Welfare Projects Of AIBL
Staff Welfare Project
The Bank always kept a careful eye on the economic security and benefit of its staffs & officers. The Bank operates a contributory provident fund, a social security & benevolent fund and a gratuity fund for its employees. In the year 2007 Tk. 7.5 lac was paid to wife of late Mr. Shahidul Islam, AVP & former branch manager of Joydevpur Branch from bank’s social security & benevolent fund. Till now a total of Tk. 30 lac has been paid from the fund to the families of late officers & staffs of the bank.
Al-Arafah Islami Bank Foundation
The Bank has a Foundation launching philanthropic activities Al-Arafah English Medium Madrasah and Al-Arafah Islami Bank Library are major two wings for launching philanthropic activities.
Al-Arafah English Medium Madrasah
Al-Arafah English Medium Madrasah has been established by the Al-Arafah Bank Foundation with a view to building next generation according to the ideals of peace and equality of Islam and to establishing banking and other aspects of life in the way of Islam. The prime aim of this madrasah is to contribute towards building human resource and in the broader sense to ensure human welfare. With this in view Al-Arafah Islami Bank Foundation has established an English Medium Madrasah at Dhanmondi in 1999. Such institution up to O level of its kind is for the first time in Bangladesh.
Al-Arafah Islami Bank Library
Library is the carrier and reservoir of knowledge. Al-Arafah Islami Bank has shown that other than generating profit, it can also contribute significantly in the field of providing good source of knowledge by establishing a public library at 32, Topkhana Road, Chittagong Bhaban (1st floor), Dhaka, thus strengthening social development. It is placed in a sound, healthy surroundings. It harbours 23,000 books of reference for the researchers, students, professionals, bankers, physicians, engineers, politicians, writers or journalists, even for the kids. It is open to all from the year 2000 and well located & accessible to everybody. It procured some exceptional collection of books on Religion, Economics, Banking, Computer Science, Business Administration, Sociology, English & Arabic language and juvenile literature in Bangla, English, Urdu & Arabic which are very rare.
Varieties of good books were procured in the library, but those were predominantly to enrich Islamic knowledge and culture. To fulfill that goal Al-Arafah Islami Bank distributed a total of 1084 copies of Arabic-BangIa ‘Torjomatul Quran’ to all the upazillas of the country.
Education is the harmonious development of body, mind & soul. If religion is not attached to it the real attitude towards life and values will fail to develop. It is mandatory to learn Elm-e-Din to govern our life in the right way of Islam. To fulfill this noble intention Al-Arafah Islami Bank Library started Dars-ul-Quran (Teachings of Quran) program. This program will cover translation with detail explanation of Quran starting from Sura Fatiha upto Sura Nas gradually. Dars-ul-Quran program takes place every Monday after Magrib prayer.
Other than this Al-Arafah Islami Bank Library arranges shows of feature films or Documentary films on Islamic life & Culture.
The starting point of all the banking operations is General Banking. It is an important department for all banks because it provides services to the customers day-to-day. Front Desk is the important for general banking. Customers give their deposits and meet their demand for cash by honoring Cheques. The customer opens new accounts, remit funds, issues bank drafts and pay orders etc. There are various sections in this department, which are as follows: –
The most vital and important section of the branch is Cash Department. It deals with all kinds of cash transactions. This department starts the day with cash in vault. Each day some cash that is opening cash balance are transferred to the cash officers from the cash vault. Opening cash balance is added by cash receipts and payments. The figure is called closing balance. This balance is then added to the vault. This is the final cash balance figure for the bank at the end of any particular day.
Account opening section is an important factor for banks because customer is the main source of bank. Selection of customer is another important factor. Bank’s success and failure largely depends on their customers. If customer is not good then may create fraud and other problems by their account with bank and thus destroy goodwill of banks. Therefore, bank must be conscious in selecting its customer. For this reason Al-Arafah Islami Bank Ltd. keep key information system.
Bank receives all kinds of Cheque in favor of the client for clearing. When Cheque is received it is necessary to endorse it and cross it specially.
|Inward Clearing Cheque|| |
|Cheque received from the Clearing House of Al-Arafah Islami Bank.||Party’s A/C —-Dr.|
Al-Arafah Islami Bank General A/C—Cr
(Outward Bills for Collection)
|Cheques of other branch of Al-Arafah Islami Bank within its Clearing House area.||These Cheques are directly sent to the respective Branch and request them to sent IBCA. When it comes, then Customer’s Account’s is credited for the Cheque.|
|Clearing Cheque||Cheques another Bank within Al-Arafah Islami Bank Clearing House area.||These cheques are sent to clearing house via Dhanmondi branch. When drawee bank honor the Cheques, then the account of Cheque depositors are credited.|
|Outward Clearing||Cheques for|
outside the clearing area
|If any branch of Al-Arafah Islami Bank exists Within the clearing house area of drawee Bank then Al-Arafah Islami Bank send the Cheque to that Branch of Al-Arafah Islami Bank and sends IBCA to it.|
|Inward Bills for Collection (IBC)||From other branch of Al-Arafah Islami Bank||These Cheques are settled by IBCA, i.e. debiting depositor’s account and crediting sender’s branch account|
|From another bank outside the clearinghouse||These Cheques are settled debiting depositor’s account and sending DD, MT, TT in favor of sender’s bank.|
When money is sending from one place to another place for the customer is another important service of banks. In addition, this service is an important part of country’s payment system. For this service, people, especially businesspersons can transfer funds from one place to another place very quickly. There are five kinds of techniques for remitting money from one place to another place. These are:
Telegraphic and Telephone Transfer (TT) are almost the same, both are them are known as TT in short.
Pay order gives the payee the right to claim payment from the issuing bank. It is payment from issuing branch only. Within the clearinghouse area of issuing branch. Payment is made through clearing.
Charges of pay order are shown in bellow by a chart:
|Amount of P.O.||Commission||VAT||Total|
This is an instrument through which customer’s money is remitted to another person/ firm/organization in outstation (Outside the clearing house area) from a branch of one bank to an outstation branch of the same bank or to a branch of another bank (with prior arrangement between that bank with the issuing branch)
Demand Draft Payment is made through the following process:
This is a mode of transfer / remittance of customer’s money from a branch of one bank to another branch of the sane bank or to a branch of another bank (with prior arrangement between that bank with the TT issuing branch) through telephonic message. The issuing branch used to send the message of such remittance /transfer to the drawer/payee branch through telephone adding certain code number or test number on the basis of text key apparatus developed by the concerned bank for its different branches.
