Investment of AIBL
The most important difference between the Conventional and Islamic bank is that both the banks operate to earn profit but they differ in the way of operation. Islami Bank gives emphasis on legitimate (Halal) business. On the other hand traditional bank is not operated by the following rules and regulations approved by Islam that is the most powerful contradiction between them. Islamic Bank does not invest in loans and fixed interest securities. It can invest in ordinary share only while interest based bank can invest in loans and different kinds of securities. Islami Bank establishes and participate projects with its client as a partner and bears the risk along with the client on a proportionate basis. Besides, other conventional banks sometimes finance projects but do not bear risk. Finally, the concept of Islamic Bank is to establish on egalitarian society based on principles of social justice and equity. Whereas traditional banks pay a fixed interest on savings, time deposit and grant loans with interest for any purpose. We have gathered the fact that investment management is the theme of AIBL. The bank takes deposits and invests the same based on the profit-loss sharing. Bank go for the investment mainly which are long term and profitable in nature. AIBL also give high concentration on the investment that will generate more employment. As investment is one of the most priority areas for the AIBL, so it needs to cautious in investment decision. To ensure proper investment AIBL always go with in-depth study before making the investment.
Investment Objectives of AIBL
The objectives and principles of investment operations of the Banks are:
Investment Policy of AIBL
Investment operation of a Bank is very important as the greatest share of total revenue is generated from it, maximum risk is centered in it and the very existence of a Bank mostly depends on prudent management of its Investment Port-folio. For efficient deployment of mobilized resources in profitable, safe and liquid sector a sound, well-defined and appropriate Investment Policy is necessary.
The important feature of the investment policy of the Bank is to invest on the basis of profit-loss sharing system in accordance with the tenets and principles of Islami Shariah. Earning of profit is not the only motive and objective of the Bank’s investment policy rather emphasis is given in attaining social good and in creating employment opportunities.
The plan aims at diversification of the investment port-folio by size sector geographical area, economic purpose and securities to bring in phases all sectors of the economy and all types of economic groups of the society within the fold of Bank’s investment operations.
A sound well defined, well planned and appropriate investment policy frame work is a pre-requisite for achieving the goal of the Bank i.e. implementation and materialization of the economic and financial principles of Islam in the Banking area and justice in trade, commerce and industry and to build socio-economic infrastructure, create opportunity for income and sustained economic growth of the country.
Salient Features of Investment
Risk in the investment and return thereon are interrelated. An investment policy that emphasizes a high return must accept relatively high risk. Conversely, an investment policy that will tolerate only small amount of risk must be prepared to accept a relatively low return. As such, it is really difficult whether to select a high return portfolio on high risk or low risk port-folio with a low return. Nevertheless, considering all aspects following guidelines shall be followed as strategy for banks investment:
The terms “Bai” and “Murabaha” have been derived from Arabic words Murabaha” and “Bai”. The word Bai means purchase and sale and the word Murabaha means a in cash” Bai-Murabaha means sale for which payment is in cash or in future fixed date or within a fixed period. In short, it is a sale on cash.
Bai-Murabaha may be defined as a contract between a buyer and a seller under which the seller sells certain specific goods (permissible under Islamic Shariah and the Law of the land), to the buyer at a cost plus agreed profit payable in cash or on any fixed future date in lump-sum or by installments. The profit marked-up may be fixed in lump-sum or in percentage of the cost price of the goods.
Types of Murabaha
In respect of dealing parties Bai-Murabaha may be of two types.
If there are only two parties, the seller and the buyer, where the seller as an ordinary trader purchases the goods from the market without depending on any order and promise to buy the same from him and sells those to a buyer for cost plus profit, then the sale is called Ordinary Bai-Murabaha.
Bai-Murabaha on Order and Promise
If there are three parties, the buyer, the seller and the Bank as an intermediary trader between the buyer and the seller, where the Bank upon receipt order from the buyer with specification and a prior outstanding promise to buy the goods from the Bank, purchases the ordered goods and sells those to the ordering buyer at a cost plus agreed profit, the sale is called “Bai-Murabaha on Order or Promise”, generally known as Murabaha.
