen.
- To play a vital role in human development and employment generation.
- To contribute towards balanced growth and development of the country through investment Operations particularly in the less developed areas.
- To contribute in achieving the ultimate goal of Islamic economic system.
3.6 Mission of IBBL:
To establish Islami Banking through the introduction of a welfare oriented banking system and also ensure equality and justice in the field of all economic activities, achieve balanced growth and equitable development through diversified investment operations particularly in the priority sectors and less development areas of the country. To encourage socio-economic enlistment and financial services to the low-income community particularly in the rural areas.
3.7 Vission of IBBL:
Vision of IBBL is to always strive to achieve superior financial performance, be considered a leading Islami Bank by reputation and performance.
► Goal of IBBL is to establish and maintain the modern banking techniques, to ensure the soundness and development if the financial system based on islami 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 the stability of financial system.
► IBBL will try to encourage saving in the form of direct investment.
► IBBL will also try to encourage investment particularly in projects, which are more likely to higher employment.
3.8 Islami Bank Bangladesh Limited at a glance:
(As on 31st December, 2007)
|1.||Date of incorporation||13.03.83|
|2.||Date of receiving banding license||28.03.83|
|3.||Date of incorporation of first branch (Local Office Dhaka)||30.03.83|
|6.||Authorized capital||5000 Million|
|7.||Share of capital|
a) Local-share holders
b) Foreign share holders
|8.||Paid-up capital||3456.00 Million|
|9.||Equity (31/12/2006)||tk.10,436 Million|
|11.||Deposit (31/10/2004)||tk132,419 Million|
|12.||Investment (31/12/2006)||tk.113,575 Million|
|13.||Foreign Exchange Business (31/12/2006)||tk. 201,822.00 Million|
|14.||Number of employee (31/12/2006)||7459|
Shariah Council of IBBL:
Shariah Council of the Bank is playing a vital role in guiding and supervising the implementation and compliance of Islamic Shariah principles in all activities of the Bank since its very inception. The Council, which enjoys a high status in the structure of the Bank, consists of prominent ulema, reputed banker, renowned lawyer and eminent economist.
Members of the Shariah Council meet frequently and deliberate on different issues confronting the Bank on Shariah matters. They also conduct Shariah inspection of branches regularly so as to ensure that the Shariah principles are implemented and complied with meticulously by the branches of the Bank.
Members of Shariah Council
Objectives of Shariah Council:
# The functions of the council are to offer views and opinions on matters related to the bank from time to time. The council may require any paper document from the bank and examine the same to see whether it is according to see whether it is according to Islamic principles.
# The shariah council assists the Board of Directors by advising them on matters related to shariah.
# The opining of the majority of members is taken as the opinion of the council provided that the said opinion is supported by at least three Muftis of the council.
# The council maintains its secretariat and a well-equipped library as the Head Office of the bank where it keeps proper records of all of its proceeding and decisions.
# The council elects a chairman and a secretary from amongst them. The chairman will normally preside over the meetings. In his absence the members present elect one of them to preside over the meetings.
# The council may whenever it thinks necessary, constitutes a sub committee to help the council.
# The council issues Shariah Certificate in the Annual Report of the bank.
Profit and Riba:
Profit: Profit no loss comes from investment in business activities. Profit is the result of ownership transaction and risk following the fours stages:
# Transformation through Bai/Buying Selling of goods.
# Risk of Transformation and Ownership.
# Other condition of Shariah.
# Result-Profit on loss
Profit is the difference between the value of production and the cost production which is Halal according to Islami Shariah
Riba/Interest : Interest come from loan, credit, advance of money. The word used by the Quran concerning “Interest” is Raba. The literal meanings of Riba are money increase, increase of anything to increment of anything from its original amount.
From the Islamic Shariah point of view, Riba is Haram.
Comparison between Riba and Profit:
|1. One goods-fungible||1. Two goods|
|2. Loan-Ownership retained||2. Ownership Exchanged|
|3. Excess-without exchange value||3. Equity of Value|
|4. No transformation||4. Transformation|
|5. No Risk of Transformation and ownership||5. Risk home|
|6. No relation with result imposed||6. Is the result|
|7. Certain||7. Uncertain|
Types of Product of the IBBL:
There are many accounts of IBBL & they are,
a) Mudaraba Savings Account (MSA)
b) Mudaraba Hajj Savings Account (MHSA)
c) Mudaraba Savings Bond (MSB)
d) Mudaraba Special Scheme (MSS)
e) Mudaraba Term Deposit Receipt (MTDR)
f) Mudaraba Monthly Profit Distribution Scheme (MMPDS)
g) Mudaraba Mahor Savings A/C (MMS)
h) Mudaraba Short Notice A/C (MSNA)
i) Mudaraba (Wakf) Cash Account (MWCA)
j) Mudaraba Foreign Currency Deposit A/C (MFCDA)
Performance of IBBL (for last 5 years):
Five years performance of IBBL
(Including bills payable) Gross
|Total Investments (Including Inv in Share) Gross||59,041.90||79,893.63||97178.31||117132.83||167523.00|
|Total Foreign Exchange Business||84,643.00||112,665.00||147,642.00||201822.00||287920.00|
|Net Profit before Tax||802.01||1842.99||2162.42||2908.67|
|Payment to Government (Income Tax)||426.61||829.35||973.09||1490.12|
|Dividend||20% (Stock)||20% (Stock)||25%(Stock)||25% (Stock)|
|Total Assets (including Contra)||98,046.85||125,776.94||150959.66||188115.27|
|Total Assets (Excluding Contra)||81,704.74||102149.28||122880.35||150252.82|
|No. of deposit account holder||19,94266||22,91269||2705180|
|No. of investment account holder||22,3954||26,4863||297943|
|Cumulative amount of disbursement from RDS||2923.60||4216.77||6033.36||9303|
|Outstanding Investment of RDS||570.9||789.97||1107||2242|
|RDS no. of A / C holder||130,465||163,465||217445||409575|
|RDS no. of village||3700||4230||4560||8057|
|Number of Foreign Correspondents||840||850||860||870|
|Number of Shareholders||14,196||15,892||17201||20960||23711|
|Number of Employees||4673||5306||6202||7459||8438|
|Number of Branches||141||151||169||176||186|
|Book value per Share ( Taka)||2743.00||2904.00||3013.00||3019.00|
|Earning per Share (Taka)||195.52||518.59||487.57||485.94|
|Market Value per Share (Taka) (Highest)||4548.00||5110.00||5850.00||4749.00|
|Capital Adequacy Ratio||9.43%||9.21%||9.44%||9.43%|
Functional Department of IBBL:
The Islami Bank Bangladesh Limited (IBBL), provides several services to its customers by several departments. These departments are dedicated to its millions of customers. These are given follows:
- General banking
- Account Opening Section
- M.S.B, M.S.S, Haji Section
- P.O, T.D.R, D.D, T.T Section
- Cash Section
- Clearing House Section
- Transaction Entry Section
- Transfer & Locker Service Section
- Foreign Exchange Section
- Activities for importer
- Activities for exporter
- Collecting and sending foreign remittance
- Investment Section
IBBL’s World Rating :
As per banker’s Almanac (January 1999 edition) Published by the Reed Business information, Windsor Court, England, IBBL’s world rank is 1902 among 4500 banks selected by them, IBBL’s country rank is 5 among 39 banks as per ratings, made by the above Almanac on the basis of IBBL’s financial statements of the year 1997.
World ranking of IBBL amongst top 3000 International Banks:
Source: The Bankers Almanac: World Ranking Road Business Information, U.K.