Payment process of TT is:
Various Types Of deposit account
AIBL Bank offers following types of deposit account:
Installment Term Deposit (ITD)
BRIF DESCRIPTION OF DIFFERENT ACCOUNTS:
Current account facilitates the account holder to draw money at any times but no profit is given to the current account deposited money. Current accounts can be opened by any individual or joint or any name of
proprietorship business, private limited company or public limited company, association, clubs, societies, trusts etc. Generally, current account is opened for businessman and traders for easy transaction. By taking this liability, AL-ARAFHA-ISLAMI Bank takes service charge 100/- for six months.
It’s a certain period deposited system, which is not repayable before the maturity date of a fixed period. AL-ARAFHA-ISLAMI Bank offers higher rates of profit on such deposits. Usually customers are allowed to open this account for a certain period and the rate of profit in accordance with the terms of the deposit. The features of MTDR as follows:
Minimum balance: TK 10000.00
|3 months||6 months||1 year|
To maintain smooth and certain life in future Savings account is very suitable for middle class groups. The attributes of Savings Account are:
For opening of this type of accounts following requirements are necessary:
a) The introducer must be attested photograph.
b) The introducer must be account holder of MD of AL-ARAFAH-ISLAMI Bank Bangladesh
Short Term Deposit (SND):
Short Term Deposit has following attributes:
a) Installment Term Deposit (ITD)
It’s a sure investment for a steady return. It can be opened for 5, 8, 10, or 12 years for Tk.200, Tk.300, Tk.500, Tk.1000, Tk.1500 and Tk2000. The savings amount is to be deposited any day of the month. If the depositor has a separate account in the bank for which a standing instruction can be given to transfer the monthly deposit in the scheme’s account. Incase of failure to make the monthly installment in the schedule time 5% on overdue installment amount will be charged. The lowest charge will be Tk. 10 and this will be added with the following months installment. After 3 years of savings in this schemed the depositor is eligible for a loan up to 80% of his deposited amount.
b) Highlights of the Scheme
Mudaraba Kotipoti Scheme: This are the most popular & target oriented schemes. One can open for 3,4,5,6,7,10,12,15,18,20 years and have to pay (Monthly installment) 2,39,500/- 1,69,500/- 1,27,500/- 99,500/- 80,000/- 46,000/- 33,450/- 21,485/- 14,330/- 11,100/- respectively and will get 1corror.
Mudaraba milliner Scheme: For Mudaraba milliner Scheme 3,4,5,6,7,10,12,15,20 year’s monthly installments are 23,950/- 16,950/- 12,750/- 9,950/- 8,000/- 4,600/- 3,345/- 2,170/- 1,150/- respectively and will get 10million.
Mudaraba Lakhpoti Scheme: For Mudaraba Lakhpoti Scheme 3,5,8,10,12 year’s monthly installments are 2,375/- 1,275/- 670/- 460/- 335/-/- respectively and will get 1lak.
Conditions of the Scheme
1) By filling up a form an account is opened.
2) A non-transferable deposit receipt will provide to the customer after opening the account.
3) If the deposit is withdrawn before a 5-year term, then saving interest rate will be applicable and paid to the depositor. However, no in profit paid if the deposit is withdrawn within 1 year of opening the account and Monthly Income paid to the customer will be adjusted from the principal amount.
4) This scheme will be credited to the loan account until liquidation of the loan amount inclusive of profit. A depositor can avail loan up to 80% of the deposit amount under this scheme.
c) Mudaraba Double Deposit:
Savings works as the very foundation of development. Savings is the prime source of business investment in a country. So it helps to build up capital. To create more awareness and motivate people to save, AL-
ARAFAH-ISLAMI Bank offers Mudaraba Double Deposit. Here people put their money for double return after 6years.Conditions Of The Scheme:
a) The deposit can be made in multiplies of TK. 10000.00.
b) This is 6 years period deposit. The deposit cannot be withdrawn at any time with in the maturity date.
c) Al-Arafah monthly deposited Hazz account:d)Pension scheme
Cheques clearing section of Al-Arafah Islami Bank Ltd. receives cheque, demand drafts and pay orders of their clients. Upon the receipt of the instrument the cheque clearing section examines:
The Paying Bank within Dhaka City:
The cheques clearing section of Al-Arafah Islami Bank Ltd., Dhanmondi Branch sends Inter Branch Debit Advice (IBDA) to the head office on the receiving day of the instruments. The main branch takes those instruments to the clearinghouse on the following day. If the instruments are dishonored, Head Office of Al-Arafah Islami Bank Ltd. sends IBDA to the Al-Arafah Islami Bank Ltd., Dhanmond branch
The Paying Bank of Their Own Branch:
The cheque clearing section of Al-Arafah Islami Bank Ltd., Dhanmond branch sends outward bills for collection (OBC) to the concerned paying branch to get Inter Branch Credit Advice (IBCA) from the paying branch. If the paying branch dishonors the instrument, the paying branch returns it to the Al-Arafah Islami Bank Ltd., Dhanmond branch describing why the instrument is dishonored.
Types of Cheque Collected By Clearing Department:
Transfer Cheques are those cheques, which are collected and paid by the same branch of Al-Arafah Islami Bank Ltd.
Local Bills Collection Cheques (LBC)
Local bills collection cheques are those cheques, which are collected and paid by two different branches of a bank situated in the same city.
Outward Bills Collection Cheque (OBC):
OBC cheques are those cheques, which are collected and paid by two different branches of same or different bank situated in the outstation.
Clearing House is an arrangement under which member banks agree to meet, through their representatives, at an appointed time and place to deliver instruments drawn on the other and in exchange, to receive instruments drawn on them. The net amount payable or receivable as the case may be, is settled through an account kept with the controlling bank.
Types of Clearing
Outward clearing means when a particular branch receives instruments drawn on the other bank within the clearing zone and those instruments for collection through the clearing arrangement is considered ad outward clearing for that particular branch.
When a particular branch receives instruments, which drawn on them and sent by other member bank for collection are treated as inward clearing.
Foreign Exchange Division
Foreign exchange is the means and methods by which rights to wealth in a country’s currency are converted into rights to wealth in another country’s currency. In banks when we talk of foreign exchange, we refer to the general mechanism by which a bank converts currency of one country into that of another. Foreign Exchange Department (FED) is the international department Bangladesh Bank issues license to scheduled banks to deal with foreign exchange. These banks are known as Authorized Dealers. If the branch is authorized dealer in foreign exchange market, it can remit foreign exchange from local country to foreign countries. So AL-ARAFAH-ISLAMI Bank, Principal branch is an authorized dealer.