This Murabaha upon order and promise is generally used by the Islami Banks, which undertake the purchase of commodities according to the specification requested by the Clients and sale on Bai-Murabaha to the one who ordered for the goods and promised to buy those for its cost price plus a marked-up profit agreed upon previously by the two parties, the Bank and the Clients.
Important Features of Bai-Murabaha
1) It is permissible for the client to offer an order to purchase by the bank particular goods deciding its specification and committing him to buy the same from the bank on Murabaha, i.e. cost plus agreed upon profit.
2) It is permissible to make the promise binding upon the client to purchase from the bank, that is, he is to either satisfy the promise or to indemnify the damages caused by breaking the promise without excuse.
3) It is permissible to take cash/collateral security to guarantee the implementation of the promise or to indemnify the damages.
4) It is also permissible to document the debt resulting from Bai-Murabaha by a guarantor, or a mortgage, or both like any other debt. Mortgage/Guarantee/Cash security may be obtained prior to the signing of the agreement or at the time of signing the agreement.
5) Stock and availability of goods is a basic condition for signing a Bai-Murabaha agreement. Therefore, the bank must purchase the goods as per specification of the client to acquire ownership of the same before signing the Bai-Murabaha agreement with the client.
The terms “Bai” and “Muajjal” have been derived from Arabic words Ajal and Bai. The word Bai means purchase and sale and the word Ajal means a fixed time or a fixed period” Bai-Muajjal means sale for which payment is made at a future fixed date or within a fixed period. In short, it is a sale on credit.
Bai-Muajjal may be defined as a contract between a buyer and a seller under which the seller sells certain specific goods (permissible under Islamic Shariah and the Law of the Country), to the buyer at a agreed fixed price payable at a certain fixed future date in lump-sum or within a fixed period by fixed installments. The seller may also sell the goods purchased by him as per order and specification of the Buyer.
Important Features of Bai-Muajjal
1) It is permissible for the client to offer an order to purchase by the bank particular goods deciding its specification and committing him to buy the same from the bank on Bai-Muajjal i.e. deferred payment sale at fixed price.
2) It is permissible to make the promise binding upon the client to purchase from the Bank, that is, he is to either satisfy the promise or to indemnify the damages caused by breaking the promise without excuse.
3) It is permissible to take cash / collateral security to guarantee the implementation of the promise or to indemnify the damages.
4) It is also permissible to document the debt resulting from Bai-Muajjal by a guarantor, or a mortgage or both like any other debt. Mortgage/Guarantee/Cash security may be obtained prior to the signing of the Agreement or at the time of signing the Agreement.
5) Stock and availability of goods is a basic condition for signing a Bai-Muajjal agreement, therefore, the bank must purchase the goods as per specification of the client to acquire ownership of the same before signing the Bai-Muajjal agreement with the client.
Bai – Salam
The terms “Bai” and “Salam” have been derived from Arabic words Bai and Salam. The word “Bai” means “sale and purchase” and the word Salam means “Advance”. “Bai-Salam” means Advance Sale and Purchase.
Under this mode Bank will executive purchase contract with the client and make payment against purchase of product, which is under process of production. Bai-Salam contract will be executed after making any investment showing price, quality, quantity, time, place and mode of delivery. The profit is to be negotiated. The payment as the price of the goods is made at the time of Agreement / on the spot and the delivery of the goods is deferred.
Fixation of Purchase Price
Points are to be considered at the time of bargaining with the client for fixation of price of the goods to be purchase under Bai-Salam. The time for taking delivery of the goods is anticipated time from the date of date of Bai-Salam price to final disposal of the goods. Taking delivery and costs for marketing, transportation charges, and selling commission etc. Godson Guard’s salary, insurance, rent etc. Present market price and the anticipated sale price at the time of disposal of the goods. Expected rate of returns is as per Head Office norms. All areas of appraisal should be carefully studied and the Appraisal forms should be completed properly. Purchase price shall be fixed-up with due study keeping in view that after sale of the goods the Bank gets profit as per expected Rate of Return.
The client shall exclusively utilize the investment for the purpose for which he has taken it and shall deliver/export the goods as per Bai-Salam Agreement. The Bank shall take delivery of the goods from the client either by itself or through its representative as per Bai-Salam Agreement and Delivery Schedule. The bank shall not disburse the investment unless the client completes all necessary arrangements for the proposed production /manufacture. In case the Client tails to produce and deliver/export the goods, he will immediately refund the money received from the Bank. If necessary Bank may authorize the Client in writing to sell/deliver/supply/export the Bai-Salam goods against his /their license /contract/sale agreement for and on behalf of the Bank as its agent at a price not lower than the price fixed by the Bank provided a separate agency agreement is executed between the bank and the Client (Agent).
Taking delivery of the goods after the due date of delivery as per schedule shall be at the absolute discretion of the Bank.
Important Feature of Bai-Salam
1) Bai-Salam is a mode of investment allowed by Islamic Shariah in which commodity/product can be sold without having the said commodity/product either in existence or physical/constructive possession of the seller.
2) Generally, industrial and agricultural products are purchased in advance under Bai-Salam mode of investment.
3) It is permissible to obtain collateral security from the seller client to secure the investment.
4) It is also permissible to obtain mortgage and/or personal guarantee from a third party as security.
5) Bai-Salam on a particular commodity/product or on a product of a particular field or farm cannot be affected.
Hire purchase /Ijarah
The term Ijarah has been derived from the Arabic works Ajr and Ujrat which means consideration, return, wages or rent. This is really the exchange value or consideration, return, wages, rent of service of an Asset. Ijarah has been defined as a contract between two parties, the Hiree and Hirer where the Hirer enjoys or reaps a specific service on benefit giant a specified consideration or rent from the asset owned by the Hiree. It is a hire agreement under which a certain asset is hired out by the Hiree to a Hirer against fixed rent or rentals for a specified period.
Hire Purchase Under shirkatul Melk
Hire purchase under shirkatul Melk is a special type of contract which has been developed through practice. Actually, it is a synthesis of three contracts: Shirkat, Ijarah and sale. Shirkat means partnership. Shirkatul Melk means share an ownership. When two or more persons supply equity, purchase an asset, own the same jointly, and share the benefit as per agreement and bear the loss in proportion to their respective equity, the contract is called Shirkatul contract.
Stages of Hire Purchase under Shirkatul Melk
Thus Hire Purchase under Shirkatul Melk Agreement has got three stages:
Investment under Special Schemes
Household durable scheme:
Al Arafah Islami Bank Limited has introduced Household Durables Investment Scheme, which has already created great enthusiasm among the people and received tremendous response from them. Objectives are to assist the service holders with limited income in purchasing household articles such as:
Investment scheme for doctors:
A good number or newly graduated doctors from Medical Colleges are unemployed. Many of the medical graduates are waiting for job because the opportunity for Government service is limited. If these young doctors could be self-employed by extending investment facilities, they could make modern facilities available at the door-steps of rural people.
In view of the above facts, Al-Arafah Islami Bank Limited has taken the initiative an introduced the ” Doctors Investment Scheme” to ensure modern treatment and medical facilities available to the people through extension of Bank’s investment facilities for self-employment of newly graduated doctors and at the same time extending investment facilities to the established medical practitioners to procure modern and sophisticated medical equipment.
Small business investment scheme:
Bangladesh a third-world developing country is rich in natural and human resources. In spite of vast possibilities, the majority people of the country live in hardship-below poverty tapped, explored and exploited. Physical labor is their only means of earning. A large segment of this populace is active youth force. Many of them are efficient, intelligent and energetic with initiative & drive and have courage to tale risks. But they cannot uplift their socio-economic condition due to poverty, lack of financial support and other required facilities.
Aims and objectives:
Housing investment scheme:
One of the basic human needs is to have a house to live in. A house is in an abode of peace and happiness. Housing has now become an acute problem in the country, especially in the towns, cities and metropolis.
With their limited income, it has become almost impossible on the part of the lower middle class, middle class and sometimes, even for upper middle class to solve their housing problem.
To meet this basic human need, Al-Arafah Islami Bank Limited is committed to contribute to this end to provide a peaceful and happy.