There are three kinds of foreign exchange transaction:
To import, a person should be competent to be and importer. According to Import and Export Control Act, 1950, the Office of Chief Controller of Import and Export provides the registration (IRC) to the importer. In an international business environment, buyers and sellers are generally unknown to each other. So seller of goods always seeks security for the payment of his exported goods. Bank gives export guarantee that it will pay for the goods on behalf of the buyer if the buyer does not pay. This guarantee is called Letter of Credit. Thus the contract between importer and exporter is given a legal shape by the banker by ‘Letter of Credit’.
Letter of Credit
A letter of credit is a letter issued by a bank (know as the opening or the issuing bank) at the instance of its customer (known as the opener) addressed to a person (beneficiary) undertaking that the bills drawn by the beneficiary will be duly honored by it (opening bank) provided certain conditions mentioned in the letter gave been complied with.
Parties to the L/C
|Importer||Who applies for L/C|
|Issuing Bank||It is the bank which opens/issues a L/C on behalf of the importer.|
|Confirming Bank||It is the bank, which adds its confirmation to the credit and it, is done at the request of issuing bank. Confirming bank may or may not be advising bank|
|Advising or Notifying Bank||It is the bank through which the L/C is advised to the exporters. This bank is actually situated in exporter’s country. It may also assume the role of confirming and / or negotiating bank depending upon the condition of the credit.|
|Negotiating Bank||It is the bank, which negotiates the bill and pays the amount of the beneficiary- The advising bank and the negotiating bank may or may not be the same. Sometimes it can also be confirming bank.|
|Accepting Bank||It is the bank on which the bill will be drawn (as per condition of the credit). Usually it is the issuing bank|
|Reimbursing Bank||It is the bank, which would reimburse the negotiating bank after getting payment – instructions from issuing bank.|
Steps for import L/C Operation
8 steps operation:
Step 1 – Registration with CCI&E
Step 2 – Determination terms of credit
Step 3 – Proposal for Opening of L/C
To have an import LC limit an importer submits an application to department to AL-ARAFAH-ISLAMI Bank. The proposal contains the following particulars:
Step 4 – Application by importer to the banker to open letter of credit
|1. L/C Application form||7. Authority to debit account|
|2. Filled up LCA form||8. Filled up amendment request Form|
|3. Demand Promissory Note||9. IMP form|
|4. pro-forma invoice||10. Insurance cover note and money receipt|
|5. Tax Identification number||11. Membership certificate|
|6. Import registration certificate||12. Rate fluctuation undertaking|
Step 5 – Opening of L/C by the bank for the opener:
Step 6 – Shipment of goods and lodgment of documents by exporter:
Then exporter ships the goods to the destination of the importer country.
Sends the documents to the L/C opening bank through his negotiating bank. Generally the following documents are sent to the Opening Banker with L/C:
|1. Bill of Exchange||6. Packing List|
|2. Bill of Lading||7. Advice Details of Shipment|
|3. Commercial Invoice||8. Pre-shipment Inspection Certificate|
|4. Certificate of Origin||9. Vessel Particular|
|5. A certificate stating that each packet contains the description of goods over the packet.||10.Shipment Certificate|
Step 7 – Lodgment of Documents by the opening Bank from the negotiating bank:
After receiving the documents, the opening banker scrutinizes the documents. If any discrepancy found, it informs the importer. If importer accepts the fault, then opening bankers call importer retiring the document. At this time many thing can happen. These are indicated in the following:
Step 8 – Retirement
The importer receives the intimation and gives necessary instruction to the bank for retirement of the import bills or for the disposal of the shipping document to clear the imported goods from the customs authority. The importer may instruct the bank to retire the documents by debiting his account with the bank or may ask for LTR (Loan against Trust Receipt).
Accounting Procedure in case of L/C Opening
When the officer thinks fit the application to open a L/C, giving the following entries-creates the following charges-
|Particulars||Debit/Credit||Charges in Taka|
|L/C Margin A/C||Credit|
|Commission A/C on L/C||Credit||50%|
|VAT||Credit||15% on commission|
Amendment of L/C:
After opening of L/C some time’s alteration to the original terms and conditions become necessary. These amendments involve changes in:
a Unit price
Such amendments can be affected only if all the concerned parties agree i.e. the beneficiary, the importer, the issuing bank and the advising bank.
For any amendment the importer must request the issuing bank in writing duly supported by revised indent/proforma invoice. The issuing bank then advises the required amendment to the advising bank. L/C amendment commission including postage is charged to the clients A/C.
Loan against Trust Receipts (LTR)
Loan Against Imported Merchandise (LIM)
Advance (Loan) against the security of merchandise imported through the Bank may be allowed either on pledge or hypothecation, of goods, retaining margin prescribed or their Landed Cost, depending on their categories and Credit Restriction imposed by the Bangladesh Bank. Bank shall also obtain a letter of undertaking and indemnity from the parties, before getting the goods cleared through LIM Account.
Payment Procedure of Import Documents
This is the most sensitive task of the Import Department The officials have to be very much careful while making payment. This task constitutes the following:
Date of Payment
Usually payment is made within seven days after the documents have been received. If the payment is become deferred, the negotiating bank may claim interest for making delay.
Preparing Sale Memo
A sale memo is made at B.C rate to the customer. As the T.T & O.D rate is paid to the ID, the difference between these two rates is exchange trading. Finally, an Inter Branch Exchange Trading Credit Advice is sent to ID.
Requisition for the Foreign Currency
For arranging necessary fund for payment a requisition is sent to the International Department
Transmission of Message
Message is transmitted to the correspondent bank ensuring that payment is being made.
The goods and services sold by Bangladesh to foreign households, businessmen and Government are called export. The export trade of the country is regulated by the Imports and Exports (control) Act, 1950. There are a number of formalities, which an exporter has to fulfill before and after shipment of goods. The exports from Bangladesh are subject to export trade control exercised by the Ministry Of Commerce through Chief Controller of Imports and Exports (CC & E). No exporter is allowed to export any commodity permissible for export from Bangladesh unless he is registered with CC! & E and holds valid Export Registration Certificate (ERC). The ERC is required to be renewed ever}year. The ERC number is to be incorporated on EXP forms and other documents connected with exports. The formalities and procedure are enumerated as follows:
Bangladesh exports a large quantity of goods and services to foreign households. Readymade textile garments (both knitted and woven), Jute, Jute-made products, frozen shrimps, tea are the main goods that Bangladeshi exporters exports to foreign countries. Garments sector is the largest sector that exports the lion share of the country’s export; Bangladesh exports most of its readymade garments products to U.S.A and European Community (EC) countries, Bangladesh exports about 40% of its readymade garments products to U.S.A. Most of the exporters who export through AL-ARAFAH-ISLAMI BANK are readymade garment exporters. They open export L/Cs here to export their goods, which they open against the import L/Cs opened by their foreign importers.
Export L/C operation is just reverse of the import L/C operation For exporting goods by the local exporter, bank may act as advising banks and collecting bank (negotiable bank) for the exporter.
As an advising bank
It receives documents from the foreign importer and hands it over to the exporter. Sometimes it adds confirmation on the L/C on request from the Opening Bank. By adding confirmation, it assumes the responsibility to make payment to the exporter.
As Negotiating Bank
It negotiates the bills and other shipping documents in favor of the exporter. That is? it collects the proceeds of the export-bill from the drawer and credits the exporter’s account for the same. Collection proceed from the export bill is deposited in the bank’s NOSTRO account in the importer’s country. Sometimes the bank purchases the bills at discount and waits till maturity of the bill. When the bill matures, bank presents it to the drawer to encash it.
In our country Export and Import operation of bank is very much related with one another because of use of Back to Back and maturity of payment for Back-to-Back L/C is set in such that it can be paid out of export proceeds.
It is simply issued to the clients against an import L/C. Back-to-Back mechanism involves two separate L/C. One is master Export L/C and another is Back-to-Back L/C. On the strength of Master Export L/C bank issues bank to Back L/C. Back-to-Back L/C is commonly known as Buying L/C. On the contrary, Master Export L/C is known as Selling L/C.
Features of Back to Back L/C
C) FOREIGN REMITTANCE
This bank is authorized dealer to deal in foreign exchange business. As an authorized dealer, a bank must provide some services to the clients regarding foreign exchange and this department provides these services.
The basic function of this department are outward and inward remittance of foreign exchange from one country to another country. In the process of providing this remittance service, it sells and buys foreign currency. The conversion of one currency into another takes place an agreed rate of exchange, which the banker quotes, one for buying and another for selling. In such transactions the foreign currencies are like am other commodities offered for sales and purchase, the cost (convention value) being paid by the buyer in home currency, the legal tender.
Remittance procedures of foreign currency
There are two types of remittance:
Inward Foreign Remittance: Inward remittance covers purchase of foreign currency in the form of foreign T.T., D.D, and bills, T.C. etc. sent from abroad favoring a beneficiary in Bangladesh. Purchase of foreign exchange is to be reported to Exchange control Department of Bangladesh bank on Form-C.
Outward Foreign Remittance: Outward remittance covers sales of foreign currency through issuing foreign T.T. Drafts, Travelers Check etc. as well as sell of foreign exchange under L/C and against import bills retired.
Working of this department
The remittance process involves the following four modes
|Cash Remittance Dollar/ Pound||Sell|
|Bank sells Dollar / Pound for using in abroad by the purchaser. The maximum amount of such sell is mentioned in the Bangladesh Bank publication of ‘Convertibility of Taka for Currency Transactions in Bangladesh’|
|Bank can purchase dollar from resident and non – resident Bangladeshi and Foreigner. Most dollars purchased comes from realization of Export Bill of Exchange.|
|Issue of TC|
|TC is useful to traveler abroad. Customers can encase the TC in abroad from the drawee bank. TC is alternative to holding cash and it provides better security than holding cash in hand.|
|Buying of TC||If any unused leaf of TC is surrendered bank buys it from the customer. All payments are made in local currency. Banks generally buy only those TC.|
|Telex Transfer||Outward TT||It remits fund by tested TT via its foreign correspondence bank in which it is maintaining its NOSTRO Account.|
|It also makes payment according to telegraphic message of its Incoming foreign correspondence bank from the corresponding VOSTRO Account.|
|Foreign Demand Draft||Bank issue Demand Draft in favor of purchaser or any other according to, instruction of purchaser. The payee can collect it for the drawer bank in which the Issuing bank of Demand Draft holds its NOSTRO Account. Bank also makes payment on DD drawn on this bank by its foreign correspondence bank through the VOSTRO Account.|
In these processes of remittance, bank must have to make profit as a business institution. Profit is made in two ways:
RISK IN FOREIGN EXCHANGE BUSINESS
Foreign Exchange Business involves the following risks:
AL-ARAFAH-ISLAMI is a new generation bank. it is committed to provide high quality financial services/products to contribute to the growth of GDP of the country through stimulating trade & commerce, accelerating the pace of industrialization, boosting up export, creating employment opportunity for the educated youth, poverty alleviation, raising standard of living of limited income group and over all sustainable socio-economic development of the country. In achieving the aforesaid objective of the bank, investment operation of the bank is of paramount importance as the greatest share of total revenue of the band is generated from it, maximum risk is centered in it and even the very existence of band depends on prudent management of its investment portfolio. The failure of a commercial bank is usually associated with the problem in investment portfolio and is less often the result of shrinkage in the value of other assets. As such investment portfolio not only features dominant in the assets structure of the, it is critically important to the success of the bank also. In view of the above this investment policy and control guidelines of the bank has been prepared which is subject to amendment, revision, readjustment and refinement from time to time as may be warranted by the change of circumstances due to passage of time to suite the requirement of the bank.
The investment policy should be updated annually to reflect changes in the economic outwork and evolution of bank’s investment portfolio. The investment proposal should be forwarded to head office for sanction with recommendation showing justification that should include the following:
a) Industry and business segment focus:
The bank shall provide suitable investment services & products for the following sectors, which must meet the other requisites as set by the bank from time to time.
a) Steel & engineering.
b) Food & Allied.
d) Textile & garments.
e) Pharmaceuticals & Chemicals.
f) Paper & paper products.
g) Service industries.
h) Housing & real Estate.
j) Bricks Fields.
k) Edible oil.
l) Assembling industry.
m) Cottage industry.
n) Electronics & Electrical Commodities.
o) Construction company.
p) Trading (retail/whole sale)
Every year at the time of investment budgeting a clear indication of banks appetite for growth to be reflected approved investment budget shall be strictly followed for the development of the bank.
b) Investment categories:
As initiated by Bangladesh bank vide BCD circular no. 33 dated 16-11-89 different kinds of lending were subdivided into 11 categories w. e. f 01-01-90, which was subsequently reduced to 9 vide BCD circular no. 23 dated 09-10-93 and again to 7 prime sectors vide BCD circular no. 8 dated 25-04-94 for fixation of rates of profit by the individual banks on competitive basis depending on the cost of funds, prevailing market condition and monetary policy of the country.
Investment has primarily been divided into two major groups:
i) lzara bill baia: these are the investments made by the bank with fixed repayment schedules. the term of investment are defined as follows:
Short term : up to 12 months
Medium term : more than 12 and up to 36 months.
Long term : more than 36 month.
ii) Continuing investments: these are the investments having no fixed repayment schedule, but have an expiry date at which it is renewable on satisfactory performance.