Real estate investment program:
Professionals, Service-holders, Businessmen, Real Estate Developer and other categories of people who are not entitled for availing investment facilities under Housing Investment Scheme, shall be eligible under this program Investment is to be extended to build new houses and for extension/ completion of the house already constructed, commercial building, shopping complex, flat apartment etc.
Transport investment program:
Under this scheme, investment in being allowed to the existing successful businessmen and potential entrepreneurs in this sector for all types of road and water transport with simple and easy terms and conditions. The bank is also extending investment facilities to multinational companies, established, business houses and well to do officials and professionals for acquisition of private cars, microbus and jeeps.
Aims and Objectives:
Car investment scheme:
Car is considered as on essential mode of transport in the modern society, particularly by a section of the officials, business houses and business executives and established professionals for movement in discharging their duties and responsibilities punctually and efficiently. Many of these categories of people cannot purchase a car on payment of entire purchase value at a time out of their own sources. To meet this need Al-Arafah Islami Bank has introduced the ‘Car Investment Scheme’ for the mid and high ranking officials of government and semi-government organizations, corporations; executives and directors of big business houses and companies arid also for persons of different professional groups on easy payment terms and conditions.
Rural development scheme of AIBL:
Al-Arafah Islami Bank Limited (AIBL) envisages an economic system based on equity and justice. Taking into consideration that majority of the population below poverty line lives in rural Bangladesh, the Bank has devised a Rural Development Scheme (RDS) with a view to creating employment opportunity for them and alleviates their poverty through income generation activities.
The AIBL through its RDS project has been implementing integrated programs for the landless poor, aged laborers and marginal farmers aimed at meeting their basic needs and promoting their comprehensive development. Consciousness among the poor needs should be enhanced so that they can lift their position in the socio-economic structure of the country. In order to consolidate their economic base, invested money should be used in income generating activities so the poorer section of the population can become self-reliant. RSD works for the realization of that objective.
Agricultural implements investment scheme:
Bangladesh is predominantly an agricultural country with vast majority of people living in rural areas. Most of our people for their living are dependent on agriculture. Agriculture still contributes the lion share of the gross domestic product. But we could not as yet become self-sufficient in food production. We still import a bulk quantity of food grains from abroad to meet the deficit. We must modernize our agriculture and establish more and more industries in order to minimize imports
The Bank has introduced “Agriculture Implements Investment Scheme” to provide power tillers, power pumps, shallow tube-wells, thrasher machine etc. On easy terms unemployed youths for self-employment and to the farmers help augment production in agricultural sector.
Micro industries investment scheme:
Al-Arafah Islami Bank Ltd. has been appreciably participating in this direction by financing industrial sector. With a view to creating wider base for industries, the Bank has decided to launch “Micro Industries Investment Scheme” through its Branches.
SOWT Analysis of AIBL
Investment pricing techniques
The pricing of investment products shall be judiciously and appropriately made taking in view the bank rate, cost of fund, risk factor involved, ruling investment prices of the banking sector, demand / supply interaction of the investment products, socioeconomic impact of investment products and national priority. Flexibility and competitiveness shall also be taken into consideration to ensure that the pricing is appropriate and competitive for easy marketing of the products, to yield fair rate of return on investment s as well as to uphold the social welfare objectives of the special investment schemes. The pricing shall be reviewed and evaluated from time to time and be adjusted as per prevailing situation and experiment.
2.Cost of capital
These two components add-up to the bank’s “cost”.
Administrative cost = Administrative cost (godown rent, transport cost and godown staff salary).
Cost of capital = Return on capital or the Rate of Return investors
Profit charge= Purchase price (cost) + administrative cost +agreed Profit
(Fixed in lump sum or in percentage of the cost price of the goods)
There are many Causes of overdue. Some import causes are as follows:
Rebate may be allowed to the investment account (at the calculated rate of profit) in lump sum, but very nearest to the Rate of Return for earlier adjustment of the concerned amount within due date.
Bank may charge compensation on the overdue investment accounts for the overdue period at the calculated rate of profit. But no compensation is charged without the approval of the Review Committee. The branches must send R.C. Memo to Head Office immediately after the account becomes overdue. Preferably within 7 days from the date of overdue of the account. Against Review Committee’s specific approval the compensation may only be charged on the concerned overdue account at the calculated rate of profit.