Further all categories of investments have been accommodated under the 7 prime categories as under:
Investment facilities to the agriculture sector fall under this category. it is subdivided into tow major heads:
Investment to primary producers: financing under these categories refers to the investment facilities allowed to production units engaged in farming, fishing, forestry or livestock.
Investments to processors or traders of agricultural products are not to be categories as agricultural investments.
investments to tea gardens for production are treated as agricultural investment, but investments to tea gardens for export should be treated under the category “investment on export’’. Similarly medium and ling term investments to tea gardens are categorized as industrial term lending.
Investment to dealers/distributors: it refers to the financing allowed to input dealers and (or) distributors in the agricultural sectors.
Agriculture investment may include short, medium and long investments as well as continuing investment. As such it may fall under the head “lzara bill baia /lzara bill baia (HP)/lzara (LF)”
2. lzara bill baia for large & medium scale industry: this category of investments accommodate the medium and long term financing for capital structure formation of new industries or for BMRE Of The existing Units who are engaged in manufacturing goods and services.
3.lzara bill baia to small & cottage industry: these are the medium and long term investments allowed to small & cottage manufacturing industries (small industry is presently defined as those establishments whose total investment in fixed capital such as land, building machinery and equipment (excluding taxes and duties) does not exceed 30 million taka and investment in cottage industries also fall within this definition).
No short term or continuing investments are to be included in this category. Like the large & medium scale industry it is also allowed in the form of “lzara bill baia/ lzara bill baia (HP)/lzara (LF)”.
4.Working capital: investment allowed to the manufacturing units to meet their working capital requirements, irrespective of their size-big, medium or small, fall under the category.
These are usually continuing investments and as such fall under the head “Bai-Muazzal”.
5.investment on export: investment facilities allowed to facilitate export of all items against letter of credit and/or confirmed export orders fall under this category. it is accommodated under the heads “Musharaka pre- shipment (ECC), Musharaka pre- shipment(PC), foreign documentary bills purchased (FDBP), Local Documentary Bills Purchase (LDBP) etc.
6.Commercial lending: short-term investments and continuing investments allowed for commercial purposes other than exports fall under this category. It includes import financing, financing for internal trade, service establishment etc. no medium and ling term investments are accommodated here. these category of investments are allowed in the from of (i) Murabaha post import (MPI) (ii) investment against trust receipt (TR) (iii) Murahaha import bills (MIB), (iv) Bia-Muazzal, (v) lzara bill baia, etc. for commercial purposes.
Others: any investment that does not fall in any of the above categories is considered under the category “Others”. It includes investment to (i) transport equipments; (ii) Construction works including housing (commercial/residential), (iii) work order finance, (iv) Personal investment, etc.
c) TYPES OF INVESTMENT FACILITIES:
Depending on the various nature of financing all the lending activities have been brought under the following major heads:
lzara bill baia (general)
Short term, medium term & long term investments followed to individual/firm/industries for a specific purpose but for a definite period and generally repayable by installments fall under this head. This type of lending is mainly allowed to accommodate financing under the categories (i) large & medium scale industry and (ii) others are also included here.
Izara Bill Baia (HB):
Investments allowed to individual/enterprises for construction of house (commercial) fail under this type of investment. The amount is repayable by monthly installment with a specified period. Such investments are known as Izara Bill Baia (HB): No investment for construction of residential house building shall be accommodated to the Bank’s customer where there is no other business consideration.
Izara Bill Baia (Staff HB):
Investment allowed to our Bank employees for purchase/construction of house shall be know as Investment (STAFF HB).
Other Investment to Staff :
Investment allowed to employees other than for House Building shall be grouped under head of Staff Izara Bill Baia (General).
Investment allowed to individual/firm for trading as well as wholesale purpose or to industries to meet up the working capital requirements against hypothecation of goods as primary security fall under this type of lending, it is a continuous investment. It is allowed under the categories (i) “Commercial Lending” when the customer is other than a industry and (ii) “Working Capital” when the customer is an industry.
Financial accommodations to individual/firm for trading as well as for wholesale or to industries as working capital against pledge of goods as primary security fall under this head of investment. !t is also a continuous investment and like the above allowed under the categories (i) “Commercial Lending” and (ii) Working Capital”. ‘
Izara Bill Baia (HP) :
Izara Bill Baia (HP) is a type of installment investment under which the Purchaser agrees to take the goods on hire at a stated rental, which is inclusive of the repayment of Principal as well as profit for adjustment of the investment within a specified period.
Izara (LF) :
Izara (LF) is one of the most convenient sources of acquiring capital machinery and equipment whereby a client is given the opportunity to have an exclusive right to use an asset usually for an agreed period of time against payment of rent. It is a term financing repayable by installment.
House Hold Durable Scheme (HDS) :
It is a special investment scheme of the Bank to finance purchase of consumer durable to the fixed income group to raise their standard of living. The investments are allowed on soft terms against personal guarantee and deposit of specified percentage of equity by the customers. The investment is repayable by month installment within a fixed period.
Bai-Muazzal (General/FO) :
Investment allowed to individual/firms against financial obligation (i.e. lien on MTDR/ PSP/BSP/insurance Policy/Share etc.) This may not be a continuous Investment.
Investment allowed against assignment of work order for execution of contractual work fails under this head. This investment is generally allowed for a definite period and specific purpose i.e. it is not a continuous investment.
Bai-Muazzal (Export) :
Investment allowed for purchasing foreign currency for payment against L/Cs (Back to Back) where the exports do not materialize before the date of import payment. This is also an investment for temporary period, which is known as export finance and fafls under the category “Commercial Lending”.
Murabaha Import Bills (MIB) :
Payment made by the bank against lodgment of shipping documents of goods imported through L/C falls under this head. It is an interim investment connected with import and is generally liquidated against payment usually made by the party for retirement of the documents for release of imported goods from the customs authority it fails under the category “Commercial Lending”.
Murabaha Post Import (MPI) :
Investment allowed for retirement of shipping documents and release of gods imported through L/C taking effective control over the goods by pledge in Godown under Bank’s lock & key fall under this type of investment. This is also a temporary investment connected with import that is known as post-import finance and falls under the category “Commercial Lending”.
Trust Receipt (TR) :
Investment allowed for retirement of shipping documents and release of goods imported through L/C fall under this heard. The goods are handed over to the importer under trust with the arrangement that sale proceeds should be deposited to liquidate the investments within a given period. This is also a temporary investment connected with import and know as post-import finance and falls under the category “Commercial Lending”.
d) SINGLE BORROWER/GROUP LIMITS/SYNDICATION:
Bank may allow investment facilities to a single customer/Group (Funded & non funded) up to its 50% of total capital out of which funded facilities must not exceed 25% of total capital. All proposal submitted to Head Office will also be required to indicate the extent of the Bank’s global exposure to that customer group.