Profit / compensation charged on investments classified as substandard and doubtful be kept in suspense and not be taken as income
Imposition of profit / compensation is stopped on investments classified as Bad / Loss. In case of filing suit profit / compensation may be charged up to the date of filing suit and suit to be filed for principal; and profit / compensation amount. But profit / compensation to be kept in suspense account profit / compensation charged for any other reason on investment classified as Bad/ Loss also to be kept in suspense Accounts.
Deposit Trends of Four Banks:
Table: (Deposit of four banks) Tk. in million
|Islami Bank Bangladesh Ltd. (IBBL)||200343.41||166325.29|
|Al-Arafah Islami Bank Ltd. (AIBL)||29690.12||23009.13|
|Social Investment Bank Ltd. (SIBL)||24099.82||19753.94|
|EXIM Bank Ltd. (EXIM)||57586.99||41546.57|
The table shows that Islami Bank Bangladesh contains the higher position in the consecutive years. After that EXIM Bank contains the second position among four banks.
Trend of Investment in Share & Securities of Four Banks:
Table: (Trend of investment of four banks) Tk. in million
|Islami Bank Bangladesh Ltd. (IBBL)||187586.55||165286.32|
|Al-Arafah Islami Bank Ltd. (AIBL)||1090.23||868.58|
|Social Investment Bank Ltd. (SIBL)||853.46||558.45|
|EXIM Bank Ltd. (EXIM)||2894.02||2457.72|
From table we can say that Islami Bank Bangladesh maintains the highest position in investment of share and bonds, and again EXIM Bank Remains in the second position where Al-Arafah Islami Bank in third and Social Islami Bank in fourth position.
Mode wise Investment of Al-Arafah Islami Bank Limited
Table: 4 (Mode wise Investment Data) Taka in million
|Purchase & Negotiation||–||–|
|Pre shipment investment||381.26||151.24|
|Uzrat Bill Wakala||4.99||3.55|
(Mode Wise Investments of AIBL as on 31 December 2009)
The mode wise investment of Al-Arafah Islami Bank describe the Bai-Muazal is in top position of the investment sectors. Then Murabaha is in the second position and HPSM in third and Quard in fourth position.
Mode wise Investment of Islami Bank Bangladesh Limited
Table: (Mode wise Investment of IBBL) Taka in Million
|Purchase & Negotiation||9047||8878|
Chart: (Mode wise Investment of IBBL)
From the table it can be described that the Bai-Murabaha maintains the highest position of the around 51% among the other sectors. HPSM is the second position of the investment sectors which maintains the 34.64% of total investment and Mudaraba is nil in 2009 and Musharaka is the lowest portion of the investment.
Mode Wise investment of EXIM Bank Ltd.:
Tk. in million
|Murabaha Post Import (MPI)||1550.73||1167.10|
|Izara Bill Baia(LG/HP)||16523.64||13179.83|
|Izara Bill Baia(HB)||4490.77||2024.20|
|Quard Against MTDR||244.79||158.54|
Table: 7 (Mode Wise Investment of EXIM Bank)
Total deposit and investment position: 2005 to 2009 of Al-Arafah Islami Bank Ltd.
Tk. in Million
|% of investment to total deposit||80.62%||98.54%||103.86%||99.55%||93.44%|
The graph shows the deposit and investment opposition of Al-Arafah Islami Bank from 2005-2008. From this graph it can be noticed that the in 2007 the investment total is higher than the 4 other previous year and the investment of total deposit is gradually is decreasing up to 2009 and from 2005 the total investment is gradually is increasing up to 2006.
Total deposit and investment position: 2005 to 2009 of Islami Bank Bangladesh Ltd.:
Tk. in Million
|% of investment to total deposit||86.36%||86.89%||85.77%||87.13%||89.87|
The graph shows the total investment position of Islami Bank Bangladesh Ltd. It can be observed that the investment is continuously increasing from 2004-2008. In 2009 investment position is the top most which is the result of continuously increment of the periods. It is the good symbol for the company that the attain in its investment.