Group exposure shall be deemed to include the total investment facilities as detailed below:
However, definition of group exposure if given by Bangladesh Bank shall be followed regardless of the above definition.
e) LENDING CAPS:
The Bank shall establish a specific Industry sector exposure cap by preparing a sector wise investment budget In order to avoid over concentration in any one-industry sector. The Investment budget shall release (after approval from the Board) in the month January of every year. Investment budget shall be proposed /released considering the following points:
The aggregated of all cash facilities shall not exceed 80% of customer’s deposits; it is further governed by the statutory and liquidity reserve requirement of Bangladesh Bank.
Term Facility :
Aggregate Long Term facilities shall’ not exceeds 20% of the total investment portfolio. Facilities shall not be allowed for a period exceeding 5 (Five) year. Any exceptions will require the approval of the Board of Director.
Aggregate Bank investments to corporate or individual customers which are not secured by collateral and are allowed on the strength of customer’s personal integrity and financial standing or the corporate customer’s balance sheet, with or without hypothecation of stock shall not exceed 30% of the total investment portfolio.
No clean investments are allowed to accommodate.
Sector-wise allocation of investment/investment budget shall be made in the month of January of each year with the approval of Executive Committee/Board of Directors. This will be reviewed from time to time.
Security accepted against investment facilities shall be properly valued and shall be affected in accordance with the laws of the country in which the security is held. An appropriate margin of security will be taken to reflect such factors as the disposal costs or potential price movement of the underlying assets.
f) DISCOURAGED BUSINESS TYPE:
The Banks should outline industries or leading activities that are discouraged. As a minimum, the following should be discouraged.
– Military Equipment/Weapons Finance.
– Highly Leveraged Transactions.
– Finance of Speculative Investments.
– Logging, Mineral Extraction/Mining, or other activity that is Ethically of Environmentally Sensitive.
– Lending to companies listed on CIB black list or known defaulters.
– Counter parties in countries subject to UN sanctions.
– Share Lending.
– Taking an Equity Stake in Borrowers.
– Lending to Holding Companies.
– Bridge Investments relying on equity/debt issuance as a source of repayment.
– Tannery Finance.
– Izara Bill Baia (HB-residential) who has no other business with the Bank
INVESTMENT FACILITY PARAMETERS:
Bank shall not ordinarily go for any investment facilities for long term basis. Short-term investment facilities shall be for 3 month to 12 months. Medium term investment shall be 12 months to 36 months. Long terms investment shall be more than 36 months.
i) Maximum 50% (Funded & non-funded) of total capital of the Bank
ii) Maximum 25% (funded) facility of total capital of the bank.
All assets (Bai-Muazzal & Murabaha) must be covered under proper insurance risk with enlisted insurance Companies. Insurance coverage obtained outside enlisted companies are discouraged. For valuation of securities following guidelines to be followed:
Valuation of Primary Security:
Valuation of Collateral Security:
Branches should meticulously follow following instructions:
CROSS BORDERS RISK:
Limit to be established by the Board of individual Country as well as or aggregate Bank Credit exposures to different countries. These limits are to be reviewed from time to time with due regard to the political and economic environment in each country. The country exposure limits may be utilized up to maximum amounts for different maturities as follows:
For maturities up to one year: 100% of the limit.
For maturities up to two years: maximum 50% of the limit.
For maturities up to three years; maximum 25% of the limit
For maturities beyond three years: maximum 10% of the limit.
For exceptions, approval is required from the Board of Director.
The Principle of lending is a collection of certain accepted time tested standards, which ensure the proper use of loan fund in a profitable way and its timely recovery. Different authors describe different principles for sound lending.
Safely should get the prior importance in the time of sanctioning the loan. At the time of maturity the borrower may not will or may unable to pay the loan amount. Therefore, in the time of sanctioning the loan adequate securities should be taken from the borrowers to recover the loan. Banker should not sacrifice safety for profitability.
AL-ARAFH-ISLAMI Bank Ltd. exercises the lending function only when it is safe and that the risk factor is adequately mitigated and covered. Safety depends upon:
* The security offered by the borrower: and
* The repaying capacity and willingness of the debtor to repay the loan with interest.
Banker should consider the liquidity of the loan in time of sanctioning it. Liquidity’ is necessary to meet the consumer need.
Banker should be careful in the selection of security to maintain the safety of the loan. Banker should properly evaluate the proper value of the security. If the estimated value is less than or equal to loan amount, the loan should be given against such securities. The more the cash near item the good the security. In the time of valuing the security, the Banker should be more conservative.
As a commercial origination, Banker should consider the profitability. So banker should consider the interest rate when go for lending. Always Banker should fix such an interest rate for its lending which should be higher than its savings deposits interest rate. To ensure this profitability Banker should consider the prospect of the project.
Banker should minimize the portfolio risk by putting its fund in the different fields. If Bank put its entire loan able fund in one sector it \\ill increase the risk. Banker should distribute its loan able fund in different sectors. So if it faces any problem in any sector it can be covered by the profit of another sector
Process of Loan:
|Application||Applicant applies for the loan in the prescribed form of the bank describing the types and purpose of loan.|
|Sanction||1. Collecting credit information about die applicant to determine the credit worthiness of the borrower. Sources of information|
2. Personal Investigation, Confidential Report from other bank. Head Office/Branch/Chamber of Commerce,
3. CIB (Central Information Bureau) report from Central Bank.
i. Evaluation of compliance with its lending policy,
ii. Evaluating the proposed security.
4. LRA is must for the loan exceeding one crore – as ordered by Bangladesh Bank.
5. If everything is in accordance the loan is sanctioned
|Documentation||Then bank prepare a loan proposal which contains terms and conditions of loan for approval of Ra or Manager|
Takes the necessary papers and signatures from borrower
|Disbursement||A loan Account is opened. Where customer A/C———Dr.|
Respective Loan A/C ———————– ——– Cr.
PROCESS OF HANDLING LOANS:
As sure proper and orderly conduct of the business of the Bank, the Board of Directors’ will empower the Managing Director and other Executives of the Bank to lend up certain amount under certain terms and conditions at their discretion. The lending officer is broadly categorized as follows:
The amount and scope of each Officer lending authority is a function of the amount and extent of authority required by the officer to carry out his/her responsibilities to the Bank and its clients may prudent, effective manner. It must be emphasized mat an Officer will not be delegated lending authority only on the basis of his position. In other words, an officer does not automatically get lending authority by virtue of his corporate and/ or functional title. Specified lending authority will be delegated by the Managing Director to various Executives after taking into consideration his proven credit judgment, knowledge and experience. The amount of lending authority approved by the Board for various Executives form the upper limits of the authority that may be delegated to an officer holding corporate title. Each individual lending authority will be delegated to him in writing. The managing Director with the Executive Committee/ Board will review all lending authorities periodically.
CIB (Credit Information Bureau)
Bangladesh Bank has established within itself a Credit Information Bureau (CIB), which collects credit information from the banks. Banks are required to furnish such information in respect of credit limit of Tk.50000 and over. They mention the Name of facility, security and charge along with outstanding balance. After consolidating such information in respect of each customer the central bank supplies to the total limits sanctioned to and the number of banks dealing with a party. Thus the banks can find out if any of their customers is having excessive borrowings from the banking system at any particular time.
Loan classification is a process by which the risk or loss potential associated with the loan accounts of a bank on a particular date is identified and quantified to measure accurately the level of reserves to be maintained by the bank to provide for the probable toss on account those risky loan.
Like other banks, all types of loans of AL-ARAFH-ISLAMI fall into following four scales:
CLASSIFICATION OF LOANS:
Documentation can be described as the process or technique of obtaining the relevant documents. In spite of the fact that banker lends credit to a borrower after inquiring about the character capacity and capital of the borrower he must obtain proper documents executed from the borrower to protect him against willful defaults. Moreover, when money is lent against some security of some assets, the document must be executed in order to give the banker a legal and binding charge against those assets. Documents contain the precise terms of granting loans and they serve as important evidence in the law courts if the circumstances so desire. That’s why all approval procedure and proper documentation shall be completed prior to the disbursement of the facilities.
CONSIDERATION FOR SECURITY DOCUMENT
AIBL considers the following point for obtaining security document:
Stability of value
The securities that is acceptable to the bank in respect of credit facilities
Having completely and accurately prepare the necessary loan documents, the loan officer ready to disburse the loan to the borrower’s loan account. After disbursement, the loan needs to be monitored to ensure whether the terms and conditions of the loan fulfilled by both bank and client or not.
The Administration of the loan process shall ensure. Compliance with all Saws and regulations at both local and global levels including bank policy as set out in this document and the Banks credit manual/ circulars.
Proper analysis of credit proposal is complex and requires a high level of numerical as well as analytical ability and common sense to ensure effective understanding of the concepts and thus common sense. To ensure effective understanding of the concepts and thus to make the overall credit portfolio of the Bank healthy proper staffing of the credit departments shall be done through placement of qualified officials who hare got the right aptitude, formal training in finance, credit risk analysis. Bank credit procedures as well its required experience. Where repayment and interest servicing performance of a credit deteriorates shall be identifies at an early state and closely-monitored to avoid low losses.
Loans/facilities, where appropriate and related security will be monitored and reviewed by a separate unit of unconnected with the credit approval process on a regular basis in order to assess the collected ability of the loan and effectiveness of the security. This Unit will report to the Managing Director or his designated officer.
MARKETING STRATEGIES OF AL-ARAFAH ISLAMI BANK
Vision of AIBL:
To be a pioneer in Islamic Banking in Bangladesh and contribute significantly to the growth of the national economy.
Mission of AIBL:
To attain the above vision and mission AIBL follow the following Marketing Strategies:
FINANCIAL HIGHLIGHTS OF AIBL (2006-2007)
|PROPERTY AND ASSETS||2007||2006|
|In hand (including foreign currency)||381,766,435||232,088,682|
|Balance with central bank & other banks||1,637,443,244||1,523,363,956|
|Balance with other banks and financial institution|
|Money at call & short notice||——||——|
|Investment in share and Securities||868,583,386||2,000,000|
|General Investment etc.||21,116,394,966||15,571,766,350|
|Bills Purchased & Discount||1,789,972,964||1,851,423,411|
|Premises & fixed assets||334,476,460||215,105,651|
|Non Banking Asset||——||——|
|Borrowing from other banks financial Institutions & agents||1,320,000,000||——|
|Deposits & other Accounts|
|Al-Wadia Current Account||3,097,906,953||2,443,198,486|
|Mudaraba Saving deposit||3,932,227,170||3,393,889,202|
|Mudaraba Short notice deposits||761,766,781||489,453,134|
|Mudaraba Term deposit||11,233,591,127||7,874,927,822|
|Mudaraba Special deposits||3,629,539,263||2,377,235,299|
Capital shareholders equity :
|Paid up capital||1,153,175,400||854,204,000|
|Asset Revaluation Reserve||64,603,248||64,603,248|
|Total share holder equity||2,037,498,470||1,690,148,303|
|Total liabilities & shareholder equity||30,182,323,406||21,368,168,142|
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 2005-2006
|Less : profit paid on deposits.||(1,628,628,877)||(819,714,448)|
|Net Interest Income||614,518,980||881,682,692|
|Commission, exchange & brokerage||566,470,987||354,330,314|
|Income from Investment in Share /Securities||2,601,615||—–|
|Other operating Income||143,388,985||116,754,951|
|Total operating Income||1,326,980,567||1,352,767,957|
|Salaries & allowances||400,419,052||253,064,455|
|Directors and Sharia Council fees and expenses||5,363,612||3,879,804|
|Rent, taxes, insurance, lighting & traveling||66,389,460||40,352,105|
|Postage, stamp, telegram & telephone||15,904,341||13,597,210|
|Depreciation and Repairs||19,677,065||15,806,628|
|Salary & Allowance to the Managing Director||4,300,000||2,600,000|
|Stationery, printing & advertisement||13,127,054||9,559,875|
|Total Operating Expenses||570,800,273||382,998,271|
|Profit before Tax and provision||756,180,294||969,769,686|
|Provision against Investment and Contingent Liabilities||173,336,636||114,300,000|
|Profit/Loss before tax||582,843,658||855,469,686|
|Provision for Taxation||235,529,492||385,451,280|
|Net Profit/Loss after tax||347,314,166||470,018,407|
|Retained Profit brought forward||30,593||77,523|
GROWTH OF AIBL
|Figure in Million Tk.|
|08.||Profit before Tax and Provision||348.89||548.20||969.77||756.18|
|09.||Profit after Tax and Provision||154.76||262.90||470.02||347.31|
|10.||Earning per Share||26.36||38.78||55.02||30.12|
|11.||Dividend||Bonus 15.50%||Bonus 26%||Bonus 35%||Bonus 20%|
|12.||Number of Employees||803||771||912||1033|
|13.||Number of Branches||40||41||46||46|
PERFORMANCE OF AL-ARAFAH ISLAMI BANK LIMITED
The total deposit of AIBL is increasing sharply. The total deposit of bank was Tk. 23009.13 million at 31st December 2007 as against Tk. 16775.33 million at 31st December 2006 recording growth of 37.16% of which Tk. 685.50 million was bank deposit and general deposit was 22323.63 million Tk. The graph shows that the deposit collection rate is dramatically increasing year to year:
The investment of the Bank stood at Tk. 22906.37 Million as on 31st December 2007 as against Tk. 17423.19 Million in the previous year showing an increase by 31.47%. The growth of Investment from 2004 to 2007 shown graphically, graph shows that every year the bank earns a huge amount of income from Investment account.