Total deposit and investment position: 2005 to 2009 of Social Investment Bank Ltd.:
Table: (Total deposit and investment of SIBL) Tk. in Million
|% of investment to total deposit||65.40%||89.53%||94.70%||83.23%||82.79%|
The graph shows the percentage of total investment of total deposit of Social Islami Bank Limited. The graph describes says that in 2007 the investment was higher among the periods and gradually decreases to 2009. From the very beginning 2005 the investment percentage were increasing to 2006. The 2005 was the worst position in the percentage of investment.
Total deposit and investment position: 2005 to 2009 of EXIM Bank Ltd.:
Table: (Total deposit and investment of EXIM Bank) Tk. in Million
|% of investment to total deposit||101.33%||91.97%||93.18%||96.75%||93.14%|
The chart shows the total percentage of investment of total deposit of EXIM Bank Limited. The shows the investment is increases and decreases sometimes throughout the period. But in 2005 the investment was higher among the periods. And the percentage of investment decreases dramatically in 2006. In the following year the investment is going to increase up to 2008 and in 2009 the investment is decrease.
Sector-wise Investment of Al-Arafah Islami Bank Ltd.:
Table: (Sector-wise Investment) Tk. in Million
|Water Works & Sanitary Service||–||10.64|
In 2008 the company given more emphasis to trade finance sector and in the similar year in industrial sector dominates the second position of the investment storage sector is in lowest position. Comparing to the industry, construction, water works and sanitary services, transport, agriculture and others maintain the progressive position of these sectors.
Sector-wise Investment of IBBL
Table: (Sector-wise Investment) Tk. in Million
In 2009 the Islami Bank Bangladesh Ltd., all the time maintain the higher position compared to 2008. The most noticeable sector is the industrial phase. The lowest portion is the transport sector.
Sector-wise Investment of Social Islami Bank Ltd.:
Table:(Sector-wise Investment) Tk. in Million
In 2009 the company given more emphasis to industry sectors for investment and after that the company emphasis to commercial sector to investment because commerce is the most potential aspect of investment to carry out the progress of the country and for the nation. Besides these micro investment is the lower position of the other sectors.
Sector-wise Investment of EXIM Bank Ltd.:
Table: (Sector-wise Investment) Tk. in Million
From the table it can be shown that the sector wise investment of EXIM Bank Ltd. In textile industries sector is the most important sector for investment of the bank among the other sectors. The company chooses it for its more potentialities and for its bright future. The also emphasizes on the other sectors for investment finances for export and commercial sectors are also important.
Problems and Prospects of AIBL
Despite tremendous popular support spectacular success in terms of mobilization of deposit and distribution of profit Islamic banking in Bangladesh yet to achieve the desired level of success due to the absence of appropriate legal framework for carrying out Islamic Banking operations in the country. All the government- approved securities in Bangladesh are interest bearing; Besides, Islamic Money Market in Bangladesh is yet to develop. As a result the Islamic banks, which are committed to avoid interest, cannot invest the permissible part of their Statutory Liquidity Reserve and short Term Liquidity in those securities.
AIBL is experiencing different problems including the investment program under the Islamic Shariah. Due to this, it is yet to conduct the some schemes which are agreed with the Islamic law and some of the schemes has already been closed and which are under operations are not out of flows.
The following section highlights the major findings of the problem that are associated with the investment program of AIBL.
The problem of Musharaka:
The problem of Bai-Salam:
The problem of Bai-Muajjal:
The problem of Bai-Murabaha:
Client doesn’t repay the profit in time.
Bank has to bear the risk of goods until those are delivered to the client and the bank is also responsible for any damages of the goods in this period.
The bank will face problem if the client refuse to satisfy the contract.
As we have seen from the comparison the four banks are trying to perform well in the previous years. The recommendations for Al-Arafah Islami Bank and other three banks (EXIM, Islami Bank Bangladesh Limited, Social Islami Bank Limited) are as follows:
Recommendation to Al-Arafah Islami Bank Limited:
This bank should increase the deposit amount in the following years. In 2009 the bank deposited BDT Taka 29690.12 million which is very little to BDT Taka 200343.41 million of Islami Bank Bangladesh Limited. They should increase the deposit in the next years. The investment position of the bank is also lower compared to the other banks except Social Islami Bank Limited. The bank should increase the investment. The mode wise investment of this bank is not satisfactory so it should be developed. This bank is almost maintaining the traditional banking so it should innovate on-line banking. The bank should increase the branch network and should introduce new technology. The information should be available to the shareholders.