The Bank earned operating profit of Tk. 756.18 million during this year 2007 before the pre-tax profit of the bank during the year 2006 was Tk. 969.77 million and thus the bank attained negative growth of 22.02% in respect of operating profit. The growth of operating profit for the year 2004 to 2007 graphically given below. Political unrest, economic recession and many other factors badly affected they total banking sector, so that it earn lower profit than the previous year.
The Bank has been paying Dividend every year since 1998 just after conversion of a public limited company. The Board of Directors of the Bank recommend 20% stock dividend in the year 2007, which is lower than the previous year because of lower operating profit. Dividend for different years shown below graphically:
The total export earning in 2004 was Tk.3639.34 Million and in 2007 it was Tk.12714.91 Million. So it is seen that the export earnings was 3.49 times in 2007 than 2004. It is also depicted from the figure.
The total Import earning in 2004 was Tk.9337.49 Million and in 2007 it was Tk.27042.72 Million. So it is seen that the Import earnings was 2.9 times in 2007 than 2004. It is also depicted from the figure
The total number of human resources in 2004 was 771 and in 2007 it was 1033.So number of employees in AIBL has increased by 262 employees from the year 2004 to 2007, which is shown below graphically:
The total number of Branches in 2004 was 40 and in 2007 it was 46.So number of Branches in AIBL has increased by 6 Branches from the year 2004 to 2007, but in 2007 there were no addition of Branches, this is shown below graphically:
PERFORMANCE OF AIBL
(THREE YEARS DEPOSIT, INVESTMENT, EXPORT, IMPORT & PROFIT)
|Tk. In Crore|
|HEAD OF ACCOUNTS|
|DEPOSIT TARGET||DEPOSIT ACHIEVED||ACHIEVED IN PERCENTAGE|
|INVESTMENT TARGET||INVESTMENT ACHIEVED||ACHIEVED IN PERCENTAGE|
|EXPORT TARGET||EXPORT ACHIEVED||ACHIEVED IN PERCENTAGE|
|IMPORT TARGET||IMPORT ACHIEVED||ACHIEVED IN PERCENTAGE|
|PROFIT TARGET||PROFIT EARNED||ACHIEVED IN PERCENTAGE|
ANALYSIS OF DATA
From the above it is seen Dhanmondi branch of AIBL is running well to the goals of the AIBL. Though it has shown some cyclical variation in various years but its deposit collection, investment, export & import activities and above all the ultimate target is showing that Dhanmondi branch of AIBL perform its management expectation satisfactorily.
The Bank’s deposit collection rate is quite well such as in 2005 and 2007. It collected Tk. 102.48, 67.4 and 60.89 cores respectively although management targeted Tk.150, 100 and 60 cores respectively. But it could not achieve its target in 2006 and 2007 because Economic recession, political and for many other reasons. But in 2005 it achieve 101.50% of its target. The collection of deposit is gradually increasing. That is shown by the graphically representation.
The Branch made more investment than its target in 2005.In 2005 its investment target was 16 crore whereas its achievement was 17.70. In 2006 its target was 40 crore, but achievement was 17.79. In 2007 it has achieved 42.22% of its total target. The investment is gradually increasing. That is shown by the graphically representation.
AIBL Dhanmondi branch is less export oriented. in 2007 it has an export target of 20 lac only whereas it has achieved 29 lac export which is 148.53% of target.
In 2005 the AIBL Dhanmondi Brach has achieved 94.68 %of its import target. Its target was 15 crore where its achievement was 14.19 crore. In 2006 and 2007 Its import target was 30 and 20 crore respectively where its achievement was 12.51 and 20.06 crore respectively. Achievement percentage in 2006 and 2007 was 41.7% and 100.31% respectively.
The profit earning capacity of the branch is not good. This branch is failed to fulfill the targeted profit in 2007. Its target was 10 crore where it achieved only 1.19 crore, which is 11.96% of its target. The branch achieved 100.10% and 103.14% of its target 2005 & 2006 respectively. High operating expense is the worst condition of profit. The graph shows how year to year the branch earned its profit.
Not surprisingly, in the competitive arena of marketing era SWOT analysis is a must based on Product, Price, Place and Promotion of a financial institute like private bank. From the SWOT analysis we can figure out ongoing scenario of the bank. So to have a better view of the present banking practices of Al-Arafah Islami Bank Ltd.
In SWOT analysis two factors act as prime movers
Findings and Analysis:
Today the banking service is very competitive. From the practical materialization of customer dealing procedure during the whole period of my practical orientation in AL-ARAFAH-ISLAMI Bank limited I have reached a firm and concrete conclusion in a very confident way. I believe that my realization will be in harmony with most of the banking thinkers. It is quite evident that to build up an effective and efficient banking system to the highest desire level, computerized transaction is must.
AL-ARAFAH-ISLAMI Bank Ltd. is a new generation Bank. It is committed to provide high quality financial services/products to contribute to the growth of G.D.P of the country through stimulating trade and commerce, accelerating the pace of industrialization, boosting up export, creating employment opportunity for the educated youth, poverty alleviation, raising standard of living of limited income group and overall sustainable socio-economic development of the country. The is not so far when it will be in a position to overcome the existing constraints and it may be expected that by establishing a network over the country and by increasing resources this bank will be able to play a considerable role in the portfolio of development of financing.
Success in the banking business largely depends on effective lending. Less the amount of loan losses, the more the income will be from credit operations. The more the income from credit operations the more will be the profit of the AL-ARAFAH-ISLAMI Bank Ltd. and here lays the success of credit financing.
It can be argued that though the results achieved so far are not satisfactory, credit financing is a modern scientific technique for enhancing AL-ARAFAH-ISLAMI Bank’s strength and there lies the opportunities to make it more effective in the future for our own benefit.
From the learning and experience point of view I can say that I really enjoyed my internship at AL-ARAFAH-ISLAMI Bank Ltd. from the very first day. I am confident that this 02 (Two) months internship program at AL-ARAFAH-ISLAMI Bank Ltd. will definitely help me to realize my further carrier in the job market.