Should launce centrally on-line banking:
Al-Arafah Islami Bank Limited yet not started centrally on-line banking system. To coup with the new customers the banks should launce or introduce new banking and modern technological system banking.
Recommendation to the Government:
The government should take an initiative to open an Islamic money market in Bangladesh.
The government should also take an initiative to develop a legal framework of Islamic banking in Bangladesh.
The government should develop an Islamic economic system in Bangladesh.
Recommendation to the Civil Society:
The people should improve their morality for the proper use Islamic banking in Bangladesh. They should return the amount of profit in due time.
Recommendation for Islami Bank Bangladesh limited:
Should enhance ATM network:
The ATM networking system of Islami Bank is not so enhanced. The transaction through IBBL ATM incurs problem. The system deducted more money from the client’s account. This type of service gathers chaos and customers’ satisfaction. They also need to install more ATM booths to provide service quickly and easily to the customers.
Through the observation of comparative analysis of four banks it is firstly noticeable that IBBL all time maintains the top position among the four banks. There are diversified sectors of investment in Bangladesh and the potential sectors are increasing day by day. The Islami Bank Bangladesh Limited will meet the demand of all diversified sectors. All the Islami banking and general banking system will increase the investment portion and will contribute in the national and domestic progress of income.
Recommendation to Social Islami Bank Limited:
The Social Islami Bank is one of the potential banks in Bangladesh to foster the Islami Banking system. In bank is performing very well in this country and getting rewards for their excellent performance. Incase of deposit the bank should be increase compared to the other three banks. The deposit is lower among these four banks. In investment sector the word lower is possible to repeat among these four banks. So the should be increase in the following year. The mode wise investment of the bank is in fourth position among these four banks. The mode wise investment of this bank should be increased. The bank should establish more branches and install more ATM booths and introduce on-line banking to carryout more customers and to earn more profit.
Recommendation to EXIM Bank:
Enlarge customers in different sectors:
They have to increase their Letter of Credit (LC) customer. Banks take margin against opening LC. They charge the margin on the customer according to their relationship with that bank. In the competitive market, EXIM bank should charge a lower rate of margin over the customer to increase the customer and maintain a long term relationship with the customer.
Give more training and development to increase the efficiency level of the employee:
Every company should establish an efficient customer care service. Because with this they can stay touched with the customer and customer can get immediate help of their problem. To establish that the specific company should have to have an efficient employee group.
Commence new creation and services:
EXIM Bank already has the online banking services. But they don’t have own ATM booth. Their consumers withdraw cash by using the others banks booth. They have to introduce their own credit card service.
The Islamic Banks are performing as the satisfactory level to meet the optimum financial flow in Bangladesh and outside the Bangladesh. They are trying to invest among different types of people. They are helping very much people to properly operate their business and their family effectively. The most of the people of our country are living under the poverty line. The Islamic Banks are operating according to the Islami Shariah.
The four banks mentioned here are investing in different sectors in to execute their business and profitably. The investment position of four banks is different in the various sectors. The scenario of deposit of these banks is increasing in the last previous years. The Islami Bank is in the top position of investment among the four banks. The EXIM bank in the second position more than 57000 million in 2009 and Al-Arafah in third position and Social Islami Bank in the fourth position and deposited near to taka 24000 million in 2009. In the review of investment position among the four banks Islami Bank Bangladesh is in the first position and invested Tk. 187586.55 million in 2009, EXIM Bank is in the second position and investment amount tk.2894 million in 2009 which is the increase position of these banks. The Al-Arafah Islami Bank is in the third position and invested amount taka 1090 and Social Islami Bank in the fourth position in 2009 among the four banks.
In the preview of mode wise investment the Islami Bank Bangladesh Limited is maintaining the optimum position. Incase of total deposit and investment Islami Banks is in the first position and Social Islami Bank in the fourth position in 2009.